What a Credit Repair Company Must Give You by Law
The checklist
1. A written disclosure of your rights, before the contract
The company must give you a separate written statement titled "Consumer Credit File Rights Under State and Federal Law." It explains that you can dispute inaccurate information yourself for free, that accurate negative information can't be removed, and that you can sue a company that violates the law. You must receive it before you sign the contract.
2. A written contract that includes:
- The total amount you'll pay and the terms of payment
- A full and detailed description of the services
- An estimate of how long the services will take
- The company's name and principal business address
- A clear statement of your right to cancel within three business days
3. A three-business-day right to cancel
You can cancel without penalty for any reason within three business days of signing. The company must give you a cancellation form you can use.
4. No payment before the work is done
CROA bars a credit repair company from charging or receiving money for any service before that service is fully performed. "Setup fees," "first-work fees" and "retainers" collected upfront are red flags.
5. No false promises
The company can't make false or misleading statements about what it can do, and it can't advise you to make false statements to a credit bureau or creditor.
Why you should never accept a handwritten receipt
This isn't spelled out in CROA, but it's a rule we teach every certified consultant: a legitimate company gives you a printed or electronic receipt. It should show the company's legal name and address, the date, the amount, and which service you paid for.
A handwritten note on a scrap of paper:
- Can't prove what you paid for or whether the work was finished first
- Often leaves off the business's legal name, so you don't know who to hold responsible
- Is a common sign of a cash-only operation that won't be there when you need a refund
If someone hands you a handwritten receipt, ask for a proper one. If they can't provide it, treat that as a warning.
Keep a file
Keep your contract, disclosure, cancellation form, receipts, and every letter sent on your behalf. If anything goes wrong, those documents are your proof.
Next step
Before you hire anyone, check their standing. Use CCA's Consultant Standing Check | Find a CCA-certified consultant
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Common Questions
Can a company charge a monthly fee?
Many charge monthly for work completed in the prior month. What they can't do is charge for work that hasn't been performed yet.
Does CROA apply to nonprofits?
CROA excludes certain tax-exempt nonprofit organizations, but state laws may still apply. Ask any organization what laws it follows.
What if the company broke these rules?
A contract that doesn't comply with CROA can be treated as void, and you may be able to recover what you paid. Talk to a consumer attorney and file complaints with the FTC, the CFPB and your state attorney general.
Sources
- Credit Repair Organizations Act, 15 U.S.C. 1679b (no advance payment)
- 15 U.S.C. 1679c (required disclosure statement)
- 15 U.S.C. 1679d (contract requirements)
- 15 U.S.C. 1679e (three-day cancellation)