U.S. Sens. Chris Coons (D-DE) and Lisa Murkowski (R-AK) introduced legislation recently to address fraudulent credit repair scams that exploit consumers with false promises and high fees.
The legislation, Ending Scam Credit Repair Act, would strengthen consumer protections by prohibiting Credit Repair Organization (CROs) from collecting any payments until six months after they have provided proof that the consumer’s credit score has improved. The bill would also require CROs to register with a state, while increasing civil penalties for violations and requiring stronger disclosures to consumers. Additionally, the legislation would prohibit “Jamming,” a tactic used by CROs that floods financial institutions with duplicative disputes that can prevent legitimate credit report issues from being addressed.
“Americans are already stretched thin. Improving a low credit score is hard enough without having to navigate predatory companies seeking to lie to you and rip you off,” Coons said. “The Ending Scam Credit Repair Act would protect Americans trying to restore their financial foundation while making it easier for honest businesses to succeed.”
Companion legislation was introduced in the House by U.S. Reps. Sarah McBride (D-DE) and Young Kim (R-CA).
“The credit repair industry is full of many bad actors who prey on Delawareans with low credit scores, offering quick fixes and delivering nothing but empty promises,” McBride said. “Our bipartisan, now bicameral, Ending Scam Credit Repair Act would stop these scammers from taking advantage of consumers when they are most vulnerable while increasing transparency and accountability. I’m grateful to Senators Coons and Murkowski for introducing the Senate companion bill, and I look forward to working across our respective chambers to get this commonsense solution over the finish line and protect consumers from these harmful practices.”
The Ending Scam Credit Repair is endorsed by the National Consumer Law Center, American Financial Services Association, National Association of Consumer Bankruptcy Attorneys, American Bankers Association, National Association of Consumer Advocates, Consumer Bankers Association, Delaware Community Legal Aid Society, Delaware Community Reinvestment Action Council, American Fintech Council, Consumer Action, and the AARP.
“AARP is committed to ensuring older Americans are financially secure in retirement so they may retire with dignity. Unfortunately, older Americans who have errors or negative marks on their credit report are often locked out of access to credit as they try to address these issues on their credit reports. Making matters worse, credit repair organizations (CROs) may claim to help them erase or fix items on people’s credit reports but instead exploit customers with the promise of a quick credit fix… AARP is pleased to support [this] legislation, which would introduce new rules to shield consumers from misleading and fraudulent practices,” the AARP said in a statement.