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The Credit Repair Organizations Act CHAPTER 2--CREDIT REPAIR ORGANIZATIONS(1) SEC. 2451. REGULATION OF CREDIT REPAIR ORGANIZATIONS. Title IV of the Consumer Credit Protection Act (Public Law 90-321, 82 Stat. 164) is amended to read as follows: TITLE IV--CREDIT REPAIR ORGANIZATIONS'' Sec. 401. Short title. 402. Findings and purposes. 403. Definitions. 404. Prohibited practices. 405. Disclosures. 406. Credit repair organizations contracts. 407. Right to cancel contract. 408. Noncompliance with this title. 409. Civil liability. 410. Administrative enforcement. 411. Statute of limitations. 412. Relation to State law. 413. Effective date. SEC. 401. SHORT TITLE.(2) This title may be cited as the 'Credit Repair Organizations Act'. SEC. 402. FINDINGS AND PURPOSES.(3) (a) Findings.--The Congress makes the following findings: (1) Consumers have a vital interest in establishing and maintaining their credit worthiness and credit standing in order to obtain and use credit. As a result, consumers who have experienced credit problems may seek assistance from credit repair organizations which offer to improve the credit standing of such consumers. (2) 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. (b) Purposes.--The purposes of this title are-- (1) to ensure that prospective buyers of the services of credit repair organizations are provided with the information necessary to make an informed decision regarding the purchase of such services; and (2) to protect the public from unfair or deceptive advertising and business practices by credit repair organizations. SEC. 403. DEFINITIONS.(4) For purposes of this title, the following definitions apply: (1) Consumer. -- The term 'consumer' means an individual. (2) Consumer credit transaction. -- The term 'consumer credit transaction' means any transaction in which credit is offered or extended to an individual for personal, family, or household purposes. (3) Credit repair organization. -- The term 'credit repair organization'-- (A) means any person who uses any instrumentality of interstate commerce or the mails to sell, provide, or perform (or represent that such person can or will sell, provide, or perform) any service, in return for the payment of money or other valuable consideration, for the express or implied purpose of--
(i) improving any consumer's credit record, credit history, or credit rating; or (ii) providing advice or assistance to any consumer with regard to any activity or service described in clause (i); and (B) does not include-- (i) any nonprofit organization which is exempt from taxation under section 501(c)(3) of the Internal Revenue Code of 1986; (ii) any creditor (as defined in section 103 of the Truth in Lending Act),(5) with respect to any consumer, to the extent the creditor is assisting the consumer to restructure any debt owed by the consumer to the creditor; or (iii) any depository institution (as that term is defined in section 3 of the Federal Deposit Insurance Act) or any Federal or State credit union (as those terms are defined in section 101 of the Federal Credit Union Act), or any affiliate or subsidiary of such a depository institution or credit union. (4) Credit.--The term 'credit' has the meaning given to such term in section 103(e) of this Act.(6) SEC. 404. PROHIBITED PRACTICES.(7) (a) In General.--No person may-- (1) 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-- (A) any consumer reporting agency (as defined in section 603(f) of this Act);(8) or (B) any person-- (i) who has extended credit to the consumer; or (ii) to whom the consumer has applied or is applying for an extension of credit; (2) 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-- (A) any consumer reporting agency; (B) any person-- (i) who has extended credit to the consumer; or (ii) to whom the consumer has applied or is applying for an extension of credit; (3) make or use any untrue or misleading representation of the services of the credit repair organization; or (4) 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. (b) 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.
