Section 1679a. Definitions
For purposes of this subchapter, the following definitions apply:
(1) Consumer
The term ''consumer'' means an individual.
(2) Consumer credit transaction
The term ''consumer credit transaction'' means any transaction
in which credit is offered or extended to an individual for
personal, family, or household purposes.
(3) Credit repair organization
The term ''credit repair organization'' -
(A) means any person who uses any instrumentality of
interstate commerce or the mails to sell, provide, or perform
(or represent that such person can or will sell, provide, or
perform) any service, in return for the payment of money or
other valuable consideration, for the express or implied
purpose of -
(i) improving any consumer's credit record, credit history,
or credit rating; or
(ii) providing advice or assistance to any consumer with
regard to any activity or service described in clause (i);
and
(B) does not include -
(i) any nonprofit organization which is exempt from
taxation under section 501(c)(3) of title 26;
(ii) any creditor (as defined in section 1602 of this
title), with respect to any consumer, to the extent the
creditor is assisting the consumer to restructure any debt
owed by the consumer to the creditor; or
(iii) any depository institution (as that term is defined
in section 1813 of title 12) or any Federal or State credit
union (as those terms are defined in section 1752 of title
12), or any affiliate or subsidiary of such a depository
institution or credit union.
(4) Credit
The term ''credit'' has the meaning given to such term in
section 1602(e) of this title.
Section 1679b. Prohibited
practices
(a) In general
No person may -
(1) make any statement, or counsel or advise any consumer to
make any statement, which is untrue or misleading (or which, upon
the exercise of reasonable care, should be known by the credit
repair organization, officer, employee, agent, or other person to
be untrue or misleading) with respect to any consumer's credit
worthiness, (FOOTNOTE 1) credit standing, or credit capacity to -
(FOOTNOTE 1) So in original. Probably should be
''creditworthiness,''.
(A) any consumer reporting agency (as defined in section
1681a(f) of this title); or
(B) any person -
(i) who has extended credit to the consumer; or
(ii) to whom the consumer has applied or is applying for an
extension of credit;
(2) make any statement, or counsel or advise any consumer to
make any statement, the intended effect of which is to alter the
consumer's identification to prevent the display of the
consumer's credit record, history, or rating for the purpose of
concealing adverse information that is accurate and not obsolete
to -
(A) any consumer reporting agency;
(B) any person -
(i) who has extended credit to the consumer; or
(ii) to whom the consumer has applied or is applying for an
extension of credit;
(3) make or use any untrue or misleading representation of the
services of the credit repair organization; or
(4) engage, directly or indirectly, in any act, practice, or
course of business that constitutes or results in the commission
of, or an attempt to commit, a fraud or deception on any person
in connection with the offer or sale of the services of the
credit repair organization.
(b) Payment in advance
No credit repair organization may charge or receive any money or
other valuable consideration for the performance of any service
which the credit repair organization has agreed to perform for any
consumer before such service is fully performed.
Section 1679c.
Disclosures
(a) Disclosure required
Any credit repair organization shall provide any consumer with
the following written statement before any contract or agreement
between the consumer and the credit repair organization is
executed:
''CONSUMER CREDIT FILE RIGHTS UNDER STATE AND FEDERAL LAW
''You have a right to dispute inaccurate information in your
credit report by contacting the credit bureau directly. However,
neither you nor any 'credit repair' company or credit repair
organization has the right to have accurate, current, and
verifiable information removed from your credit report. The credit
bureau must remove accurate, negative information from your report
only if it is over 7 years old. Bankruptcy information can be
reported for 10 years.
''You have a right to obtain a copy of your credit report from a
credit bureau. You may be charged a reasonable fee. There is no
fee, however, if you have been turned down for credit, employment,
insurance, or a rental dwelling because of information in your
credit report within the preceding 60 days. The credit bureau must
provide someone to help you interpret the information in your
credit file. You are entitled to receive a free copy of your
credit report if you are unemployed and intend to apply for
employment in the next 60 days, if you are a recipient of public
welfare assistance, or if you have reason to believe that there is
inaccurate information in your credit report due to fraud.
''You have a right to sue a credit repair organization that
violates the Credit Repair Organization Act. This law prohibits
deceptive practices by credit repair organizations.
''You have the right to cancel your contract with any credit
repair organization for any reason within 3 business days from the
date you signed it.
''Credit bureaus are required to follow reasonable procedures to
ensure that the information they report is accurate. However,
mistakes may occur.
''You may, on your own, notify a credit bureau in writing that
you dispute the accuracy of information in your credit file. The
credit bureau must then reinvestigate and modify or remove
inaccurate or incomplete information. The credit bureau may not
charge any fee for this service. Any pertinent information and
copies of all documents you have concerning an error should be
given to the credit bureau.
