Arkansas Credit Repair

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4-91-101. Title.

This chapter may be known and cited as the “Credit Services Organizations Act of 1987”.

4-91-102. Definitions.

As used in this chapter, unless the context otherwise requires:

(1) “Buyer” means any individual who is solicited to purchase or who purchases the services of a credit services organization;

(2) (A) “Credit services organization” means any person or entity that, with respect to the extension of credit by others, sells, provides, performs, or represents that the person or entity will sell, provide, or perform, in return for the payment of money or other valuable consideration, any of the following services:

(i) Improve a buyer’s credit record, history, or rating;

(ii) Obtain an extension of credit for a buyer; or

(iii) Provide advice or assistance to a buyer with regard to either subdivisions (2)(A)(i) or (ii) of this section.

(B) “Credit services organization” does not include:

(i) Any person or entity authorized to make loans or extensions of credit under the laws of this state or the United States, which person or entity is subject to regulation and supervision by this state or the United States or a lender approved by the United States Secretary of Housing and Urban Development for participation in any mortgage insurance program under the National Housing Act;

(ii) Any bank, savings bank, or savings and loan institution whose deposits or accounts are eligible for insurance by the Federal Deposit Insurance Corporation or the Federal Savings and Loan Insurance Corporation, or a subsidiary of such bank, savings bank, or savings and loan institution;

(iii) Any credit union, federal credit union, or out-of-state credit union doing business in this state;

(iv) Any nonprofit organization exempt from taxation under § 501(c)(3) of the Internal Revenue Code;

(v) Any person licensed as a real estate broker by this state if the person is acting within the course and scope of that license;

(vi) Any person licensed as a collection agency under the laws of this state if the person is acting within the course and scope of that license;

(vii) Any person licensed to practice law in this state if the person renders services within the course and scope of his or her practice as an attorney;

(viii) Any broker-dealer registered with the Securities and Exchange Commission or the Commodity Futures Trading Commission if the broker-dealer is acting within the course and scope of that regulation; or

(ix) Any consumer reporting agency as defined in the federal Fair Credit Reporting Act, 15 U.S.C. §§ 1681-1681t; and

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

4-91-103. Waiver of rights.

(a) Any waiver by a buyer of any part of this chapter is void. Any attempt by a credit services organization to have a buyer waive rights given by this chapter is a violation of this chapter.

(b) In any proceeding involving this chapter, the burden of proving an exemption or an exception from a definition is upon the person claiming it.

4-91-104. Violations.

(a) Any person who violates this chapter is guilty of a Class A misdemeanor. Any court of competent jurisdiction in this state may restrain and enjoin any violation of this chapter.

(b) This section and § 4-91-103 shall not limit or restrict the right of any person to pursue any appropriate remedy at law for a violation of this chapter.

4-91-105. Damages.

(a) Any buyer suffering damages as a result of a violation of this chapter by any credit services organization may bring any action for recovery of damages. Judgment shall be entered for actual damages, but in no case shall the amount be less than the amount paid by the buyer to the credit services organization, plus reasonable attorney’s fees and costs. An award may also be entered for punitive damages.

(b) The remedies provided under this chapter are in addition to any other procedures or remedies for any violation or conduct otherwise provided by law.

4-91-106. Prohibited acts.

(a) A credit services organization, its salespersons, agents, and representatives, and independent contractors who sell or attempt to sell the services of a credit services organization may not do any of the following:

(1) Charge or receive any money or other valuable consideration prior to full and complete performance of the services the credit services organization has agreed to perform for the buyer unless the credit services organization has obtained a surety bond of ten thousand dollars ($10,000) issued by a surety company admitted to do business in this state and has established a trust account at a federally insured bank or savings and loan association located in this state;

(2) Charge or receive any money or other valuable consideration solely for referral of the buyer to a retail seller who will or may extend credit to the buyer if the credit that is or will be extended to the buyer is upon substantially the same terms as those available to the general public;

(3) Make, counsel, or advise any buyer to make, any statement with respect to a buyer’s credit worthiness, credit standing, or credit capacity that is untrue or misleading or that should be known by the exercise of reasonable care to be untrue or misleading to a credit reporting agency or to any person who has extended credit to a buyer or to whom a buyer is applying for an extension of credit; or

(4) Make or use any untrue or misleading representations in the offer or sale of the services of a credit services organization or engage, directly or indirectly, in any act, practice, or course of business that operates or would operate as fraud or deception upon any person in connection with the offer or sale of the services of a credit services organization.

(b) If a credit services organization is in compliance with subdivision (a)(1) of this section, the salesperson, agent, or representative who sells the services of that organization is not required to obtain a surety bond and establish a trust account.

4-91-107. Information statement — Requirements.

(a) Before the execution of a contract or agreement between the buyer and a credit services organization or before the receipt by the credit services organization of any money or other valuable consideration, whichever occurs first, the credit services organization shall provide the buyer with a statement in writing containing all the information required by § 4-91-108.

(b) The credit services organization shall maintain on file for a period of two (2) years an exact copy of the statement, personally signed by the buyer, acknowledging receipt of a copy of the statement.

4-91-108. Information statement — Contents.

The information statement required under § 4-91-107 shall include all of the following:

(1) (A) A complete and accurate statement of the buyer’s right to review any file on the buyer maintained by any consumer reporting agency, as provided under the federal Fair Credit Reporting Act, 15 U.S.C. §§ 1681-1681t;

(B) A statement that the buyer may review his or her consumer reporting agency file at no charge if a request is made to the consumer reporting agency within thirty (30) days after receiving notice that credit has been denied; and

(C) The approximate price the buyer will be charged by the consumer reporting agency to review his or her consumer reporting agency file;

(2) A complete and accurate statement of the buyer’s right to dispute the completeness or accuracy of any item contained in any file on the buyer maintained by any consumer reporting agency;

(3) A complete and detailed description of the services to be performed by the credit services organization for the buyer and the total amount the buyer will have to pay, or become obligated to pay, for the services;

(4) A statement asserting the buyer’s right to proceed against the bond or trust account required under § 4-91-106(a); and

(5) The name and address of the surety company that issued the bond or the name and address of the depository and the trustee and the account number of the trust account.

4-91-109. Contract requirements — Notice of cancellation.

(a) (1) Each contract between the buyer and a credit services organization for the purchase of the services of the credit services organization shall be in writing, dated, and signed by the buyer and shall include all of the following:

(A) A conspicuous statement in boldface type, in immediate proximity to the space reserved for the signature of the buyer, as follows: “You, the buyer, may cancel this contract at any time prior to midnight of the fifth day after the date of the transaction. See the attached notice of cancellation form for an explanation of this right”;

(B) The terms and conditions of payment, including the total of all payments to be made by the buyer, whether to the credit services organization or to some other person;

(C) A full and detailed description of the services to be performed by the credit services organization for the buyer, including all guarantees and all promises of full or partial refunds, and the estimated date by which the services are to be performed or the estimated length of time for performing the services; and

(D) The credit services organization’s principal business address and the name and address of its agent in this state authorized to receive service of process.

(2) The contract shall be accompanied by a completed form in duplicate, captioned “Notice of Cancellation”, that shall be attached to the contract, be easily detachable, and contain in boldface type the following statement written in the same language as used in the contract:

“Notice of Cancellation

(b) The credit services organization shall give to the buyer a copy of the completed contract and all other documents the credit services organization requires the buyer to sign at the time they are signed.