New bill would force credit-repair firms to prove results before getting paid

Ending Scam Credit Repair Act overview: 

• Who: A proposed bill known as the Ending Scam Credit Repair Act (ESCRA) is currently pending in Congress. 
• Why: The bill aims to amend the Credit Repair Organizations Act and impose additional requirements on credit-repair organizations. 
• Where: The bill is currently pending in the 119th Congress. 
• How to get help: Has a credit repair, debt consolidation or debt settlement company made false promises or charged you before providing services? You may qualify to join a credit repair class action lawsuit. 

A proposed bill aimed at amending the Credit Repair Organizations Act (CROA) and imposing additional requirements on credit-repair organizations is currently pending in Congress.

Under the proposed law, known as the Ending Scam Credit Repair Act (ESCRA), a credit-repair company couldn’t collect payment until it files documented proof of improvements after six months, making it far easier for people wronged by bad actors to seek redress.

ESCRA would also make it illegal for an individual — including credit repair organizations (CRO) — to make false or misleading statements regarding a consumer’s creditworthiness or standing to a consumer reporting agency or to a consumer credit provider.

Furthermore, ESCRA would prohibit making such statements to the Consumer Financial Protection Bureau, the Federal Trade Commission or law enforcement. Notably, the individual must know the statements they are making are false or misleading to be in violation of the law. 

ESCRA would revise credit repair organizations’ obligations to consumers

The bill would also revise CRO obligations to consumers and set a minimum liability amount for damages of $500 for each violation of CROA. 

Under the law, a CRO would be prohibited from charging a consumer for a service until proof is provided by the CRO of success, not less than six months after the service is provided. 

ESCRA also requires additional disclosures to consumers and the retention of any recorded telephone calls, increases the retention period for records from two years to five, and requires that consumers be given copies of all communications sent on their behalf. 

Additionally, the bill requires all persons to be licensed by a state to act as a CRO. It restricts a CRO’s ability to submit multiple credit disputes regarding the same information.

If you worked with a credit repair, debt consolidation, or debt settlement company that made misleading promises or charged you before delivering any services, you may be eligible to pursue compensation. 

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