Credit Consultants Association's New York's Credit Laws:
This state currently has legislation pertaining to credit repair. These laws apply to the state that the consumer is located in, not the credit repair company. Keep this in mind if you plan on doing business out of state.
**DISCLAIMER - The following information is not legal advice. We strive to keep all information updated to the best of our knowledge but regulations are subject to change frequently, without our immediate awareness. The information on this page may not be 100% accurate. We strongly urge you to do your own research and to consult with a legal professional or your local legislators before making any decisions.
Department Overseeing Entity
Some states require registration with the overseeing entity. There may also be municipal or county regulations regarding business licensing or permits depending on your location. Consult with your local government to determine licensing requirements.
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Surety bonds are required in certain states in order to prove that the credit repair organization is operating in an ethical manner. The amount and requirements vary from state to state.
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All credit repair organizations are subject to both state and federal regulations. According to federal law, the Credit Repair Organizations Act (CROA) requires all CRO's to provide contracts outlining the terms and descriptions of their services to their customers. Each individual state has different requirements regarding the language of those contracts.
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Anyone performing credit repair services and receiving compensation for said services is subject to the regulations in this act. However, occupations in related professions may also perform duties that may be considered credit repair. Usually, as long as someone is behaving within the course and scope of their profession and not collecting compensation, they are considered exempt from these regulations. However, these exemption requirements vary from state to state. See N.Y. Gen. Bus. 28-BB § 458-b
§ 458-a. Legislative findings and declarations; purposes. The
legislature finds and declares:
1. The ability to obtain and use credit has become of great importance
to consumers, who have a vital interest in establishing and maintaining
their credit worthiness and credit standing. As a result, consumers who
have experienced credit problems may seek assistance from credit
services businesses which offer to improve the credit standing of such
consumers.
Certain advertising and business practices of some companies engaged
in the business of credit services have worked a financial hardship upon
the people of this state, often those who are of limited economic means
and inexperienced in credit matters.
2. The purposes of this article are to provide prospective consumers
of services of credit services companies with the information necessary
to make an informed decision regarding the purchase of those services
and to protect the public from unfair or deceptive advertising and
business practices.
§ 458-b. Definitions. As used in this article:
1. "Credit services business" means any person who sells, provides, or
performs, or represents that he can or will sell, provide or perform, a
service for the express or implied purpose of improving a consumer's
credit record, history, or rating or providing advice or assistance to a
consumer with regard to the consumer's credit record history or rating
in return for the payment of a fee.
"Credit services business" does not include any of the following:
(a) Any charitable corporation as defined in paragraph (a) of section
one hundred two (Definitions) of the not-for-profit corporation law
licensed pursuant to article twelve-c of the banking law.
(b) Any person admitted to practice law in this state where the person
renders services within the course and scope of his or her practice as
an attorney at law.
2. "Consumer" means any natural person who is solicited to purchase or
who purchases the services of a credit services business.
3. "Person" includes an individual, corporation, partnership, joint
venture, or any business entity.
4. The terms "consumer reporting agency", "consumer report",
"investigative consumer report", "file", and "adverse information" shall
have the meanings ascribed to each by section three hundred eighty-a of
this chapter.
§ 458-c. Information statement; procedure. Prior to the execution of a contract between a consumer and a credit services business, the credit services business shall provide the consumer an information statement in writing, on a separate sheet, containing the information required by section four hundred fifty-eight-d of this chapter. The consumer shall acknowledge receipt of such information statement by placing his signature on the face thereof. The credit services business shall maintain on file or microfilm for a period of two years from the date of such acknowledgement an exact copy of such information statement.
§ 458-d. Information statement; contents. The information statement
shall be printed in at least ten point type and shall include the
following:
"RIGHT TO REVIEW YOUR FILE"
"The Federal Fair Credit Reporting Act gives you the right to know
what your credit file contains, and the consumer reporting agency must
provide someone to help you interpret the data. The New York Fair Credit
Reporting Act gives you the right to receive an actual copy of your
credit report. You will be required to identify yourself to the
consumer reporting agency and you may be charged a small fee. There is
no fee, however, if you have been turned down for credit, employment, or
insurance because of information contained in a report within the
preceding thirty days."
"INCORRECT INFORMATION"
"Consumer reporting agencies are required to follow reasonable
procedures to ensure that subscribing creditors report information
accurately. However, mistakes may occur.
When you notify the consumer reporting agency in writing that you
dispute the accuracy of information, it must reinvestigate and modify or
remove inaccurate data. The consumer reporting agency may not charge any
fee for this service. Any pertinent data you have concerning an error
should be given to the consumer reporting agency.
If reinvestigation does not resolve the dispute to your satisfaction,
you may enter a statement of one hundred words or less in your file,
explaining why you think the record is inaccurate.
The consumer reporting agency must include your statement about
disputed data -- or a coded version of it -- with any reports it issues
about you. New York law also provides that, at your request, the
consumer reporting agency must notify any person who has received a
report in the previous year that an error existed and furnish such
person with the corrected information."
