The Credit Repair Organization Act (CROA) makes it illegal for credit repair companies to lie about what they can do for you, and to charge you before they’ve performed their services. The CROA is enforced by the Federal Trade Commission and requires credit repair companies to explain:
- your legal rights in a written contract that also details the services they’ll perform,
- your three day right to cancel without with any charge,
- how long will it take to get results,
- the total cost you will pay, and
- any guarantees.
What if a credit repair company you hired doesn’t live up to its promises? You have some options. You can:
- sue them in federal court for your actual losses or for what you paid them, whichever is more,
- seek punitive damages—money to punish the company for violating the law,
- join other people in a class action lawsuit against the company, and if you win, the company has to pay your attorney’s fees.
For more information, click here.
Teaching Suggestions
- Ask students to make a list of major provisions of the Credit Repair Organization Act.
- Ask students if there is a time limit on reporting negative information about criminal convictions.
Discussion Questions
- Where and how can you report credit repair frauds?
- Can the FTC resolve individual credit disputes? If not, why should you file the complaint with the FTC?
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