THESE INVESTIGATIONS IN THE MUST EFFICIENT, EFFECTIVE, AND THANK YOU, MR. CHAIRMAN, I WOULD BE HAPPY TO ANSWER ANY QUESTIONS YOU MAY HAVE. - 5 STATEMENT OF HONORABLE CHALMERS P. WYLIE I believe that we are holding hearings today on a fin piece of consumer legislation. I want to commend Chairman Annunzio and his staff for the excellent work that they have done on this issue. I am pleased to have joined Chairman Annunzio as a co-sponsor of H.R. 458. H.R. 458 will solve a considerable problem in the market place. Credit repair organizations prey upon consumers promising to correct their credit histories and put them on sound financial footing. In reality, many of these credit repair organizations abuse the system offering their clients nothing more than the consumers could accomplish themselves or that they could accomplish with the help of local non-profit organizations which specialize in credit problems. Many credit repair organizations make false and misleading statements to consumers about their services and as a result, many consumers fall further into debt instead of improving their credit ratings. This bill establishes a system where these types of abuses will be prevented. I am a strong proponent of H.R. 458 and encourage my colleagues to support this bill. I look forward to the testimony we will hear today and I hope we can move this piece of legislation through Congress in an expeditious manner. Thank you. Mr. ANNUNZIO introduced the following bill; which was referred to the Committee on Banking, Finance and Urban Affairs 1 A BILL To prevent consumer abuse by credit repair organizations. Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 3 That title IV of the Consumer Credit Protection Act (15 4 U.S.C. 1601 et seq.) is amended to read as follows: 5 "TITLE IV-CREDIT REPAIR ORGANIZATIONS "Sec. "401. Short title. "402. Findings and purpose. "403. Definitions. "404. Prohibited practices by credit repair organizations. "405. Disclosures. "406. Credit repair organizations contracts. "407. Right to cancel contract. "408. Noncompliance with this title. "409. Civil liability. "410. Jurisdiction of courts: limitation of actions. "411. Administrative enforcement. "412. Relation to State law. 1 "§ 401. Short title 2 2 "This title may be cited as the 'Credit Repair Organiza 3 tions Act'. 4 "8 402. Findings and purpose 5 6 7 8 9 10 11 12 13 14 15 16 17 "(a) The Congress makes the following findings: offer to improve the credit standing of such consumers. “(2) Certain advertising and business practices of some companies engaged in the business of credit repair services have worked a financial hardship upon consumers, particularly those of limited economic means and who are inexperienced in credit matters. "(b) The purposes of this title are to provide prospective 18 buyers of the services of credit repair organizations with the 19 information necessary to make an informed decision regard20 ing the purchase of those services, and to protect the public 21 from unfair or deceptive advertising and business practices by 22 credit repair organizations. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 3 "(a) the term 'person' means any individual, part nership, corporation, trust, estate, cooperative, associa tion, or other entity; "(b) the term 'consumer' means an individual; "(c) the adjective 'consumer', used with reference to a credit transaction, characterizes the transaction as one in which the party to whom credit is offered or extended is a natural person, and the money, property, or services which are the subject of the transaction are primarily for personal, family, or household purposes; and "(d) the term 'credit repair organization' means any person, who, with respect to the extension of consumer credit by others, sells, provides or performs, or represents that he can or will sell, provide or perform, in return for the payment of money or other valuable consideration, a service for the express or implied pur pose of improving a consumer's credit record, credit history, or credit rating; obtaining an extension of consumer credit for a consumer; or providing advice or as sistance to a consumer with regard to a consumer's credit record, credit history or credit rating. 23 The term 'credit repair organization' does not include— "(1) a depository institution whose deposits are insured by the Federal Deposit Insurance Corporation, 24 25 HR 458 IH |