Avoiding Credit Repair Scams in Rhode Island

Bad credit and low credit scores can leave people desperate for credit repair help. In their bid to improve their score and record, people with bad credit make prime targets for businesses that are more interested in making a hefty profit than they are helping people.

However, overcoming bad credit takes time, effort, and patience as the state of Rhode Island reminds people on its website. You can avoid becoming the victim of a scam by knowing what kind of help can legally be offered to you by a credit repair service.

Rhode Island Restrictions on Credit Repair Services

creditscoreRhode Island’s attorney general’s office keeps a close watch on companies that operate as credit repair services and debt collection businesses. The state’s AG office has implemented a program called Operation Collection Protection, which outlines what these companies can and cannot legally do while conducting business and targeting consumers in Rhode Island.

According to the state’s website, Operation Credit Protection prohibits these businesses from lying to you about your debt. They must be truthful about any money that you owe creditors as well as who they are and what could happen if you do not pay your debt. They cannot use scare tactics to get you to hand over money to them.

Debt collectors that conduct business in the state likewise cannot threaten or harass you about your debt. They cannot tell anyone else, such as your employer or relatives, about money that you owe to creditors. If they violate this mandate, they could be sued in court and be found monetarily liable to you.

Along with complying with these rules, credit repair services must also use truthful and accurate information when advertising their services or signing people up for their programs. If they make false claims like promising to remove all negative information from your credit file, they void their contract with you and cannot legally perform or collect on any services that they render to you.

More About Rhode Island Credit Repair Laws

rhodeislandRhode Island has its own set of laws for credit repair services in the state. However, it also relies on federal laws already in place to help regulate this industry.

The primary law that it utilizes to oversee the credit repair services that operate in Rhode Island is U.S. code 15 USC Chapter 41 Subchapter 11-A: Credit Repair Organizations. This code defines what credit repair services in the state and elsewhere in the U.S. can lawfully offer to people who want to improve or repair their records, ratings, and histories.

Under this federal law, credit repair services are businesses and individuals who offer to cleanup or improve clients’ credit records, ratings, or histories in exchange for money. They also may offer advice or guidance to people who want to improve or cleanup their own credit files.

This law is designed for businesses and individuals who offer these services for profit. It does not apply to entities like banks and credit unions, collection or bankruptcy law firms and attorneys, non-profit organizations that are registered with the IRS as 501(c)(3) entities, or creditors who want to help debtors settle or reorganize their delinquent accounts.

The specifics of this code center on making sure that for-profit credit repair services use factual and accurate language when advertising their businesses. They are not allowed to guarantee their services nor can they promise to remove all bad credit or raise people’s scores by disputing accurate yet negative entries.

They cannot promise to set up new credit identities for clients; they also cannot tell people that they can get new Social Security numbers. Credit repair services are allowed to dispute entries if they have reason to believe that the negative entries are:

  • Fraudulent
  • Misplaced
  • Outdated
  • Wrongful

These businesses must provide proof to substantiate their claims, and they also must await an answer to the dispute before they can charge or collect on any fees for rendered services. If they fail to comply with the state or federal mandates for their industry, they could be sued and found civilly liable in court.

Rhode Island regulates the credit repair industry in the state with Operation Collection Protection. It also relies on federal laws to protect consumers from credit repair scams.