SEC. 405. DISCLOSURES.(9) (a) Disclosure Required.--Any credit repair organization shall provide any consumer with the following written statement before any contract or agreement between the consumer and the credit repair organization is executed: 'Consumer Credit File Rights Under State and Federal Law
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'. (b) Separate Statement Requirement.--The written statement required under this section shall be provided as a document which is separate from any written contract or other agreement between the credit repair organization and the consumer or any other written material provided to the consumer. (c) Retention of Compliance Records.-- (1) In general.--The credit repair organization shall maintain a copy of the statement signed by the consumer acknowledging receipt of the statement. (2) Maintenance for 2 years.--The copy of any consumer's statement shall be maintained in the organization's files for 2 years after the date on which the statement is signed by the consumer. SEC. 406. CREDIT REPAIR ORGANIZATIONS CONTRACTS.(10) (a) Written Contracts Required.--No services may be provided by any credit repair organization for any consumer-- (1) unless a written and dated contract (for the purchase of such services) which meets the requirements of subsection (b) has been signed by the consumer; or (2) before the end of the 3-business-day period beginning on the date the contract is signed. (b) Terms and Conditions of Contract.--No contract referred to in subsection (a) meets the requirements of this subsection unless such contract includes (in writing)-- (1) the terms and conditions of payment, including the total amount of all payments to be made by the consumer to the credit repair organization or to any other person; (2) a full and detailed description of the services to be performed by the credit repair organization for the consumer,
including-- (A) all guarantees of performance; and (B) an estimate of-- (i) the date by which the performance of the services (to be performed by the credit repair organization or any other person) will be complete; or (ii) the length of the period necessary to perform such services; (3) the credit repair organization's name and principal business address; and (4) a conspicuous statement in bold face type, in immediate proximity to the space reserved for the consumer's signature on the contract, which reads as follows: 'You may cancel this contract without penalty or obligation at any time before midnight of the 3rd business day after the date on which you signed the contract. See the attached notice of cancellation form for an explanation of this right.'. SEC. 407. RIGHT TO CANCEL CONTRACT.(11) (a) In General. -- Any consumer may cancel any contract with any credit repair organization without penalty or obligation by notifying the credit repair organization of the consumer's intention to do so at any time before midnight of the 3rd business day which begins after the date on which the contract or agreement between the consumer and the credit repair organization is executed or would, but for this subsection, become enforceable against the parties. (b) Cancellation Form and Other Information. -- Each contract shall be accompanied by a form, in duplicate, which has the heading 'Notice of Cancellation' and contains in bold face type the following statement: 'You may cancel this contract, without any penalty or obligation, at any time before midnight of the 3rd day which begins after the date the contract is signed by you. To cancel this contract, mail or deliver a signed, dated copy of this cancellation notice, or any other written notice to (name of credit repair organization) at (address of credit repair organization) before midnight on (date) I hereby cancel this transaction, ( date ) ( purchaser's signature ).'. (c) Consumer Copy of Contract Required.--Any consumer who enters into any contract with any credit repair organization shall be given, by the organization-- (1) a copy of the completed contract and the disclosure statement required under section 405; and (2) a copy of any other document the credit repair organization requires the consumer to sign, at the time the contract or the other document is signed. SEC. 408. NONCOMPLIANCE WITH THIS TITLE.(12) (a) Consumer Waivers Invalid.--Any waiver by any consumer of any protection provided by or any right of the consumer under this title-- (1) shall be treated as void; and (2) may not be enforced by any Federal or State court or any other person. (b) Attempt To Obtain Waiver.--Any attempt by any person to obtain a waiver from any consumer of any protection provided by or any right of the consumer under this title shall be treated as a violation of this title. (c) Contracts Not in Compliance.--Any contract for services which does not comply with the applicable provisions of this title-- (1) shall be treated as void; and
(2) may not be enforced by any Federal or State court or any other person. SEC. 409. CIVIL LIABILITY.(13) (a) Liability Established.--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. SEC. 410. ADMINISTRATIVE ENFORCEMENT.(14) (a) In General.--Compliance with the requirements imposed under this title with respect to credit repair organizations shall be enforced under the Federal Trade Commission Act by the Federal Trade Commission. (b) Violations of This Title Treated as Violations of Federal Trade Commission Act.-- (1) In general. -- For the purpose of the exercise by the Federal Trade Commission of the Commission's functions and powers under the Federal Trade Commission Act, any violation of any requirement or prohibition imposed under this title with respect to credit repair organizations shall constitute an unfair or deceptive act or practice in commerce in violation of section 5(a) of the Federal Trade Commission Act. (2) Enforcement authority under other law. -- All functions and powers of the Federal Trade Commission under the Federal Trade Commission Act shall be available to the Commission to enforce compliance with this title by any person subject to enforcement by the Federal Trade Commission pursuant to this subsection, including the power to enforce the provisions of this title in the same manner as if the violation had been a violation of any Federal Trade Commission trade regulation rule, without regard to whether the credit repair organization-- (A) is engaged in commerce; or (B) meets any other jurisdictional tests in the Federal Trade Commission Act. (c) State Action for Violations.-- (1) Authority of states. -- In addition to such other remedies as are provided under State law, whenever the chief law enforcement officer of a State, or an official or agency designated by a State, has reason to believe that any person has violated or is violating this title, the State--
