Definition
The Credit Repair Organizations Act (CROA) is a federal law passed in 1996 that prohibits the use of misleading statements and other fraudulent acts by credit repair organizations.
Analysis
CROA actually serves two important purposes that are listed in the Act:
- to ensure that prospective buyers of the services of credit repair organizations are provided with the information necessary to make an informed decision regarding the purchase of such services
- to protect the public from unfair or deceptive advertising and business practices by credit repair organizations
This act is the most important regulation that pertains to credit repair organizations. It limits the claims that credit repair organizations can make about its services. Additionally, it forbids such organizations from charging fees before the services have been fully rendered.
The Federal Trade Commission (FTC) is the watchdog for violations of the CROA. Consumers who feel that they have been unfairly treated by a credit repair organization should consider filing a formal complaint with the FTC.
