Tougher Credit Repair Rules

Section 1. Section 458-a of the general business law is amended by adding a new subdivision 3 to read as follows:

3. This article shall be construed liberally to achieve these purposes.

§ 2. Section 458-b of the general business law, as added by chapter 386 of the laws of 1986, paragraph (a) of subdivision 1 as amended by chapter 549 of the laws of 2013, is amended to read as follows:

§ 458-b. Definitions. As used in this article:

1. "Credit services business" means any person who sells, provides, or performs, or represents that he can or will sell, provide or perform, a service for the express or implied purpose of improving a consumer's credit record, history, or rating or providing advice or assistance to a consumer with regard to the consumer's credit record history or rating in return for the payment of a fee or other valuable consideration.

"Credit services business" does not include any of the following:

(a) Any charitable corporation as defined in paragraph (a) of section one hundred two (Definitions) of the not-for-profit corporation law licensed pursuant to article [twelve-c] twelve-C of the banking law.

(b) Any person admitted to practice law in this state where the person renders services within the course and scope of his or her practice as an attorney at law.

(c) Any person holding a license to make loans or extensions of credit pursuant to the laws of this state or the United States who is subject to regulation and supervision with respect to the making of those loans or extensions of credit by an official or agency of this state or the

EXPLANATION--Matter in italics (underscored) is new; matter in brackets

[ ] is old law to be omitted.

LBD03594-01-7

A. 5234 2

United States and whose business is the making of those loans or extensions of credit.

(d) Any bank, trust company, savings bank, savings and loan association, or credit union, whether incorporated, chartered, or organized under the laws of this state or any other state or the United States, or any operating subsidiary of any such bank, trust company, savings bank, savings and loan association, or credit union.

2. "Consumer" means any natural person who is solicited to purchase or who purchases the services of a credit services business.

3. "Extension of credit" means the right to defer payment of debt or to incur debt and defer its payment, offered or granted primarily for personal, family, or household purposes.

4. "Person" includes an individual, corporation, partnership, joint venture, or any business entity.

[4.] 5. The terms "consumer reporting agency", "consumer report", "investigative consumer report", "file", and "adverse information" shall have the meanings ascribed to each by section three hundred eighty-a of this chapter.

§ 3. Section 458-c of the general business law, as added by chapter 386 of the laws of 1986, is amended to read as follows:

§ 458-c. Information statement; procedure. 1. Prior to the execution of a contract between a consumer and a credit services business, the credit services business shall provide the consumer an information statement in writing, on a separate sheet, containing the information required by section four hundred fifty-eight-d of this [chapter] article. The consumer shall acknowledge receipt of such information statement by placing his or her signature on the face thereof. The credit services business shall maintain on file [or], microfilm or electronic media for a period of two years from the date of such acknowledgement an exact copy of such information statement.

2. In addition to the requirements of subdivision one of this section, in any oral communication during which a consumer pays or agrees to pay for the services of a credit services business, before the consumer pays or agrees to pay for such services, whichever occurs first, the credit services business shall orally disclose in a clear and conspicuous manner to the consumer the following statements or substantially similar statements:

(a) you have the right to obtain a free copy of your credit report once every twelve months from each of the nationwide credit reporting agencies;

(b) you may, on your own, dispute inaccurate information in your credit report by contacting a credit reporting agency directly;

(c) neither you nor any business or organization has the right to have accurate, current, and verifiable information removed from your credit report; and

(d) you have the right to cancel your contract with any credit services business for any reason within five business days from the date you sign the contract.

§ 4. Section 458-d of the general business law, as added by chapter 386 of the laws of 1986, is amended to read as follows:

§ 458-d. Information statement; contents. The information statement shall be printed in at least ten point type and shall include the following[:

A. 5234 3

"RIGHT TO REVIEW YOUR FILE"

"The Federal Fair Credit Reporting Act gives you the right to know what your credit file contains, and the consumer reporting agency must provide someone to help you interpret the data. The New York Fair Credit Reporting Act gives you the right to receive an actual copy of your credit report. You will be required to identify yourself to the consumer reporting agency and you may be charged a small fee. There is no fee, however, if you have been turned down for credit, employment, or insurance because of information contained in a report within the preceding thirty days."

"INCORRECT INFORMATION"

"Consumer reporting agencies are required to follow reasonable procedures to ensure that subscribing creditors report information accurately. However, mistakes may occur.

When you notify the consumer reporting agency in writing that you dispute the accuracy of information, it must reinvestigate and modify or remove inaccurate data. The consumer reporting agency may not charge any fee for this service. Any pertinent data you have concerning an error should be given to the consumer reporting agency.

If reinvestigation does not resolve the dispute to your satisfaction, you may enter a statement of one hundred words or less in your file, explaining why you think the record is inaccurate.

The consumer reporting agency must include your statement about disputed data -- or a coded version of it -- with any reports it issues about you. New York law also provides that, at your request, the consumer reporting agency must notify any person who has received a report in the previous year that an error existed and furnish such person with the corrected information."

