Enacted to prevent deceptive practices, the Credit Repair Organizations Act (CROA) regulates any commercial entity that offers to improve a consumer's credit record or credit rating.
1. Key CROA Consumer Protections
- Advance Fee Prohibition: Companies cannot demand or receive money before fully performing all promised credit repair services.
- Written Contract Requirements: All agreements must be in writing, specifying total costs, guarantees, and terms of service.
- 3-Day Right of Rescission: Consumers retain an unconditional right to cancel the contract within 3 business days without penalty.
- Prohibition on Creating New Identities: Advising consumers to apply for an Employer Identification Number (EIN) or Credit Privacy Number (CPN) is a federal crime under 18 U.S.C. § 1014.