(A) may bring an action to enjoin such violation; (B) may bring an action on behalf of its residents to recover damages for which the person is liable to such residents under section 409 as a result of the violation; and (C) in the case of any successful action under subparagraph (A) or (B), shall be awarded the costs of the action and reasonable attorney fees as determined by the court. (2) Rights of commission.-- (A) Notice to commission.--The State shall serve prior written notice of any civil action under paragraph (1) upon the Federal Trade Commission and provide the Commission with a copy of its complaint, except in any case where such prior notice is not feasible, in which case the State shall serve such notice immediately upon instituting such action. (B) Intervention.--The Commission shall have the right-- (i) to intervene in any action referred to in subparagraph (A); (ii) upon so intervening, to be heard on all matters arising in the action; and (iii) to file petitions for appeal. (3) Investigatory powers. -- For purposes of bringing any action under this subsection, nothing in this subsection shall prevent the chief law enforcement officer, or an official or agency designated by a State, from exercising the powers conferred on the chief law enforcement officer or such official by the laws of such State to conduct investigations or to administer oaths or affirmations or to compel the attendance of witnesses or the production of documentary and other evidence. (4) Limitation. -- Whenever the Federal Trade Commission has instituted a civil action for violation of this title, no State may, during the pendency of such action, bring an action under this section against any defendant named in the complaint of the Commission for any violation of this title that is alleged in that complaint. SEC. 411. STATUTE OF LIMITATIONS.(15) Any action to enforce any liability under this title may be brought before the later of-- (1) the end of the 5-year period beginning on the date of the occurrence of the violation involved; or (2) in any case in which any credit repair organization has materially and willfully misrepresented any information which-- (A) the credit repair organization is required, by any provision of this title, to disclose to any consumer; and (B) is material to the establishment of the credit repair organization's liability to the consumer under this title, the end of the 5-year period beginning on the date of the discovery by the consumer of the misrepresentation. SEC. 412. RELATION TO STATE LAW.(16) This title shall not annul, alter, affect, or exempt any person subject to the provisions of this title from complying with any law of any State except to the extent that such law is inconsistent with any provision of this title, and then only to the extent of the inconsistency. SEC. 413. EFFECTIVE DATE.(17) This title shall apply after the end of the 6-month period beginning on the date of the enactment of the Credit Repair Organizations Act,(18) except with respect to contracts entered into by a credit repair organization before the end of such period.''.
Before you try to fix your own credit you’ll find it necessary to understand the four laws that are your key tools against unfair creditors and collection companies. That way, if any of the credit bureaus or creditors start getting cute, you can set them straight fast. You'll be able to cite a few Code Sections of the various laws, and those bullies are going to fall in line. There is nothing that strikes terror in the hearts of creditors more than a consumer who knows their rights and isn’t afraid to use the law to get justice.
The good news is you don’t have to go to law school to get a handle on these regulations. Here’s the skinny on the four most important consumer credit protection laws and how to use them: Fair Credit Reporting Act This is also known as FCRA and it’s the granddaddy of consumer credit protection law. This is a federal law that controls how information about your credit is gathered, shared and used. The law is administered by the Federal Trade Commission. As you know, credit bureaus (aka credit reporting agencies or CRAs) gather all the financial information about you they can. The first part of FCRA forces these credit bureaus to provide you with one free credit report annually and to verify the accuracy of any item you report as an error to them. That last bit is the important part. If an item is inaccurate, the bureau has to remove it. If they later discover that the error has been corrected they can’t put the negative item back in your report. But if they do that they first have to tell you 5 days before they reinstate the item. Next, the Fair Credit Reporting Act mandates how long the CRA can keep negative items on your report. Typically, most blemishes have to come off your credit report in 7 years. The exception is bankruptcy which stays on your record for 10 years. FCRA also spells out the rules of conduct for anyone reporting to the credit reporting agencies. That includes creditors, collection agencies, courts and employers (past and present). These people can only report information that is complete and accurate. And they must investigate any item that you dispute. If they find a mistake, they have to fix it within 30 days. If they still believe their report is accurate, they have to tell you why within 30 days. Last, they are obligated to let you know when they report a negative item to a credit bureau but they have 30 days from the time they report the negative to let you know about it. If a party who reviews your credit decides to not do business with you or to charge you more because of the information they see in your report, they have to tell you which reporting agency issued the report. This way, you have the opportunity to make sure the report is accurate. What happens if creditors or credit bureaus don’t comply? Here’s the good news. If you find a discrepancy and the other side willfully ignores your request to correct the error, you can recover the greater of your damages or $2500. On top of that, you may be able to get punitive damages plus your legal fees and other costs. To get this relief however you will have to sue the offender and you’ll have to do so within 5 years of the date you uncover the error. If you don’t have the patience to sue someone, don’t worry. There is a much faster and cheaper way to get this issue resolved. I’ll cover that here. Fair Credit Billing Act This is also a federal law and it’s really part of the Truth In Lending Act. The goal here is to safeguard you against unfair billing and to lay out the way errors are supposed to be corrected. You can use this law to get satisfaction from unfair business practices:
