ESCRA Act

Bill: 119-hr-306
Sponsor: full_name: Rep. McBride, Sarah [D-DE-At Large]
Introduced: 2025-01-09
Policy area: Finance and Financial Sector
Latest action: action_date: 2025-01-09
text: Referred to the House Committee on Financial Services.

Summaries:
action_date: 2025-01-09
action_desc: Introduced in House
text: <p><strong>Ending Scam Credit Repair Act or the ESCRA Act</strong></p><p>This bill revises the Credit Repair Organizations Act and creates additional requirements for credit repair organizations (CROs).</p><p>Under current law, it is illegal for a person (including a&nbsp;CRO) to make false or misleading statements regarding a consumer’s creditworthiness or standing to a consumer reporting agency or to a consumer credit provider. The bill additionally prohibits making such statements to the Consumer Financial Protection Bureau, the Federal Trade Commission, or law enforcement. To be subject to this prohibition, the bill also requires such statements to be made knowingly.</p><p>The bill also revises CRO obligations to consumers. A CRO is prohibited from charging a consumer for a service (e.g., getting inaccurate information removed from a credit report) until the CRO provides proof of success not less than six months after providing the service. The bill also requires&nbsp;additional disclosures to consumers, requires the retention of any recorded telephone calls, and increases the time records must be retained from two to five years. In addition, consumers must be given copies of all communications sent on their behalf.</p><p>Under the bill, all persons must be licensed by a state to act as a&nbsp;CRO. The bill also restricts a CRO’s ability to submit multiple credit disputes regarding the same information.</p><p>The bill also sets a minimum liability amount for damages of $500 for each violation of the Credit Repair Organizations Act.</p>

tv_txt: I 119th CONGRESS 1st Session H. R. 306 IN THE HOUSE OF REPRESENTATIVES January 9, 2025 Ms. McBride (for herself and Mrs. Kim ) introduced the following bill; which was referred to the Committee on Financial Services A BILL To amend the Credit Repair Organizations Act to add additional protections against harmful practices within the credit repair organization industry, and for other purposes.

