Article
30. Credit Repair Services Act
Chapter 66. Commerce and Business
Article
30. Credit Repair Services Act (Refs & Annos)
§ 66-220. Short title
and purpose
(a) This Article shall be known and may be cited as the Credit
Repair Services Act.
(b) The General Assembly recognizes that many of its citizens rely
heavily on favorable credit ratings in order to obtain goods and services, and
that some of these citizens are unable to secure credit because of unfavorable
credit histories. The General Assembly further recognizes that consumers
sometimes need assistance in obtaining credit or in correcting erroneous credit
histories, and that this need has given rise to the establishment of businesses
organized for the purpose of providing credit repair services. The purpose of
this Article is to ensure that businesses offering credit repair services are
providing these services in a manner that is fair and reasonable to the consuming public.
§ 66-221. Definitions
As used in this Article, unless the context requires otherwise:
(1) "Credit repair business" means any person who, with respect to the extension of credit by others, sells, provides, or performs, or represents that such person can or will sell, provide, or perform any of the following services in return for the payment of money or other valuable consideration:
a. Improving, repairing, or correcting a consumer's credit record,
history, or rating;
b. Obtaining revolving charge card credit or retail installment
credit;
c. Providing advice or assistance to a consumer with regard to
either sub-subdivision a. or b. above.
(2)
"Credit repair business" does not include:
a. Any bank, credit union, or savings institution organized and
chartered under the laws of this State or the
b. Any nonprofit organization exempt from taxation under section 501(c)(3)of the Internal Revenue Code (26 U.S.C. § 501(c)(3));
c. Any person licensed as a real estate broker or real estate
salesman by this State where the person is acting within the course and scope
of the license;
d. Any person licensed to practice law in this State where the
person renders services within the course and scope of that person's practice
as a lawyer;
e. Any broker-dealer registered with the Securities and Exchange
Commission or the Commodities Future Trading Commission where the broker-dealer
is acting within the course and scope of that regulation; or
f. Any consumer reporting agency as defined in the Federal Fair
Credit Reporting Act.
(3)
"Consumer" means any individual who is solicited to purchase or who
purchases the services of a credit repair business.
§ 66-222. Bond or trust
account required
Every credit repair business shall obtain a surety bond issued by
a surety company authorized to do business in this State, or shall establish a
trust account with a licensed and insured bank or savings institution located
in the State of North Carolina. The amount of the bond or trust account shall
be ten thousand dollars ($10,000). The bond or trust account shall be in favor
of the State of
§ 66-223. Prohibited
acts
A credit repair business and its salespersons, agents, and
representatives, and independent contractors who sell or attempt to sell the
services of a credit repair business, shall not do any of the following:
(1) Charge or receive any money or other valuable consideration prior to full and complete performance of the services that the credit repair business has agreed to perform for or on behalf of the consumer;
(2) Charge or receive any money or other valuable consideration
solely for referral of the consumer to a retail seller or to any other credit
grantor who will or may extend credit to the consumer, if the credit that is or
will be extended to the consumer is upon substantially the same terms as those
available to the general public;
(3) Represent that it can directly or indirectly arrange for the
removal of derogatory credit information from the consumer's credit report or
otherwise improve the consumer's credit report or credit standing, provided,
this shall not prevent truthful, unexaggerated statements about the consumer's
rights under existing law regarding his credit history or
regarding access to his credit file;
(4) Make, or counsel or advise any consumer to make, any statement
that is untrue or misleading and which is known or which by the exercise of
reasonable care should be known, to be untrue or misleading, to a consumer
reporting agency or to any person who has extended credit to a consumer or to
whom a consumer is applying for an extension of credit, with respect to a
consumer's creditworthiness, credit standing, or credit capacity; or
(5) Make or use any untrue or misleading representations in the
offer or sale of the services of a credit repair business or engage, directly
or indirectly, in any act, practice, or course of business which operates or
would operate as a fraud or deception upon any person in connection with the
offer or sale of the services of a credit repair business.