How To Use The Fair Credit Billing Act This law gives you as the consumer a lot of fire power but you have to play by the rules. First, if you find a mistake, send a snail-mail letter to the “billing inquires” address of the creditor – not the address you send payments to. Once the error appears on your statement, you have to make sure the creditor gets your dispute letter within sixty days of the statement date. For these reasons, I suggest you use an overnight mail delivery service or registered mail. Sometimes creditors allow you to dispute claims via online websites but if you go that route you may waive your protection under this law. Find out before you submit your dispute. And no matter what anyone says, you aren’t protected under the law if you phone in your gripe. The creditor has to acknowledge they received your letter within 30 days and they have 90 days to either make the correction or tell you why they aren’t going to. If you get turned down, you have the right to request all the creditor’s documentation proving there is no error. Hidden Gem – This law has a hidden provision you can use with your credit card company. If you make the transaction in your home state or within 100 miles of your home address and the dollar amount exceeds $50, you can dispute the quality of what you received with the credit card company. As long as you make a good faith effort to work things out with the vendor, the credit card company will likely refund the amount you spent once you return the product or stop using the service. Enforcement Again, the Federal Trade Commission administers this law so you can take up your grievance with them. Of course, you can also file a lawsuit. If you do, you might recover your actual damages plus twice the mistaken finance charges plus your attorney fees and other costs assuming you win the suit. Truth in Lending Act Also another federal law, the Truth in Lending Act (TILA) is also known as the Consumer Credit Protection Act or “Regulation Z”. It covers disclosures about terms and costs. It also makes sure that there is uniformity in how creditors calculate finance charges. This enables you to shop for the lowest rate. But this law does not determine how much a creditor can charge. The only mandates that they disclose their charges in a way you can easily understand without getting an economics degree. Have you ever seen the term “Annual Percentage Rate” (APR)? Based on this law, the government forces creditors to calculate APR uniformly and disclose it to you. The government passed this law in order to stop vendors from advertising misleading interest rates. Fair Debt Collection Practices Act As the name implies, this law protects consumers (not business) from debt collectors’ nasty behavior. It also provides a way for you to get your hands on the information you need in order to dispute a charge. The definition of who is and who is not a “debt collector” changes over time. At first, this law only applied to companies that buy debt at a discount and then try to collect it. But over time the definition has broadened. Now attorneys involved in debt collection fall under this law and that means you have more protection against more collectors. What conduct isn’t allowed The law stops debt collectors from engaging in “abusive and deceptive” behavior when they try to collect debt. That includes:
Not only does the law prohibit the debt collector from doing certain things, the act also requires that the collector act professionally. Specifically, here is what the law requires of them:
Enforcement The Consumer Financial Protection Bureau and FTC enforces this law but you can also file a lawsuit privately. If you win your suit you might receive damages, fees and costs. The good news is, you don’t have to prove your damages. If you win your case, the debt collector will have to pay you up to $1000 plus reasonable attorney fees. Just be careful. If the court finds that you filed case furiously and you lose, you may have to pay the debt collectors legal fees. Summary These four laws (and others) were passed in order to protect you and your good name. Even if you technically owe the money, if the creditor doesn’t play by the rules, you can use these laws to get them off your back. Take a little time to review how these laws work in your favor and let your creditor know that you know. If that doesn’t get them to back off, you may want to use the assistance of experienced professionals that know exactly what to do in these situations.
The Fair Credit Reporting Act (FCRA) is a federal law that regulates how consumer reporting agencies use your information. Enacted in 1970 and substantially amended in the late 1990s and again in 2003, the FCRA, among other things,restricts who has access to your sensitive credit information and how that information can be used. Back to Top
The FCRA is a complex piece of legislation and contains numerous provisions not discussed on this page. Below are several important features of how the FCRA is designed to help consumers (for the complete text, visit the Federal Trade Commission). The FCRA protects you by requiring consumer reporting agencies:
Disclose your credit file to you upon request. Consumer reporting agencies must provide you the information in your file if you request it and provide the agency with proper identification. See "How do I get a free report? " for more information.
Limit access to your information. A consumer reporting agency may not provide your credit report to any party that lacks a permissible purpose, such as the evaluation of an application for a loan, credit, service, or employment. Permissible purposes also include several business and legal uses. See "Who can access my Equifax credit file?" for more information.
Get your consent before providing your information to an employer. A consumer reporting agency may not provide your credit information to an employer or potential employer unless you first give that employer written permission to request your credit report.
