Attorney Ron SykstusThe Credit Repair Organizations Act (CROA) is a federal consumer law found among the other various federal consumer protection laws and is located at 15 U.S.C . 1679.  This law was enacted by Congress in 1996.    The reason Congress enacted this statute was in response to the trend of credit repair companies using deceitful practices to take advantage of debtors looking to improve their credit scores. The purpose of the statute is to ensure that the public is provided with information necessary to make an informed decision regarding the purchase of credit repair services and to protect the public from unfair deceptive advertising and business practices.

A credit repair organization is defined as any person who uses any instrumentality of interstate commerce or the mail to sell, provide,  perform or represent that such person can or will sell or provide or  perform any services for the express or implied purpose of improving any consumer’s credit record, credit history or credit rating or providing advice or assistance to a consumer with regard to any activity service like this in return for the payment of money or other valuable consideration.  This definition of credit repair organizations does not include nonprofit organizations.    The act is not limited to just credit repair organizations but also to any person who makes any statement or counsel and advice to any consumer which is untrue or misleading with respect to any consumer’s credit worthiness, credit standing or credit capacity to any credit reporting agency or to any person who extends credit to the consumer.

Of utmost importance in the act, it provides that no credit report or organization may charge or receive any money or other valuable consideration for the performance of any service which it’s CRO has agreed to perform before such services are fully performed. What that means is that a credit repair organization cannot take any money up front and no advance payment is allowed before the actual service is performed.  Additionally, this law provides that a written contract is required and that the terms and conditions of payment including total amount of all payments, detailed description of services to be performed, estimate or date by which the services will be completed the credit report organizations will named principal business address in the notice of right to cancel involved near the signature line. Contracts which failed to comply with this act are void and unenforceable.  Additionally, the consumer must be given a copy of all documents at the time of signing and any waiver of any protection or any right provided under CROA is void and unenforceable and any attempt to obtain a waiver is a violation of the act as well.

Any consumer who is damaged by a violation of this act is entitled to actual damages and punitive damages along with attorney’s fees and costs.  There is a five-year statute of limitations from the date of the violation.

CROA  is a strong law and it endeavors to protect consumers from paying up front money for any type of credit repair or credit report improvement. Consumers should be aware of their rights under this act and under the Fair Credit Reporting Act (FCRA).

If you believe that your rights have been violated under CROA, please feel free to contact our office to meet with one of our licensed attorneys to explore your options.

Please see our previous blogs on the FCRA:
How Can I Dispute Incorrect or Erroneous Information on My Credit Report?

How Can You Get Free Credit Reports?


Ron Sykstus
Written by Ron Sykstus

Ron Sykstus is a Managing Partner of several of the Bond & Botes Law Offices throughout Alabama. He holds a Bachelor of Science from the University of Arizona, Tucson, and a Juris Doctorate from the Northern Illinois University College of Law. Ron has served in numerous positions throughout the U.S. Army and now utilizes his expertise in the areas of VA issues, security clearances, military law, and bankruptcy to assist his clients when they need it most. Read his full bio here.

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