A bill has been introduced in the House of Representatives that aims to combat fraudulent practices in the credit repair industry. The bill, called the Ending Scam Credit Repair Act (ESCRA) was introduced by Rep. Wiley Nickel [D-N.C.] and Rep. Young Kim [R-Calif.].
The big picture: The bill, H.R. 9991, targets CROs that exploit consumers by charging high fees without delivering on promises to improve credit scores, aiming to ensure transparency and accountability in the industry. It would amend the Credit Repair Organizations Act.
Between the lines: The bill has garnered support from both industry groups and consumer advocates, suggesting a broad consensus on the need for reform in the credit repair sector.
What’s in the bill:
- Ban on upfront fees: CROs would no longer be able to request or receive payment from consumers until they provide documented improvements in credit reports.
- State registration requirement: CROs will be required to register with the state, adding an additional layer of oversight.
- Transparency on disputes: The bill prevents CROs from flooding financial institutions with multiple, identical disputes, a tactic often used to overwhelm credit reporting agencies.
What they said: “Too many hard-working Americans have been scammed by bad actors in the credit repair industry,” said Rep. Nickel in a statement. “Our bill puts a stop to these deceptive practices by banning upfront fees and requiring state registration.”
What’s next: Given that the election is less than three weeks away, it’s unlikely that this bill will make any significant progress in Congress.
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