Credit Repair Scams — Get Your Money Back

The Credit Repair Organizations Act (CROA) is a federal law designed to protect consumers from deceptive credit repair services. It sets strict rules for how these companies can operate.

The most important rule is simple: No Upfront Fees.

This means monthly subscription fees for "future work" are often illegal. Setup fees are illegal. "Audit" fees are illegal.

Can credit repair companies charge upfront fees?

No. The federal Credit Repair Organizations Act (CROA) explicitly prohibits credit repair companies from charging or receiving any money before they have fully performed the promised services. This includes so-called setup fees, audit fees, and monthly subscriptions for future work. If a company charged you anything before delivering results, they broke the law.

Recognizing a credit repair scam is the first step. Knowing how to report it and avoid future scams is equally critical.

Common Credit Repair Scam Red Flags

Watch out for these red flags. If you see any of them, you likely have a case:

1. The "Upfront Fee" Trap. They ask for $100, $500, or even thousands of dollars to "start" the process. They might call it a "setup fee," "audit fee," or "document preparation fee." This is 100% illegal under CROA.

2. The "Guaranteed" Fix. No one can legally remove accurate, verifiable negative information from your credit report. If a company promises to remove your bankruptcy, judgment, or late payments guaranteed, they are lying.

3. The "New Identity" (File Segregation) Scam. Some scammers will tell you to apply for an Employer Identification Number (EIN) or a Credit Privacy Number (CPN) to use instead of your Social Security Number. Do not do this. It is a federal crime (bank fraud) to use a false number on a credit application. Beyond being bank fraud, using a false EIN or CPN for credit purposes can also trigger IRS penalties for tax fraud or misrepresentation.

4. Failure to Disclose Your Rights. By law, they must give you a written contract and a "Consumer Credit File Rights Under State and Federal Law" statement before you sign anything. They must also give you a 3-day right to cancel without penalty.

How to Verify a Credit Repair Company's Legitimacy

Always research a company before committing to any contract. A few simple checks can save you from losing money to a scam:

• Check the Better Business Bureau (BBB). Look up the company's BBB profile for their rating, accreditation status, and complaint history. A pattern of unresolved complaints is a serious warning sign.
• Search online for complaints. Enter the company name plus "scam," "lawsuit," or "complaint" into any search engine. If other consumers are reporting the same problems, steer clear.
• Be skeptical of guarantees. No legitimate credit repair service can promise to delete accurate negative information or boost your score by a specific number of points overnight. These claims violate federal law.
• Verify with your state. Contact your state's Attorney General office or consumer protection agency to check whether the company is properly registered or licensed in your state.

For a deeper breakdown of what separates a trustworthy service from a fraudulent one, read our guide to legitimate vs. fraudulent credit repair services.

Where to Report a Credit Repair Scam

If you have already been scammed, reporting the company helps protect other consumers and strengthens any legal claim you pursue:

• Federal Trade Commission (FTC). The FTC is the primary federal agency handling consumer fraud. File a complaint at ReportFraud.ftc.gov.
• Consumer Financial Protection Bureau (CFPB). The CFPB accepts complaints about financial products and services, including credit repair. Filing here creates a formal record of the company's misconduct.
• Your State Attorney General. Your state AG's office can investigate under state consumer protection laws and may take enforcement action against repeat offenders.
• Better Business Bureau (BBB). Filing a BBB complaint creates a public record that warns other consumers and may prompt the company to respond.

Reporting is important — but it does not get your money back. For that, you need a lawyer who can sue under CROA. Contact Hyslip Legal for a free case review: (614) 362-3322.

If a credit repair company violates the CROA, you have the right to sue them in federal court. The penalties are severe for them, which is good for you. Often, victims of credit repair scams are also dealing with aggressive debt collectors. If that is your situation, you may have parallel claims to sue debt collectors under the FDCPA for harassment.

This page constitutes attorney advertising. The information provided is for general informational purposes and does not constitute legal advice. Every situation is unique — contact Hyslip Legal for a free consultation to discuss your specific circumstances. Submitting a contact form does not create an attorney-client relationship. Information submitted is not confidential until an engagement agreement is signed.