A newly introduced piece of bipartisan legislation seeks to crack down on deceptive practices by credit repair organizations (CROs) which harm consumers. It also aims to help consumers distinguish legitimate credit assistance providers from fraudulent schemes.
The Ending Scam Credit Repair Act (ESCRA) was introduced by Rep. Wiley Nickel (D-N.C.) and Rep. Young Kim (R-Calif.) with provisions targeting companies that charge consumers high fees for their services while often failing to yield the promised results.
“Too many hard-working Americans have been scammed by bad actors in the credit repair industry,” Nickel said in a press release. “Our bill puts a stop to these deceptive practices by banning upfront fees, improving dispute transparency, and requiring state registration. Consumers deserve real results, not empty promises and financial loss.”
The bill aims to tighten regulations for credit repair businesses around transparency and accountability. Specifically, the bill would prohibit the common practice of charging consumers upfront fees and would require CROs to register in states they do business. CROs also would have to provide documented proof of improvements to a consumer’s credit before receiving payment.
“Credit scores can be the key to unlocking the American dream. Fraudulent CROs should not get away with scamming hardworking Americans seeking to improve their scores,” Kim said. “The Ending Scam Credit Repair Act creates accountability and transparency for consumers and hikes penalties for scammers. I’m thrilled to introduce the bipartisan Ending Scam Credit Repair Act and will continue to work on common-sense solutions to protect the American dream.”
The ESCRA also would restrict CROs from overloading credit reporting agencies with duplicative requests which can delay legitimate updates to consumer credit reports.
The legislation has received expressed support from the American Financial Services Association, the National Association of Consumer Bankruptcy Attorneys, and the National Consumer Law Center.