"TIME LIMITS ON ADVERSE DATA"

"Most kinds of information in your file may be reported for a period of seven years. If you have declared personal bankruptcy, however, that fact may be reported for ten years.

After seven years or ten years, the information can't be disclosed by a credit reporting agency unless you are being investigated for a credit application of $50,000 or more, for an application to purchase life insurance of $50,000 or more, or for employment at an annual salary of $25,000 or more."] notice. Paragraph headings shall be capitalized and printed in fourteen point bold type.

"IMPORTANT NOTICE REGARDING CREDIT SERVICES"

"You have a right to dispute inaccurate information in your credit report by contacting a credit reporting agency directly. However, neither you nor any business or organization has the right to have accurate, current, and verifiable information removed from your credit report. Most kinds of information may be reported for a period of seven years. If you have declared personal bankruptcy, however, that fact may be reported for ten years."

"RIGHT TO REVIEW YOUR CREDIT REPORT"

"You have a right to obtain a free copy of your credit report once every twelve months from each of the nationwide credit reporting agencies. To request your free annual credit report, you may go to www.annualcreditreport.com, or call 877-322-8228, or complete the Annual

A. 5234 4

Credit Report Request Form and mail it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281. You can obtain additional copies of your credit report from a credit reporting agency, for which you may be charged a reasonable fee. There is no fee, however, if you have been turned down for credit, employment, insurance, or a rental dwelling because of information in your credit report within the preceding sixty days. The credit reporting agency must provide someone to help you interpret the information in your credit file. You are entitled to receive a free copy of your credit report if you are unemployed and intend to apply for employment in the next sixty days, if you are a recipient of public welfare assistance, or if you have reason to believe that there is inaccurate information in your credit report due to fraud."

"INCORRECT INFORMATION"

"Credit reporting agencies are required to follow reasonable procedures to ensure that the information they report is accurate. However, mistakes may occur."

"You may, on your own, notify a credit reporting agency in writing that you dispute the accuracy of information in your credit file. The credit reporting agency must then reinvestigate and modify or remove inaccurate or incomplete information. The credit reporting agency may not charge any fee for this service. Any pertinent information and copies of all documents you have concerning an error should be given to the credit reporting agency."

"If the credit reporting agency's reinvestigation does not resolve the dispute to your satisfaction, you may send a brief statement to the credit reporting agency, to be kept in your report, explaining why you think the record is inaccurate. The credit reporting agency must include a summary of your statement about disputed information with any report it issues about you."

"YOUR RIGHTS REGARDING CREDIT SERVICES BUSINESSES"

"You have the right to cancel your contract with any credit services business for any reason within five business days from the date you signed it."

"You have a right to sue a credit services business that misleads you or violates New York state or federal laws that prohibit deceptive practices."

"The Federal Trade Commission and the New York Attorney General regulate credit reporting agencies and credit services businesses. For more information, contact the Federal Trade Commission at (insert the current telephone number established by the federal trade commission for receiving inquiries from consumers) or (insert the current address of the website of the federal trade commission). You may also contact the New York Attorney General at (insert the current telephone number established by the department of law for receiving inquiries from consumers) or (insert the current address of the website of the department of law)."

§ 5. Section 458-e of the general business law, as added by chapter 386 of the laws of 1986, is amended to read as follows:

§ 458-e. Advance fees prohibited. It is hereby declared to be an unfair and deceptive trade practice and unlawful for a credit services business to: 1. receive or collect from a consumer any fee or other valuable consideration in advance of the performance of those services specified in the contract as required by section four hundred fiftyeight-f of this [chapter] article; or

A. 5234 5

2. fail to perform the agreed services within six months following the date the consumer signs the contract for those services.

§ 6. Section 458-f of the general business law, as added by chapter 386 of the laws of 1986, is amended to read as follows:

§ 458-f. Contracts; requirements and contents. 1. Every contract between a consumer and a credit services business shall be in writing, shall be dated, shall contain the street address of the credit services business and the consumer, and shall be signed by the consumer and credit services business. Each contract shall contain the following:

(a) A complete and detailed statement of the services to be performed and the results to be achieved by the credit services business for or on behalf of the consumer, including a list of the adverse information appearing on the consumer's credit report that will be modified, a description of the precise nature of each modification, and the estimated date by which each modification will occur. A copy of the consumer's current credit report issued by a consumer credit reporting agency shall be annexed to the contract with the adverse entries proposed to be modified clearly marked.

(b) A statement in at least ten point type as follows:

"Under New York law no fee may be collected in advance of performance of the services specified in this contract."

2. 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 [ten] twelve point type the following:

"Notice of Cancellation"

"You may cancel this contract, without any penalty or obligation, within [three] five days from the date the contract is signed.

"To cancel this contract, mail or deliver a signed and dated copy of this cancellation notice, or any other written notice, to ____________________ at