Business Models Debt Relief Industry

US Credit Services Credit Repair Affiliate Program Pitched. What, No CROA?

A tipster (send in your tips here) sent in an email they received that is pitching a magic money making opportunity to unsuspecting uninformed people as possible affiliates.

The offer is to become a credit repair affiliate after loan modification or debt settlement is complete.

My favorite line of the email has to be, “Remember, you can charge anything you want: we charge $350.00.”

This is one of those offers that comes out where people think they’ve hit the mother load of opportunities and in an economy like this, who doesn’t need credit repair, especially when you can “Charge Anything You Want.”

So here is the minor little federal law that changes everything. Anyone heard of the Credit Repair Organizations Act?

The lesson for today: CROA.

The Credit Repair Organizations Act is short and to the point. It makes the following statements.

  • Certain advertising and business practices of some companies engaged in the business of credit repair services have worked a financial hardship upon consumers, particularly those of limited economic means and who are inexperienced in credit matters.
  • The purposes of this title are to protect the public from unfair or deceptive advertising and business practices by credit repair organizations.
  • No person may 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, credit standing, or credit capacity to any consumer reporting agency.
  • No person may 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 any consumer reporting agency.
  • No person may 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.
  • 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.
  • According to CROA, before a consumer can enroll in a credit repair program they need to be informed:

    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

  • Any person who fails to comply with any provision of this title 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), 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.

All of this is kind of really important stuff to know before you signup to start selling credit repair. But take a look at the email sent out by US Credit Services and post a comment about what you think of the message they are sending out.

The way I read this pitch is all types of information can be removed from consumer credit reports “including, judgments, collections, charge offs, tax liens, inquiry, bankruptcy and more.”

If the information contained is simply inaccurate then the consumer can do it themselves and affiliates will have to tell the consumer they can.

The email also gives the impression the affiliate can charge and collect the feee in advance.

In fairness to the underlying service provider they appear to understand some of the issues regard verification and how a negative listing that the creditor or credit bureau verifies as a valid entry can’t be deleted.

See this screenshot from their affiliate login and look at the red arrow,

But doesn’t it just seem damn near impossible that one consumer can have so many accidental listings on one credit report for a bankruptcy, charge off, collection, balance over the limit, foreclosure, judgment, repossession, etc. It looks to me like the sales pitch is we can clean anything.

If anyone wants to offer a service to help consumers correct incorrect information on their credit report and the consumer wants to pay for that service after it is delivered, I’m all for that.

I have no problems in being being able to hire someone for professional help.

But when it comes to credit repair, you flat out can’t charge until the work is completed and you can’t give the consumer the expectation they can dispute everything that is accurate in hopes it may not be confirmed under the hope that accurate negative information can be deleted.

I just don’t want to see potential affiliate get into something they are not fully informed about.


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About the author

Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.


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