§ 66-224. Contractual
requirements
(a) Effective October 1, 1991, every contract between a consumer
and a credit repair business for the purchase of the services of the credit
repair business shall be in writing, dated, signed by the consumer, and shall
include the following:
(1) A conspicuous statement in size equal to at least 10-point boldface type, in immediate proximity to the space reserved for the signature of the consumer, as follows: "YOU, THE BUYER, MAY CANCEL THIS CONTRACT AT ANY TIME PRIOR TO MIDNIGHT OF THE THIRD BUSINESS DAY AFTER THE DATE OF THE TRANSACTION. SEE THE ATTACHED NOTICE OF CANCELLATION FORM FOR AN EXPLANATION OF THIS RIGHT."
(2) The terms and conditions of payment, including the total of
all payments to be made by the consumer, whether to the credit repair business
or to some other person;
(3) A complete and detailed description of the services to be
performed and the results to be achieved by the credit repair business for or
on behalf of the consumer, including all guarantees and all promises of full or
partial refunds and a list of the adverse information
appearing on the consumer's credit report that the credit repair business
expects to have modified;
(4) The principal business address of the credit repair business
and the name and address of its agent in this State authorized to receive
service of process; and
(5) One of the following statements, as appropriate, in
substantially the following form:
a. "As required by
b. "As required by
(b) The contract shall be accompanied by a completed form in
duplicate, captioned "NOTICE OF CANCELLATION", which shall be
attached to the contract and easily detachable, and which
shall contain in at least 10-point boldface type the following statement:
"NOTICE OF CANCELLATION
YOU MAY CANCEL THIS CONTRACT, WITHOUT ANY PENALTY OR OBLIGATION, AT ANY TIME PRIOR TO MIDNIGHT OF THE THIRD BUSINESS DAY AFTER THE DATE THE CONTRACT IS SIGNED.
IF YOU CANCEL, ANY PAYMENT MADE BY YOU UNDER THIS CONTRACT WILL BE
RETURNED WITHIN 10 DAYS FOLLOWING RECEIPT BY THE SELLER OF YOUR CANCELLATION
NOTICE.
TO CANCEL THIS CONTRACT, MAIL OR DELIVER A SIGNED AND DATED COPY
OF THIS CANCELLATION NOTICE, OR ANY OTHER WRITTEN NOTICE, TO
....................(Name of Seller)
AT...............(Address of Seller)
.......(Place of Business) NOT LATER
THAN MIDNIGHT................(Date).
I HEREBY CANCEL THIS TRANSACTION.
.............................. ..............................
Date Buyer's Signature".
A copy of the fully completed contract and all other documents the
credit repair business requires the consumer to sign shall be given by the
credit repair business to the consumer at the time they are signed.
§ 66-225. Violations
(a) If a credit repair business uses any untrue or misleading
statements in connection with a credit repair contract, fails to fully comply
with the requirements of this Article, or fails to comply with the terms of the
contract or any obligation arising therefrom, then, upon written notice to the
credit repair business, the consumer may void the contract, and shall be
entitled to receive from the credit repair business all sums paid to the credit
repair business, and recover any additional damages including reasonable
attorneys' fees.
(b) Any waiver by a consumer of any of the provisions of this
Article shall be deemed void and unenforceable by a credit repair business.
(c) Upon complaint of any person that a credit repair business has
violated the provisions of this Article, the superior court shall have
jurisdiction to enjoin that defendant from further such
violations.
(d) In a proceeding involving this Article, the burden of proving
an exemption or an exception from the definition of a credit repair business
shall be borne by the person claiming the exemption or exception.
(e) The remedies provided herein shall be in addition to any other
remedies provided for by law or in equity.
(f) The violation of any provision of this Article shall
constitute an unfair trade practice under G.S. 75-1.1 and
the violation of any provision of this Article shall constitute a Class I felony.
§ 66-226. Scope
The provisions of this Article
shall apply in all circumstances in which any party to the contract conducted
any contractual activity, including but not limited to solicitation,
discussion, negotiation, offer, acceptance, signing, or performance in this
State.
§§ 66-227 to 66-229.
Reserved
§§ 66-227 to 66-229.
Reserved
Case Law
I identified no significant cases construing this statute.