South OC Times

U.S. Representatives Young Kim from California and Wiley Nickel from North Carolina have introduced a new bill aimed at addressing fraudulent practices within the credit repair industry. The proposed legislation, known as the Ending Scam Credit Repair Act (ESCRA), seeks to curb exploitative behaviors by credit repair organizations (CROs) that charge high fees without fulfilling their promises of improving credit scores.

The bipartisan bill focuses on ensuring that CROs only receive payment after documented improvements are made to consumers' credit reports. It also proposes increased civil penalties for violations in an effort to enhance transparency and accountability within the industry.

Congresswoman Young Kim emphasized the importance of maintaining integrity in credit scoring, stating, “Credit scores can be the key to unlocking the American dream. Fraudulent CROs should not get away with scamming hardworking Americans seeking to improve their scores.” She added that the act is designed to create accountability and transparency for consumers while increasing penalties for those who deceive them.

Congressman Wiley Nickel echoed these sentiments, highlighting how many Americans have been victims of deceptive practices in this sector. “Our bill puts a stop to these deceptive practices by banning upfront fees, improving dispute transparency, and requiring state registration,” he said.

The legislation has garnered support from financial-services companies and consumer advocacy groups. Bill Himpler, President and CEO of the American Financial Services Association (AFSA), acknowledged the need for congressional action, noting that CROs often charge substantial monthly fees with minimal positive outcomes for consumers.

Andrew Pizor, senior attorney at the National Consumer Law Center (NCLC), praised the amendment as a measure to protect consumers from scams and ensure they are charged only when results are achieved.

Edward Boltz from the National Association of Consumer Bankruptcy Attorneys (NACBA) supported the bill's potential impact on eliminating misleading schemes while clarifying that honest attorneys can still offer legitimate assistance with credit report errors.