"TIME LIMITS ON ADVERSE DATA"
"Most kinds of information in your file may be reported for a period
of seven years. If you have declared personal bankruptcy, however, that
fact may be reported for ten years.
After seven years or ten years, the information can't be disclosed by
a credit reporting agency unless you are being investigated for a credit
application of $50,000 or more, for an application to purchase life
insurance of $50,000 or more, or for employment at an annual salary of
$25,000 or more."
§ 458-e. Advance fees prohibited. It is hereby declared to be an unfair and deceptive trade practice and unlawful for a credit services business to receive or collect from a consumer any fee in advance of the performance of those services specified in the contract as required by section four hundred fifty-eight-f of this chapter.
§ 458-f. Contracts; requirements and contents. 1. Every contract
between a consumer and a credit services business shall be in writing,
shall be dated, shall contain the street address of the credit services
business and the consumer, and shall be signed by the consumer and
credit services business. Each contract shall contain the following:
(a) A complete and detailed statement of the services to be performed
and the results to be achieved by the credit services business for or on
behalf of the consumer, including a list of the adverse information
appearing on the consumer's credit report that will be modified, a
description of the precise nature of each modification, and the
estimated date by which each modification will occur. A copy of the
consumer's current credit report issued by a consumer credit reporting
agency shall be annexed to the contract with the adverse entries
proposed to be modified clearly marked.
(b) A statement in at least ten point type as follows:
"Under New York law no fee may be collected in advance of performance
of the services specified in this contract."
2. The contract shall be accompanied by a completed form in duplicate,
captioned "Notice of Cancellation," which shall be attached to the
contract and easily detachable, and which shall contain in at least ten
point type the following:
"Notice of Cancellation"
"You may cancel this contract, without any penalty or obligation,
within three days from the date the contract is signed.
"To cancel this contract, mail or deliver a signed and dated copy of
this cancellation notice, or any other written notice,
to____________________ at
(name of seller)
______________________________________________________________________
(address of seller) (Place of business)
not later than midnight____________________.
(date)
"I hereby cancel this transaction."
________________________________________________
(purchaser's signature)
________________________________________________
(date)
3. A copy of the fully completed contract and all other documents
shall be given to the buyer at the time the contract is signed.
§ 458-g. Contracts void and unenforceable. 1. Any contract for
services which does not comply with the applicable provisions of this
article shall be void and unenforceable as contrary to public policy.
2. Any waiver by a consumer of the provisions of this article shall be
deemed void and unenforceable by a credit services business as contrary
to public policy.
§ 458-h. Deceptive acts prohibited. It is hereby declared to be an
unfair and deceptive trade practice and unlawful for a credit services
company to:
1. Misrepresent directly or indirectly in its advertising, promotional
materials, sales presentation, or in any manner: the nature of the
services to be performed; the time within which services will be
performed; the ability to improve a consumer's credit report or credit
rating; the amount or type of credit a consumer can expect to receive as
a result of the performance of the services offered; the qualifications,
training or experience of its personnel.
2. Make or counsel or advise any consumer to make any statement which
is untrue or misleading and which is known, or which by the exercise of
reasonable care should be known, to be untrue or misleading, to a
consumer credit reporting agency or to any person who has extended
credit to a consumer or to whom a consumer is applying for an extension
of credit, with respect to a consumer's credit worthiness, credit
standing, or credit capacity.
3. Represent directly or indirectly in its advertising, promotional
materials, sales presentation, or in any manner that it can procure or
obtain a credit card for a consumer unless that credit services company
has authority to issue the credit card being advertised.
§ 458-i. Action for recovery of damages by consumer. Any consumer injured by a violation of this article or by the breach by the credit services business of a contract which has been entered into pursuant to section four hundred fifty-eight-f of this chapter may bring an action for recovery of damages. Judgment shall be entered in favor of a consumer in an amount not to exceed three times the actual damages, but in no case less than the amount paid by the buyer to the credit services business. The court may award reasonable attorney's fees to a prevailing plaintiff.
§ 458-j. Enforcement by attorney general. In addition to the other remedies provided, whenever there shall be a violation of this article, application may be made by the attorney general in the name of the people of the state of New York to a court or justice having jurisdiction by a special proceeding to issue an injunction, and upon notice to the defendant of not less than five days, to enjoin and restrain the continuance of such violations; and if it shall appear to the satisfaction of the court or justice that the defendant has, in fact, violated this article, an injunction may be issued by such court or justice, enjoining and restraining any further violation, without requiring proof that any person has, in fact, been injured or damaged thereby. In any such proceeding, the court may make allowances to the attorney general as provided in paragraph six of subdivision (a) of section eighty-three hundred three of the civil practice law and rules, and direct restitution. Whenever the court shall determine that a violation of this article has occurred, the court may impose a civil penalty of not more than one thousand dollars for each violation. In connection with any such proposed application, the attorney general is authorized to take proof and make a determination of the relevant facts and to issue subpoenas in accordance with the civil practice law and rules.
§ 458-k. Severability. If any provision of this article or if any application thereof to any person or circumstance is held invalid, the remainder of this article and the application of the provision to other persons and circumstances shall not be affected thereby.