[Congressional Record Volume 152, Number 77 (Thursday, June 15, 2006)]
[Senate]
[Pages S5956-S5957]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. BENNETT:
  S. 3518. A bill to amend the Credit Repair Organizations Act to 
establish a new disclosure statement; to the Committee on Banking, 
Housing, and Urban Affairs.
  Mr. BENNETT. Mr. President, I rise today to introduce legislation to 
amend the Credit Repair Organizations Act, CROA, to stop abusive class 
action lawsuits against companies offering legitimate credit file 
monitoring products. The following is a summary of why we need to pass 
this legislation.
  Credit-monitoring products are offered by consumer reporting 
agencies, their affiliates, and resellers. These products help 
consumers access their consumer report information and credit scores on 
a regular basis. They include credit alert features when derogatory 
information appears in the consumer's file or someone obtains the 
consumer's report. The products give consumers a front-line defense 
against identity theft, and are routinely made available to victims of 
security breaches. Credit-monitoring products also educate consumers 
about their credit scores and credit histories. The market is highly 
competitive. Banks and other creditors also provide these products to 
their customers.
  These products are threatened by abusive class action lawsuits, based 
on CROA's language. CROA was to combat the assault on the integrity of 
accurate credit file data by credit repair organizations and by 
consumers acting on their advice. Under CROA, a credit repair 
organization is subject to a number of appropriately harsh and specific 
requirements. The most significant of these is a prohibition on 
collecting fees before completion of performance of the promised 
services. CROA also mandates that consumers be given a written warning 
that the services cannot result in the change or deletion of negative 
but accurate data. This ``warning'' would be confusing and 
inappropriate if given to a consumer of credit monitoring products or 
services.
  CROA was enacted before credit monitoring products were created. The 
CROA definition of ``credit repair organization'' is intentionally 
broad in order to prevent circumvention of its coverage. Among other 
things, the definition includes an entity that implies its activities 
or services can ``improve'' a consumer's credit record, credit history 
or credit rating. The breadth of the definition has been used by 
plaintiffs' lawyers an attempt to obtain statutory damages against 
consumer reporting agencies and their resellers solely for offering 
these monitoring

[[Page S5957]]

products. The class action lawsuits threaten the viability of the 
credit-monitoring industry.
  This result can be prevented through the enactment of a technical 
amendment to CROA that clarifies the definition of ``credit repair 
organization'' as it includes ``improving'' a consumer's credit record, 
etc. The amendment can explain that ``improving'' a consumer's credit 
record does not include credit monitoring, notifications, analysis, 
evaluation, or explanations.
  Because this is a clarifying amendment, it will not affect the CROA's 
essential operation or Federal agency enforcement. The Federal Trade 
Commission has stated that it does not think credit-monitoring products 
should be subject to CROA. If this amendment is enacted, consumers will 
continue to enjoy CROA's important rights and protections, including 
the right to bring private lawsuits against credit repair organizations 
for violations of the act. The amendment to CROA will also assure the 
continued availability of credit monitoring products and services for 
consumers.
  I encourage my colleagues to join with me in passing this important 
legislation.
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