A newly introduced bipartisan bill in Congress targets credit repair organizations (CROs) that exploit consumers by charging high fees without delivering on promises to improve credit scores.
By strengthening CROs regulations, the bill aims to ensure transparency and accountability in the industry, according to its sponsors, U.S. Reps. Young Kim (R-CA) and Sarah McBride (D-DE).
The Ending Scam Credit Repair Act, H.R. 306, which they introduced on Jan. 9, would ensure consumers that CROs only receive payment after delivering documented improvements to credit reports while increasing civil penalties for violations.
“Fraudulent CROs should not get away with scamming hard-working Americans seeking to improve their scores and unlock their American dream,” Kim said. “The Ending Scam Credit Repair Act helps consumers and hikes penalties for scammers.”
McBride pointed out that CROs exploit legal loopholes to target cash-strapped consumers who have low credit scores by charging large upfront fees based on false hopes of debt reduction.
“Our bipartisan bill eliminates those loopholes that have allowed predatory practices to flourish by banning upfront fees, improving transparency, and enhancing consumer protections,” she added. “I am grateful to Congresswoman Kim for working across the aisle with me on common-sense solutions to deliver for our constituents.”
The bill has been referred for consideration to the U.S. House Financial Services Committee.