The Federal government first enacted Consumer Protection laws in 1972. That law, known as the Consumer Credit Protection Act (CCPA), requires full disclosure of conditions and terms used in financial transactions and charges. CCPA has expanded to become an umbrella legislation that covers the Truth in Lending Act (TILA) of 1968 and the Fair Credit Reporting Act (FCRA) of 1978. None of these acts delved into the area of credit repair companies. Each State and the District of Columbia has their own statutes for consumer protection and amend these laws as new Federal legislations are enacted.
In the 1980s, the Commonwealth of Pennsylvania passed into law The Credit Services Act. This became the foundation for the September 30, 1996 Federal enactment of The Credit Repair Organizations Act (CROA), an amendment of the CCPA. The CROA set in place the performance practices credit repair companies, also called credit service organizations, must adhere to and which practices are prohibited. The Act defines protection options for consumers who use credit repair companies. While there is no official legislation known as the Credit Service Organizations Amendment Act, the CROA is often referred to by this name. The basis for the law is to oversee and manage responsible business practices of credit service organizations and is updated as significant changes arise regarding consumer protection. One example is a 2005 amendment that addressed Reverse Mortgage organizations.
<strong>CONSUMER CREDIT PROTECTION ACT</strong>
The CCPA is covered by several titles within 15 United States Code (USC), sub-section 1601. The CCPA addresses the use of credit accounts and defines the limits on creditors’ abilities to garnish wages. Title I of the CCPA relates to the TILA and requires all transaction terms be fully explained to potential consumers. Title VI of the CCPA relates to the FCRA and requires all consumer credit information reporting be managed with fair and equitable treatment to all consumers.
<strong>CREDIT REPAIR ORGANIZATIONS ACT</strong>
The CROA is covered within 15 USC, Title IV, sub-section 1679 of the CCPA. The purpose of the CROA is to protect consumers from devious, deceptive and illegal advertisements, promises, and business practices by credit repair organizations. The CROA established the governing laws that credit service organizations must obey to remain in business and what results the contracted credit repair services must be able to achieve. There are fines, fees, and license revocations associated with credit repair companies that do not comply with the law.