Investigate disputed information. If you tell a consumer reporting agency that your file contains inaccurate information, the agency must promptly investigate the matter with the source that provided the information. If the investigation fails to resolve the dispute, you may add a statement to your credit file explaining the matter. For more information, see Correcting Errors in Your Report.
Correct or delete inaccurate information. A consumer reporting agency must correct or, as the case may be, delete from your credit file the information that is found to be inaccurate or can no longer be verified. The consumer reporting agency is not required to remove accurate data from your file unless it is outdated.
Delete outdated information. In general, negative information that is more than 7 years old (10 years for bankruptcies) must be removed from your file.
Remove your name from marketing lists upon request. Consumer reporting agencies can provide lists of consumer names and addresses whose credit information matches the requirements of creditors and insurers for making firm offers of credit or insurance to the consumers on the list. However, you can request that the three nationwide consumer reporting agencies not share your information with creditors and insurers for these purposes by calling 1-888-5-OPT OUT.
Disclose your credit score to you upon request. You have the right to request a credit score about you. For Equifax, the cost of your credit score disclosure is $7.95. In some mortgage transactions, you will get credit score information without charge by contacting the person making or arranging your loan for further information. To request your credit score from Equifax, please contact: 1-877-SCORE-11
Equifax Information Services LLC
PO Box 105252
Atlanta, GA 30348
Add identity theft and active duty alerts. Identity theft victims may place fraud alerts and active duty military personnel serving away from their regular duty station may place "active duty" alerts to help prevent identity theft. See "What is a Fraud Alert?" for more information.
Remedying the Effects of Identity Theft. If you are, or believe that you are, the victim of identity theft, you have specific rights under the FCRA. These rights will help you deal with the effects of identity theft. Click here to view a brief summary of the rights designed to help you recover from identity theft.
PUBLIC LAW 93-495 - October 28, 1974
Truth in Lending Act, Amendments
Fair Credit Billing Act 15 USC 1601 July 9, 1986
PUBLIC LAW 93-495 - October 28, 1974
THE FAIR CREDIT BILLING ACT Public Law 93-495 93rd Congress - H.R. 11221 TITLE III - FAIR CREDIT BILLING
§ 301. Short Title This title may be cited as the "Fair Credit Billing Act".
The last sentence of section 102 of the Truth in Lending Act (15 U.S.C. 1601) is amended by striking out the period and inserting in lieu thereof a comma and the following: "and to protect the consumer against inaccurate and unfair credit billing and credit card practices."
The first sentence of section 103(f) of the Truth in Lending Act (15 U.S.C. 1602(f)) is amended to read as follows: "The term 'creditor'refers only to creditors who regularly extend, or arrange for the extension of, credit which is payable by agreement in more than four installments or for which the payment of a finance charge is or may be required, whether in connection with loans, sales of property or services, or otherwise. For the purposes of the requirements imposed under Chapter 4 and sections 127(a) (6), 127(a) (7), 127(a) (8), 127(b) (1), 127(b) (2), 127(b) (3), 127(b) (9), and 127(b) (11) of Chapter 2 of this Title, the term 'creditor' shall also include card issuers whether or not the amount due is payable by agreement in more than four installments or the payment of a finance charge is or may be required, and the Board shall, by regulation, apply these requirements to such card issuers, to the extent appropriate, even though the requirements are by their terms applicable only to
Fair Credit Billing Act. 15 USC 1601 note.
Post, p. 1512. Infra, 15 USC 1637. creditors offering open end credit Plans. 1 Post, pp. 1512, 1515.
§ 304. Disclosure of Fair Credit Billing Rights
(a) Section 127(a) of the Truth in Lending Act (15 U.S.C. 1637(a)) is amended by adding at the end thereof a new paragraph as follows: "(8) A statement, in a form prescribed by regulations of the Board of the protection provided by sections 161 and 170 to an obligor and the creditor's responsibilities under sections 162 and 170. With respect to each of two billing cycles per year, at semiannual intervals, the creditor shall transmit such statement to each obligor to whom the creditor is required to transmit a statement pursuant to sections 127(b) for such billing cycle." (b) Section 127(c) of such Act (15 U.S.C. 1637(c)) is amended to read: "(c) In the case of any existing account under an open end consumer credit plan having an outstanding balance of more than $1 at or after the close of the creditor's first full billing cycle under the plan after the effective date of subsection (a) or any amendments thereto, the items described in subsec- tion (a), to the extent applicable and not previously dis- closed, shall be disclosed in a notice mailed or delivered to the obligor not later than the time of mailing the next state- ment required by subsection (b)."
