The American Association of Consumer Credit Professionals (AACCP) recently held a press briefing to announce its new formation as a trade association dedicated to advocating for “holistic consumer credit repair.” Despite the word “repair” missing from the trade group’s name, the association is comprised of credit repair industry experts and advocates for the credit repair industry.
Responding to a perceived gap between the significant credit problems facing consumers and limited efforts by regulators and lawmakers to help consumers overcome those problems, the AACCP aims to educate consumers about the responsible use of credit and their legal rights and responsibilities about how furnishers and consumer reporting agencies publish information about their creditworthiness. The group prides itself on being the only consumer advocate in the credit reporting system. The aim is to “support consumer access to credit through accurate, fair, and substantiated credit reports.” A short video on the group’s website also promises to protect consumers against bullying by “shadowy debt collectors.”
The AACCP wants stakeholders in the credit ecosystem to know that they do more than just fix tradelines on consumer reports. The group’s inaugural announcement and website explain how modern credit repair organizations offer consumers more because they:
- Know the industry and the laws designed to protect consumers;
- Understand the circumstances of individual consumers to help them raise relevant questions with creditors and other furnishers of credit report information;
- Operate with integrity and maintain a strong focus on compliance with applicable statutes;
- Help consumers review, analyze and understand their credit reports in order to identify items that may need to be challenged and, if possible, changed;
- Advocate on behalf of consumers to resolve potential issues on their credit report with creditors/furnishers and the Consumer Reporting Agencies (CRAs a/k/a credit bureaus); and
- Educate consumers on their credit reports, how to build positive credit, and encourage them to use credit responsibly.
The group describes these services as a “holistic approach to credit repair advocacy.” A stated focus of this advocacy is to bring racial equity and fairness to the credit system. The group’s founders are familiar players in the credit repair space, Progrexion and Lexington Law.
The credit repair industry is regulated by state and federal law. The Credit Repair Organizations Act (15 U.S.C.S. § 1679 et seq.) is the federal law governing all credit repair services. Like many other consumer protection laws, the CROA prohibits false and misleading behavior, requires certain consumer disclosures, empowers consumers with certain legal rights, and establishes a private right of action for consumers against credit repair organizations that do not follow the law. Many states have implemented similar laws proscribing certain harmful behavior and mandating consumer-friendly behavior. Despite a 5-year statute of limitations on violations of the CROA, a quick search revealed only a small number of reported cases involving this statute. The law has been on the books since September 1996.
The collection industry and the credit repair industry share many similarities. They are both highly regulated by state and federal laws throughout the country. Their reputations are shaped most often, not by the law-abiding actors who bring assistance and value to consumers, but instead by the few who disregard the rules and bring harm to consumers. They each sit on the front lines of consumer interaction, listening to stories of hardship and helping consumers triumph over their credit challenges. Both industries have also had their share of government and civil scrutiny, with the government going after the biggest players in the marketplace:
- FTC Files Lawsuit Against Credit Repair Organizations for Illegal Upfront Fees and Threatening Consumers with Legal Action
...and courts narrowing the application of the Fair Credit Report Act to disputes received “directly” from a consumer:
But the relationship between the credit repair industry and the collection industry has not always been simpatico. Debt collectors are the recipients of tens of millions of dispute letters from credit repair organizations annually; often perceived as frivolous and unsubstantiated. Collectors themselves have taken action against credit repair organizations to stop this untoward behavior:
Yet, in the end, both industries pursue their stated purposes of helping consumers overcome financial challenges. Will this new trade association change public perception? Will lawmakers be persuaded to pass laws favorable to the credit repair industry? Will regulators take a kinder, more gentle approach to regulating the credit repair industry? The impact of this new association on the public, consumers, lawmakers and regulators remains to be seen. There may be more in common between the collection industry and the credit repair industry than either is willing to admit.