1. Short title This Act may be cited as the Ending Scam Credit Repair Act or the ESCRA Act . 2. Credit Repair Organization definition Section 403(3) of the Credit Repair Organizations Act ( 15 U.S.C. 1679a(3) )— (1) in subparagraph (A), by inserting (not including anything received in return for representing a consumer in preparation for or during litigation) after consideration ; and (2) in subparagraph (B)— (A) by inserting an entity or individual that is, in good faith and not for the purpose of evading this title after include ; (B) in clause (ii), by striking or ; (C) in clause (iii), by striking the period and inserting ; or ; and (D) by adding at the end the following: (iv) any attorney that provides legal services rendered or to be rendered to a consumer in contemplation of or in connection with a case filed, or to be filed within 12 months, under title 11 or title 15, United States Code, by an attorney within the same law firm. . 3. Prohibited practices (a) Untrue or misleading statements (1) In general Section 404(a)(1) of the Credit Repair Organizations Act ( 15 U.S.C. 1679b(a)(1) ) is amended— (A) by inserting knowingly before make any statement, or ; (B) in subparagraph (A), by striking or ; and (C) by adding at the end the following: (C) the Bureau of Consumer Financial Protection directly or through an online portal established to receive complaints, disputes, or reports of fraud; (D) the Federal Trade Commission directly or through an online portal established to receive complaints, disputes, or reports of fraud; or (E) any Federal, State, local, or Tribal law enforcement agency, directly or through an online portal established to receive complaints, disputes, or reports of fraud; . (2) Finding The Congress finds that it is already unlawful to make materially false, fictitious, or fraudulent statements or representations to the Bureau of Consumer Financial Protection. (b) Additional prohibited practices Section 404 of the Credit Repair Organizations Act ( 15 U.S.C. 1679b ) is amended— (1) in subsection (a)(2)— (A) in subparagraph (B)(ii), by inserting or after credit; ; and (B) by adding at the end the following: (C) the Bureau of Consumer Financial Protection or the Federal Trade Commission; ; (2) by amending subsection (b) to read as follows: (b) Payment in Advance (1) In general No credit repair organization may request or receive payment of any fee or consideration from a consumer for services represented to remove derogatory or inaccurate information from, or improve, such consumer's credit history, credit record, or credit rating, or services related to such a representation, until the credit repair organization has provided such consumer with documentation in the form of a consumer report, issued not less than 6 months after such service, from a consumer reporting agency that demonstrates that such representation has been achieved. (2) Rule of construction Nothing in this subsection shall be construed to alter the permissible purposes of furnishing a consumer report described in section 604 of the Fair Credit Reporting Act. ; and (3) by adding at the end the following: (c) Jamming A credit repair organization may not submit multiple disputes described in section 611 of the Fair Credit Reporting Act of the same information unless all of the following are true: (1) The consumer reporting agency or data furnisher has had the time permitted under the Fair Credit Reporting Act to conduct a reasonable investigation on the prior dispute. (2) The consumer reporting agency or data furnisher has returned the results of its investigation to the consumer with respect to such dispute, unless there are material changes to the information submitted with the dispute. (3) The credit repair organization includes with the resubmitted dispute a specific description of what information is inaccurate. . 4. Disclosures Section 405 of the Credit Repair Organizations Act ( 15 U.S.C. 1679c ) is amended— (1) in subsection (a)— (A) by striking due to fraud. and inserting due to fraud. Credit repair organizations do not provide any services that you cannot do yourself for free. ; (B) by striking regulates and inserting and the Bureau of Consumer Financial Protection regulate ; and (C) by inserting The Bureau of Consumer Financial Protection 1700 G St. NW, Washington, DC, 20552 Tel: 855–411–2372 TTY/TTD: 855–729–2372 after 20580 ; and (2) in subsection (c)— (A) in paragraph (1), by striking the period at the end and inserting and any recordings of telephone communications with the consumer. ; and (B) in paragraph (2)— (i) by striking 2 in the heading and inserting 5 ; (ii) by inserting and any telephone recordings with the consumer after consumer’s statement ; (iii) by striking 2 and inserting 5 ; and (iv) by striking statement is signed by the consumer and inserting statement or the telephone recordings are created . 5. Consumer contract required (a) In general Section 407(c) of the Credit Repair Organizations Act ( 15 U.S.C. 1679e(c) ) is amended by adding at the end the following: (3) copies of all communications sent on behalf of the consumer, at the time the communication is sent. . (b) Technical amendment Section 407(c) of the Credit Repair Organizations Act ( 15 U.S.C. 1679e(c) ) is amended— (1) by striking at the time the contract or the other document is signed. ; (2) in paragraph (1), by striking ; and inserting , at the time the contract or the other document is signed; ; and (3) in paragraph (2), by adding at the end at the time the contract or the other document is signed; and . 6. Noncompliance Section 408 of the Credit Repair Organizations Act ( 15 U.S.C. 1679f ) is amended by adding at the end following: (d) Legal services within credit repair organizations A credit repair organization shall be subject to this title regardless of whether the organization is, or employs, an attorney who also provides legal services to a consumer, except if such attorney is an attorney described in section 403(3)(B)(iv). (e) Credit repair organizations without a State license On or after January 1, 2026, no person may act as a credit repair organization unless such person is licensed by a State. . 7. Credit repair organization communications with furnishers of information (a) In general The Credit Repair Organizations Act ( 15 U.S.C. 1679 et seq. ) is amended by inserting after section 408 the following new section: 408A. Credit repair organization communications with furnishers of information Disputes submitted to a person who furnishes information to a consumer reporting agency by or on behalf of a credit repair organization shall meet the following requirements: (1) If sent by mail, the dispute shall be transmitted by first class mail and list on the envelope the— (A) name of the credit repair organization; and (B) State license number of the credit repair organization, if applicable. (2) The dispute shall list the— (A) name of the credit repair organization; (B) State license number of the credit repair organization, if applicable; and (C) name of the consumer on whose behalf the dispute is submitted. (3) In the case of any additional communication after an initial dispute, the additional communication shall clearly and conspicuously identify any material changes to the information provided in the initial written dispute and include the information described in paragraphs (1) and (2). (4) In the case where a credit repair organization sells or otherwise provides an online or paper blank dispute form to be completed and filed by the consumer, such form must contain the— (A) name and address of such credit repair organization; and (B) State license number of such credit repair organization, if applicable. (5) In the case where the person responds to a dispute submitted by a credit repair organization seeking clarifying information, verifying if the customer has actually engaged with the credit repair organization, or denying the accuracy of the underlying claim, the credit repair organization shall respond in writing within 15 business days. (6) In the case where the credit repair organization is an attorney, the attorney shall certify that any communication is consistent with any information or documentation provided by the consumer, confirmed based upon methods or means proven to be historically reliable and accurate. (7) A credit repair organization, when sending a dispute, shall disclose the fact that it is a credit repair organization by placing the following disclosure on the dispute letter: This communication was submitted or prepared on behalf of the consumer by a credit repair organization, as defined in section 403 of the Credit Repair Organizations Act ( 15 U.S.C. 1679a ). . (b) Clerical amendment The table of contents for the Credit Repair Organizations Act is amended by inserting after the item relating to section 408 the following: 408A. Credit repair organization communications with furnishers of information. . 8. Civil liability Section 409(a)(1) of the Credit Repair Organizations Act ( 15 U.S.C. 1679g(a)(1) ) is amended— (1) by striking Actual damages and inserting Damages ; (2) in subparagraph (A), by striking or ; (3) in subparagraph (B), by striking the period at the end and inserting ; or ; and (4) by adding at the end the following: (C) the amount of $500 in damages for each violation of this title. .