Why Does The Credit Repair Organizations Act (CROA) Matter?

Congress passed the Credit Repair Organizations Act (CROA) in 1996 to protect you from deceptive and abusive practices by credit repair companies. These firms often promised quick fixes for bad credit but delivered little value while charging high fees.

CROA safeguards you, the consumer, by regulating companies that offer to improve your credit reports or scores for profit. It targets for-profit organizations, not nonprofits or your own efforts to fix credit.

• You have the right to cancel your Credit Repair Organizations Act (CROA) contract within three days without penalty or obligation.
• You have the right to receive a written contract detailing all services, your obligations, total costs, and results timelines.
• You have the right to pay only after credit repair companies fully complete promised services (no upfront fees).

CROA stops credit repair companies from charging you upfront fees by prohibiting them from receiving any payment until they perform the promised services in your contract. You gain a separate three-day right to cancel the contract for any reason, with full refund of fees already paid during that window. CROA enforces this to protect you from scams.

• No fees before services start: Companies cannot demand payment in advance.
• Services must be completed first: You pay only after they deliver on specifics like disputing errors.
• Full refund on three-day cancel: If you rescind, you get all money back promptly.
• Violations lead to FTC action: Companies face fines up to $11,181 per violation.

Spot CROA violations in real offers and ads

You spot Credit Repair Organizations Act (CROA) violations in real offers and ads by scanning for guarantees of results, upfront payment demands, and missing disclosures. Credit repair companies break CROA when they promise "We'll delete all bankruptcies in 30 days" or charge "$500 upfront before we start." These claims violate bans on false statements and advance fees. Watch ads on social media or emails too, where hype often hides violations.

• **Guaranteed results**: Phrases like "100% removal of collections" or "Perfect score in weeks" (CROA bans specific outcome promises).
• **Upfront fees**: "Pay $1,000 now for disputes" (illegal until services complete).
• **No cancellation notice**: Missing "3-day full refund right" in fine print.
• **False urgency**: "Sign today or lose your spot" without contract details.
• **Unrealistic timelines**: "Fix credit overnight" ignores verification needs.

Report these red flags to the FTC immediately. You'll protect yourself and help enforce CROA (see next section for steps).

You enforce the Credit Repair Organizations Act (CROA) by filing a complaint with the FTC when credit repair companies violate your rights. This holds them accountable and protects other consumers.

1. Gather your evidence. Collect contracts, emails, ads, payment receipts, and notes on promises made.
2. Try resolving with the company first. Send a written demand letter detailing violations and requesting a fix (keep a copy).
3. File online with the FTC. Visit FTC's complaint portal, select "Credit Repair," describe facts, and upload evidence.
4. Submit to your state Attorney General. Find contact at naag.org/find-my-ag for local enforcement.
5. Report to CFPB if needed. Use consumerfinance.gov/complaint for broader credit issues.
6. Consult a lawyer for lawsuits. CROA allows you to sue for damages, attorney fees, and up to $1,000 per violation in federal court.

civil penalties up to $12,388 per violation. You benefit as the FTC enforces this through lawsuits seeking fines, injunctions, and consumer restitution.

You can sue violating companies privately. Courts award your actual damages plus statutory damages up to $1,000 per violation, along with attorney fees and costs.

CROA violations also trigger state attorney general actions and potential business shutdowns. This strong enforcement keeps companies accountable to you.

CROA supplements your state law rights without preempting them. You gain federal protections on top of any stricter state rules against credit repair scams. States like California enforce tougher upfront fee bans, so you benefit from both layers.

CROA complements your FCRA rights without overriding them. You keep FCRA's dispute and accuracy tools, while CROA adds safeguards like three-day cancellations and contract disclosures specific to credit repair companies.

CROA doesn't protect you when you repair your own credit, as it targets third‑party organizations only. Banks, credit unions, and other financial institutions escape CROA coverage when they fix errors on your reports. Nonprofits providing credit counseling fall outside CROA rules. Attorneys offering credit repair as part of legal services, if allowed by state law, avoid CROA restrictions. Creditors disputing their own negative items on your report aren't bound by CROA. Free services or basic price-before-performance deals sidestep CROA entirely.

FCRA rights for disputing inaccuracies yourself.