Section 127(b) of the Truth in Lending Act (15 U.S.C. 1637(b)) is amended by adding at the end thereof a new paragraph as follows: "(11) The address to be used by the creditor for the purpose of receiving billing inquiries from the obligor."
The Truth in Lending Act (15 U.S.C. 1601-1665) is amended by adding at the end thereof a new chapter as follows:
"Chapter 4-CREDIT BILLING
Sec. 161. Correction of billing errors 162. Regulation of credit reports. 163. Length of billing period. 164. Prompt crediting of payments. 165. Crediting excess payments. 166. Prompt notification of returns. 167. Use of cash discounts. 168. Prohibition of tie-in services. 169. Prohibition of offsets. 170. Rights of credit card customers. 171. Relation to State laws.
§ 161. Correction of billing errors
"(a) If a creditor, within sixty days after having transmitted to an obligor a statement of the obligor's account in connec- tion with an extension of consumer credit, receives at the address disclosed under section 127(b) (11) a written notice (other than notice on a payment stub or other payment medium supplied by the creditor if the creditor so stipulates with the disclosure required under section 127(a) (8)) from the obligor in which the obligor- "(1) sets forth or otherwise enables the creditor to identify the name and account number (if any) of the obligor, "(2) indicates the obligor's belief that the statement contains a billing error and the amount of such billing error, and "(3) sets forth the reasons for the obligor's belief (to the extent applicable) that the statement contains a billing error, the creditor shall, unless the obligor has, after giving such written notice and before the expiration of the time limits herein specified, agreed that the statement was correct- "(A) not later than thirty days after the receipt of the notice, send a written acknowledgment thereof to the obligor, unless the action required in subparagraph (B) is taken within such thirty-day period, and
15 USC 1666. Ante, p. 1511. Ante, p. 1511.
"(B) not later than two complete billing cycles of the 3
creditor (in no event later than ninety days) after the receipt of the notice and prior to taking any action to collect the amount, or any part thereof, indicated by the obligor under paragraph (2) either- "(i) make appropriate corrections in the account of the obligor, including the crediting of any finance charges on amounts erroneously billed, and transmit to the obligor a notification of such corrections and the creditor's explanation of any cage in the amount indicated by the obligor under paragraph (2) and, if any such change is made and the obligor so requests, copies of documentary evidence of the obligor's indebtedness; or "(ii) send a written explanation or clarification to the obligor, after having conducted an investigation, setting forth to the extent applicable the reasons why the creditor believes the account of the obligor was correctly shown in the statement and, upon request of the obligor, provide copies of documentary evidence of the obligor's indebtedness. In the case of a billing error where the obligor alleges that the creditor's billing statement reflects goods not delivered to the obligor or his designee in accor- dance with the agreement made at the time of the transaction, a creditor may not construe such amount to be correctly shown unless he deter- mines that such goods were actually delivered, mailed, or otherwise sent to the obligor and provides the obligor with a statement of such determination. After complying with the provisions of this subsection with respect to an alleged billing error, a creditor has no further responsibility under this section if the obligor continues to make substantially the same allegation with respect to such error. "(b) For the purpose of this section, a 'billing error'consists of any of the following: "(1) A reflection on a statement of an extension of credit
which was not made to the obligor or, if made, was not in the amount reflected on such statement. "(2) A reflection on a statement of an extension of credit for which the obligor requests additional clarification includ- ing documentary evidence thereof. " (3) A reflection on a statement of goods or services not accepted by the obligor or his designee or not delivered to the obligor or his designee in accordance with the agreement made at the time of a transaction. " (4) The creditor's failure to reflect properly on a statement a payment made by the obligor or a credit issued to the obligor. "(5) A computation error or similar error of an accounting nature of the creditor on a statement. "(6) Any other error described in regulations of the Board. "(c) For the purposes of this section, 'action to collect the amount, or any part thereof, indicated by an obligor under paragraph (2)' does not include the sending of statements of account to the obligor following written notice from the obligor as specified under subsection (a) if- " (1) the obligor's account is not restricted or closed be- cause of the failure of the obligor to pay the amount indicated under paragraph (2) of subsection (a) and " (2) the creditor indicates the payment of such amount is not required pending the creditor's compliance with this section. Nothing in this section shall be construed to prohibit any action by a creditor to collect any amount which has not been indi- cated by the obligor to contain a billing error. "(d) Pursuant to regulations of the Board, a creditor operat- ing an open end consumer credit plan may not, prior to the sending of the written explanation or clarification required under paragraph (B) (ii), restrict or close an account with respect to which the obligor has indicated pursuant to subsec- tion (a) that he believes such account to contain a billing error solely because of the obligor's failure to pay the amount indicated to be in error. Nothing in this subsection shall 5
Noncompli- ance. 15 USC 1666a.
be deemed to prohibit a creditor from applying against the credit limit on the obligor's account the amount indicated to be in error. "(e) Any creditor who fails to comply with the requirements of this section or section 162 forfeits any right to collect from the obligor the amount indicated by the obligor under para- graph (2) of subsection (a) of this section, and any finance charges thereon, except that the amount required to be for- feited under this subsection may not exceed $50.