''If the credit bureau's reinvestigation does not resolve the
dispute to your satisfaction, you may send a brief statement to the
credit bureau, to be kept in your file, explaining why you think
the record is inaccurate. The credit bureau must include a summary
of your statement about disputed information with any report it
issues about you.
''The Federal Trade Commission regulates credit bureaus and
credit repair organizations. For more information contact:
''THE PUBLIC REFERENCE BRANCH
''FEDERAL TRADE COMMISSION
''WASHINGTON, D.C. 20580''.
(b) Separate statement requirement
The written statement required under this section shall be
provided as a document which is separate from any written contract
or other agreement between the credit repair organization and the
consumer or any other written material provided to the consumer.
(c) Retention of compliance records
(1) In general
The credit repair organization shall maintain a copy of the
statement signed by the consumer acknowledging receipt of the
statement.
(2) Maintenance for 2 years
The copy of any consumer's statement shall be maintained in the
organization's files for 2 years after the date on which the
statement is signed by the consumer.
Section 1679d.
Credit repair organizations contracts
(a) Written contracts required
No services may be provided by any credit repair organization for
any consumer -
(1) unless a written and dated contract (for the purchase of
such services) which meets the requirements of subsection (b) of
this section has been signed by the consumer; or
(2) before the end of the 3-business-day period beginning on
the date the contract is signed.
(b) Terms and conditions of contract
No contract referred to in subsection (a) of this section meets
the requirements of this subsection unless such contract includes
(in writing) -
(1) the terms and conditions of payment, including the total
amount of all payments to be made by the consumer to the credit
repair organization or to any other person;
(2) a full and detailed description of the services to be
performed by the credit repair organization for the consumer,
including -
(A) all guarantees of performance; and
(B) an estimate of -
(i) the date by which the performance of the services (to
be performed by the credit repair organization or any other
person) will be complete; or
(ii) the length of the period necessary to perform such
services;
(3) the credit repair organization's name and principal
business address; and
(4) a conspicuous statement in bold face type, in immediate
proximity to the space reserved for the consumer's signature on
the contract, which reads as follows: ''You may cancel this
contract without penalty or obligation at any time before
midnight of the 3rd business day after the date on which you
signed the contract. See the attached notice of cancellation
form for an explanation of this right.''.
Section
1679e. Right to cancel contract
(a) In general
Any consumer may cancel any contract with any credit repair
organization without penalty or obligation by notifying the credit
repair organization of the consumer's intention to do so at any
time before midnight of the 3rd business day which begins after the
date on which the contract or agreement between the consumer and
the credit repair organization is executed or would, but for this
subsection, become enforceable against the parties.
(b) Cancellation form and other information
Each contract shall be accompanied by a form, in duplicate, which
has the heading ''Notice of Cancellation'' and contains in bold
face type the following statement:
''You may cancel this contract, without any penalty or
obligation, at any time before midnight of the 3rd day which
begins after the date the contract is signed by you.
''To cancel this contract, mail or deliver a signed, dated copy
of this cancellation notice, or any other written notice to (
name of credit repair organization ) at ( address of credit
repair organization ) before midnight on ( date )
''I hereby cancel this transaction,
( date )
( purchaser's signature ).''.
(c) Consumer copy of contract required
Any consumer who enters into any contract with any credit repair
organization shall be given, by the organization -
(1) a copy of the completed contract and the disclosure
statement required under section 1679c of this title; and
(2) a copy of any other document the credit repair organization
requires the consumer to sign,
at the time the contract or the other document is signed.
Section 1679f. Noncompliance with this
subchapter
(a) Consumer waivers invalid
Any waiver by any consumer of any protection provided by or any
right of the consumer under this subchapter -
(1) shall be treated as void; and
(2) may not be enforced by any Federal or State court or any
other person.
(b) Attempt to obtain waiver
Any attempt by any person to obtain a waiver from any consumer of
any protection provided by or any right of the consumer under this
subchapter shall be treated as a violation of this subchapter.
(c) Contracts not in compliance
Any contract for services which does not comply with the
applicable provisions of this subchapter -
(1) shall be treated as void; and
(2) may not be enforced by any Federal or State court or any
other person.
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Section 1679g. Civil liability
(a) Liability established
Any person who fails to comply with any provision of this
subchapter with respect to any other person shall be liable to such
person in an amount equal to the sum of the amounts determined
under each of the following paragraphs:
(1) Actual damages
The greater of -
(A) the amount of any actual damage sustained by such person
as a result of such failure; or
(B) any amount paid by the person to the credit repair
organization.
