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Credit Repair Organizations Act (CROA)The Credit Repair Organizations Act or also known as CROA is a federal law that oversees how credit repair companies may conduct business.
The CROA also prohibits certain practices of these same credit repair companies. The United States Congress passed the Credit Repair Organizations Act with the knowledge that consumers who have had credit problems may seek help from credit repair agencies that offer to improve their credit rating. The intention of the CROA is to ensure that consumers are offered information they need to make informed decisions about the purchase of credit repair services, and to also protect the consumer from unfair or deceptive advertising and business practices by credit repair agencies. The Credit Repair Organizations Act prohibits credit repair agencies from: 1. Making false and or misleading statements about what services the credit repair agency can and will provide, including a promise to remove valid negative items from a consumer credit report. 2. The credit repair organization may not receive payment before any promised service has been completed. 3. The credit repair organization cannot advise or instruct a consumer to establish a new credit identity by using a new taxpayer identification number, this process is also known as file segregation. 4. The credit repair organization cannot engage in any act that results in fraud, or the deception of any person, in connection with the offer or sale of credit repair services. In addition the Credit Repair Organization Act requires that credit repair agencies to: 1. Provide potential clients a written explanation of their rights as afforded by the CROA before a contract is signed. This also includes the consumer's right to contact the credit bureaus him or herself. 2. Credit repair agencies must offer their potential clients a written contract that states the services, which will be performed, as well as any guarantees made by the agency, and all payment arrangements. 3. Credit repair agencies must provide their clients with a copy of the contract. 4. Credit repair agencies must provide their clients with a three-day cooling off period before the contract takes effects. 5. The credit repair agencies cannot request for the consumer to waive any of their rights under the CROA. However, if a consumer does waive his or her rights, under the Credit Repair Organization Act, the waiver cannot be enforced by the credit repair agency in court. If you believe that your rights have been violated, under the CROA, you have the right to sue the credit repair agency within 5 years from the date of the violation. In addition, you can report the credit repair agency to the Federal Trade Commission, who tracks complaints, and enforces the laws against agencies that violate the CROA.
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