"(a) After receiving a notice from an obligor as provided in section 161(a), a creditor or his agent may not directly or indirectly threaten to report to any person adversely on the obligor's credit rating or credit standing because of the obligor's failure to pay the amount indicated by the obligor under section 161(a) (2) and such amount may not be reported as delinquent to any third party until the creditor has met the requirements of section 161 and has allowed the obligor the same number of days (not less than ten) thereafter to make payment as is provided under the credit agreement with the obligor for the payment of undisputed amounts. "(b) If a creditor receives a further written notice from an obligor that an amount is still in dispute within the time allowed for payment under subsection (a) of this section, a creditor may not report to any third party that the amount of the obligor is delinquent because the obligor has failed to pay an amount which he has indicated under section 161(a) (2), unless the creditor also reports that the amount is in dispute and, at the same time, notifies the obligor of the name and address of each party to whom the creditor is reporting information concerning the delinquency. "(c) A creditor shall report any subsequent resolution of any delinquencies reported pursuant to subsection (b) to the parties to whom such delinquencies were initially reported.
"(a) If an open end consumer credit plan provides a time period within which an obligor may repay any portion of the credit extended without incurring an additional finance charge, such additional finance charge may not be imposed with respect to such portion of the credit extended for the billing cycle of which such period is a part unless a statement which includes the amount upon which the finance charge for that period is based was mailed at least fourteen days prior to the date specified in the statement by which payment must be made in order to avoid imposition of that finance charge. "(b) Subsection (a) does not apply in any case where a creditor has been prevented, delayed, or hindered in making timely mailing or delivery of such periodic statement within the time period specified in such subsection because of an act of God, war, natural disaster, strike, or other excusable or justifiable cause, as determined under regulations of the Board.
"Payments received from an obligor under an open end consumer credit plan by the creditor shall be posted promptly to the obligor's account as specified in regulations of the Board. Such regulations shall prevent a finance charge from being imposed on any obligor if the creditor has received the obligor's payment in readily identifiable form in the amount, manner, location, and time indicated by the creditor to avoid the imposition thereof.
"Whenever an obligor transmits funds to a creditor in excess of the total balance due on an open end consumer credit account, the creditor shall promptly (1) upon request of the obligor refund the amount of the overpayment, or (2) credit such amount to the obligor's account.
15 USC 1666b. 15 USC 1666c. 15 USC 1666d.
15 USC 1666e. 15 USC 1666f. 15 USC 1666g. 15 USC 1666h. 8
"With respect to any sales transaction where a credit card has been used to obtain credit, where the seller is a person other than the card issuer, and where the seller accepts or allows a return of the goods or forgiveness of a debit for services which were the subject of such sale, the seller shall promptly transmit to the credit card issuer, a credit statement with respect thereto and the credit card issuer shall credit the account of the obligor for the amount of the transaction.
"(a) With respect to credit card which may be used for extensions of credit in sales transactions in which the seller is a person other than the card issuer, the card issuer may not, by contract or otherwise, prohibit any such seller from offering a discount to a cardholder to induce the cardholder to pay by cash, check, or similar means rather than use a credit card. "(b) With respect to any sales transaction, any discount not in excess of 5 per centum offered by the seller for the purpose of inducing payment by cash, check, or other means not involving the use of a credit card shall not constitute a finance charge as determined under section 106, if such discount is offered to all prospective buyers and its avail- ability is disclosed to all prospective buyers clearly and conspicuously in accordance with regulations of the Board.
"Notwithstanding any agreement to the contrary, a card issuer may not require a seller, as a condition to participating in a credit card plan, to open an account with or procure any other service from the card issuer or its subsidiary or agent.
