Understanding credit repair laws protects Arizona citizens from becoming scam victims, and the laws help honest people who want to start a credit repair business do so correctly. These are some of the most important laws to know.
Who Can Operate A Credit Repair Business?
To become a legal operator, a person must obtain a surety bond from a company that is licensed to sell surety bonds in the state of Arizona. According to Title 44, Chapter 11 of the state’s statutes, there are a few exceptions to the above requirements. Realtors, attorneys and qualified non-profit organizations are excluded.
There is no specific fee outlined in the state’s laws. However, the average credit repair service company charges about $80. Fees should not be significantly higher or lower than this.
According to the Arizona Credit Repair Organizations Act, only the excluded entities listed previously and people who obtain proper surety bonds can charge for their services in advance. If a person is offering credit-related services and does not have a surety bond or is not an attorney, a Realtor or a non-profit organization, money cannot be collected until they have completed the credit services.
What Should Credit Repair Companies Not Do?
A reliable credit repair company should follow all of the rules for Arizona’s Credit Repair Organizations Act. One important rule is not telling clients to make false or misleading statements. For example, these could be statements to the IRS, a creditor, a reporting bureau or a financial institution.
Also, credit repair representatives are not allowed to charge for a referral. In their advertising and discussion of services, they are not allowed to misrepresent their services or make untrue statements about what they will do or what the outcome will be. Anything that can be considered fraudulent must be avoided.
What Should Credit Repair Companies Do?
Overall, they should be upfront and honest about fees, their services, time frames and capabilities. One important step that they are required to take under Title 44 of the state’s statutes is to provide clients with important information before the contract is signed or money is collected for services. The information that must be provided to the client includes the following:
- A statement reflecting the customer’s right to view his or her file at any time upon request or to receive a copy of its contents.
- The approximate charge for a copy of the file’s contents if requested.
- A statement outlining the customer’s right to dispute the accuracy or completion of any item among the completed services.
- A detailed list and description of services that the credit organization intends to perform for the customer.
- The total amount to be charged for the intended services.
If the individual performing the services is required to obtain a bond, that individual must also provide a statement showing that the customer has the right to proceed against the bond if there is a breach of contract. Also, the individual must provide the customer with the name and address of the company holding the bond.
What Should The Contract Include?
In the Arizona Credit Repair Organizations Act, § 44-1706 says that the contract must have specific wording in 10-point font or larger that the buyer may cancel the contract at any time prior to midnight on the third day after signing the contract. Also, it must include the following:
- All conditions and terms of payment.
- A complete description of services to be performed by the credit repair organization.
- Specification of how possible refunds will be handled.
- The credit repair company’s address, name and authorized agent information.
- A “Notice of Cancellation” section that outlines the cancellation period defined in the first point.
Consumers who are looking for reputable companies should ask to see the bond information if they are not working with an attorney, a Realtor or a non-profit organization. Also, they should ask to review the contract. People who want to start a credit repair agency should read the entire Arizona Credit Repair Organizations Act outlined in Title 44.