(2) Punitive damages
(A) Individual actions
In the case of any action by an individual, such additional
amount as the court may allow.
(B) Class actions
In the case of a class action, the sum of -
(i) the aggregate of the amount which the court may allow
for each named plaintiff; and
(ii) the aggregate of the amount which the court may allow
for each other class member, without regard to any minimum
individual recovery.
(3) Attorneys' fees
In the case of any successful action to enforce any liability
under paragraph (1) or (2), the costs of the action, together
with reasonable attorneys' fees.
(b) Factors to be considered in awarding punitive damages
In determining the amount of any liability of any credit repair
organization under subsection (a)(2) of this section, the court
shall consider, among other relevant factors -
(1) the frequency and persistence of noncompliance by the
credit repair organization;
(2) the nature of the noncompliance;
(3) the extent to which such noncompliance was intentional; and
(4) in the case of any class action, the number of consumers
adversely affected.
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Section 1679h. Administrative
enforcement
(a) In general
Compliance with the requirements imposed under this subchapter
with respect to credit repair organizations shall be enforced under
the Federal Trade Commission Act (15 U.S.C. 41 et seq.) by the
Federal Trade Commission.
(b) Violations of this subchapter treated as violations of Federal
Trade Commission Act
(1) In general
For the purpose of the exercise by the Federal Trade Commission
of the Commission's functions and powers under the Federal Trade
Commission Act (15 U.S.C. 41 et seq.), any violation of any
requirement or prohibition imposed under this subchapter with
respect to credit repair organizations shall constitute an unfair
or deceptive act or practice in commerce in violation of section
5(a) of the Federal Trade Commission Act (15 U.S.C. 45(a)).
(2) Enforcement authority under other law
All functions and powers of the Federal Trade Commission under
the Federal Trade Commission Act shall be available to the
Commission to enforce compliance with this subchapter by any
person subject to enforcement by the Federal Trade Commission
pursuant to this subsection, including the power to enforce the
provisions of this subchapter in the same manner as if the
violation had been a violation of any Federal Trade Commission
trade regulation rule, without regard to whether the credit
repair organization -
(A) is engaged in commerce; or
(B) meets any other jurisdictional tests in the Federal Trade
Commission Act.
(c) State action for violations
(1) Authority of States
In addition to such other remedies as are provided under State
law, whenever the chief law enforcement officer of a State, or an
official or agency designated by a State, has reason to believe
that any person has violated or is violating this subchapter, the
State -
(A) may bring an action to enjoin such violation;
(B) may bring an action on behalf of its residents to recover
damages for which the person is liable to such residents under
section 1679g of this title as a result of the violation; and
(C) in the case of any successful action under subparagraph
(A) or (B), shall be awarded the costs of the action and
reasonable attorney fees as determined by the court.
(2) Rights of Commission
(A) Notice to Commission
The State shall serve prior written notice of any civil
action under paragraph (1) upon the Federal Trade Commission
and provide the Commission with a copy of its complaint, except
in any case where such prior notice is not feasible, in which
case the State shall serve such notice immediately upon
instituting such action.
(B) Intervention
The Commission shall have the right -
(i) to intervene in any action referred to in subparagraph
(A);
(ii) upon so intervening, to be heard on all matters
arising in the action; and
(iii) to file petitions for appeal.
(3) Investigatory powers
For purposes of bringing any action under this subsection,
nothing in this subsection shall prevent the chief law
enforcement officer, or an official or agency designated by a
State, from exercising the powers conferred on the chief law
enforcement officer or such official by the laws of such State to
conduct investigations or to administer oaths or affirmations or
to compel the attendance of witnesses or the production of
documentary and other evidence.
(4) Limitation
Whenever the Federal Trade Commission has instituted a civil
action for violation of this subchapter, no State may, during the
pendency of such action, bring an action under this section
against any defendant named in the complaint of the Commission
for any violation of this subchapter that is alleged in that
complaint.
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Section 1679i. Statute of limitations
Any action to enforce any liability under this subchapter may be
brought before the later of -
(1) the end of the 5-year period beginning on the date of the
occurrence of the violation involved; or
(2) in any case in which any credit repair organization has
materially and willfully misrepresented any information which -
(A) the credit repair organization is required, by any
provision of this subchapter, to disclose to any consumer; and
(B) is material to the establishment of the credit repair
organization's liability to the consumer under this subchapter,
the end of the 5-year period beginning on the date of the
discovery by the consumer of the misrepresentation.
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Section 1679j. Relation to State law
This subchapter shall not annul, alter, affect, or exempt any
person subject to the provisions of this subchapter from complying
with any law of any State except to the extent that such law is
inconsistent with any provision of this subchapter, and then only
to the extent of the inconsistency.
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