"(a) A card issuer may not take any action to offset a cardholder's indebtedness arising in connection with a con- sumer credit transaction under the relevant credit card plan against funds of the cardholder held on deposit with the card
issuer unless- "(1) such action was previously authorized in writing by the cardholder in accordance with a credit plan whereby the cardholder agrees periodically to pay debts incurred in his open end credit account by permitting the card issuer periodically to deduct all or a portion of such debt from the cardholder's deposit account, and "(2) such action with respect to any outstanding disputed amount not be taken by the card issuer upon request of the cardholder. In the case of any credit card account in existence on the effective date of this section, the previous written authorization referred to in clause (1) shall not be required until the date (after such effective date) when such account is renewed, but in no case later than one year after such effective date. Such written authorization shall be deemed to exist if the card issuer has previously notified the cardholder that the use of his credit card account will subject any funds which the card issuer holds in deposit accounts of such cardholder to offset against any amounts due and payable on his credit card account which have not been paid in accordance with the terms of the agree- ment between the card issuer and the cardholder. "(b) This section does not alter or affect the right under State law of a card issuer to attach or otherwise levy upon funds of a cardholder held on deposit with the card issuer if that remedy is constitutionally available to creditors generally.
"(a) Subject to the limitation contained in subsection (b), a card issuer who has issued a credit card to a cardholder pursuant to an open end consumer credit plan shall be subject to all claims (other than tort claims) and defenses arising out of any transaction in which the credit card is used as a method of payment or extension of credit if (1) the obligor has made a good faith attempt to obtain satisfactory resolution of a dis- agreement or problem relative to the transaction from the
15 USC 1666i.
person honoring the credit card; (2) the amount of the initial 9
transaction exceeds $50; and (3) the place where the initial transaction occurred was in the same State as the mailing address previously provided by the cardholder or was within 100 miles from such address, except that the limitations set forth in clauses (2) and (3) with respect to an obligor's right to assert claims and defenses against a card issuer shall not be applicable to any transaction in which the person honoring the credit card (A) is the same person as the card issuer, (B) is controlled by the card issuer, (C) is under direct or indirect common control with the card issuer, (D) is a franchised dealer in the card issuer's products or services, or (E) has obtained the order for such transaction through a mail solicitation made by or participated in by the card issuer in which the cardholder is solicited to enter into such transaction by using the credit card issued by the card issuer. "(b) The amount of claims or defenses asserted by the cardholder may not exceed the amount of credit outstanding with respect to such transaction at the time the cardholder first notifies the card issuer or the person honoring the credit card of such claim or defense. For the purpose of determining the amount of credit outstanding in the preceding sentence, pay- ments and credits to the cardholder's account are deemed to have been applied, in the order indicated, to the payment of: (1) late charges in the order of their entry to the account; (2) finance charges in order of their entry to the account; and (3) debits to the account other than those set forth above, in the order in which each debit entry to the account was made.
15 USC 1666j. 10
"(a) This chapter does not annul, alter, or affect, or exempt any person subject to the provisions of this chapter from complying with, the laws of any State with respect to credit billing practices, except to the extent that those laws are inconsistent with any provision of this chapter, and then only to the extent of the inconsistency. The Board is autho- rized to determine whether such inconsistencies exist. The Board may not determine that any State law is inconsistent with
any provision of this chapter if the Board determines that such law gives greater protection to the consumer. "(b) The Board shall by regulation exempt from the requirements of this chapter any class of credit transactions within any State if it determines that under the law of that State that class of transactions is subject to requirements substantially similar to those imposed under this chapter or that such law gives greater protection to the consumer, and that there is adequate provision for enforcement."
(a) The table of chapter of the Truth in Lending Act is amended by adding immediately under item 3 the following: "4. CREDIT BILLING . . . . . . . . . . . . . . . . . . . . . . . . . 161" (b) Section 111(d) of such Act (15 U.S.C. 1610(d)) is amended by striking out "and 130" and inserting in lieu thereof a comma and the following: "130, and 166" (c) Section 121(a) of such Act (15 U.S.C. 1631(a)) is amended- (1) by striking out "and upon whom a finance charge is or may be imposed"; and (2) by inserting "or chapter 4" immediately after "this chapter". (d) Section 121(b) of such Act (15 U.S.C. 1631(b)) is amended by inserting "or chapter 4" immediately after "this chapter". (e) Section 122(a) of such Act (15 U.S.C. 1632(a)) is amended by inserting "or chapter 4" immediately after "this chapter". (f) Section 122(b) of such Act (15 U.S.C. 1632(b)) is amended by inserting "or chapter 4" immediately after "this chapter".
This title takes effect upon the expiration of one year after the date of its enactment.
15 USC 1666 note. 11
PUBLIC LAW 93-495 - October 28, 1974 13
PUBLIC LAW 93-495 - October 28, 1974
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