What is the Credit Repair Organizations Act?
The Credit Repair Organizations Act (CROA) is a federal law that protects consumers from deceptive and unfair practices of credit repair companies. It was created in 1996 to protect consumers from companies that promised to improve their credit reports or scores, but instead charged upfront fees and made false or misleading claims about their services. In North Carolina, the CROA requires credit repair companies to provide customers with a written contract that clearly outlines the services to be performed and the fees to be charged. The customer must also receive a disclosure form with information about their rights and obligations when entering into a contract with a credit repair company. Furthermore, the company cannot collect any fees until after services are rendered. The CROA also requires the credit repair company to provide the customer with a three-day “cooling-off” period to cancel the contract. The company must also inform the customer if it decides to stop performing services. In addition, the CROA prohibits companies from making false or misleading claims about their services and requires them to truthfully inform the customer about their legal rights. The law also requires the credit repair company to have a bond of at least $10,000 and have a valid business license. Ultimately, the CROA is designed to protect consumers from unscrupulous credit repair companies and ensures that credit repair services are available to consumers at reasonable fees.
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