A bipartisan group of lawmakers has introduced legislation to crack down on deceptive practices used by fraudulent credit repair organizations.
The Ending Scam Credit Repair Act, or ESCRA, by Sens. Chris Coons (D-Del.) and Lisa Murkowski (R-Alaska) would strengthen protections for consumers by prohibiting credit repair organizations from collecting payment until six months after they have provided proof that a consumer’s credit score has improved, according to the sponsors.
Among other things, the bill would prohibit “jamming,” a tactic in which financial institutions are flooded with duplicative disputes to prevent legitimate credit report issues from being addressed and require stronger disclosures to consumers.
A companion bill (H.R. 306) was introduced in the House by Reps. Sarah McBride (D-Del.) and Young Kim (R-Calif.).
In a statement in support of the legislation, Kirsten Sutton, EVP of congressional relations and legislative affairs at the American Bankers Association, noted that banks help customers build credit through transparent products, financial education and long-term support, “and this important legislation reinforces those responsible pathways by targeting deceptive credit repair schemes.”
“ABA has consistently supported efforts to strengthen consumer confidence in the credit system, and we applaud Senators Coons and Murkowski, and Representatives McBride and Kim, for their leadership in working to ensure consumers are protected,” Sutton said.
Earlier this month, the ABA Foundation joined with other nonprofits to launch the Rebuild Right: Safe Credit Recovery and Responsible Debt Solutions campaign, a new national initiative designed to empower consumers to rebuild credit responsibly and avoid harmful financial pitfalls. The campaign will equip both consumers and bank volunteers with reliable information, practical tools and expert insights, including advice on how to spot deceptive credit repair organizations.
