Missouri Credit Repair

Title XXVI — TRADE AND COMMERCE > Chapter 407 Merchandising Practices > 407.635. Definitions.
407.635. As used in sections 407.635 to 407.644, the following words andphrases shall mean:

(1) “Buyer”, an individual who is solicited to purchase or who purchasesthe services of a credit services organization;

(2) “Consumer reporting agency” has the meaning assigned by section603(f) of the federal Fair Credit Reporting Act, 15 U.S.C. Section 1681a(f);

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

Credit service organization–exemptions.
407.637. 1. A credit services organization is a person who, withrespect to the extension of credit by others and in return for the payment ofmoney or other valuable consideration, provides or represents that the personcan or will provide any of the following services:

(1) Improving the buyer’s credit record, history or rating;

(2) Obtaining an extension of credit for a buyer; or

(3) Providing advice or assistance to a buyer with regard to subdivision(1) or (2) of this subsection.

2. The following are exempt from the provisions of sections 407.635 to407.644:

(1) A person authorized to make loans or extensions of credit under thelaws of this state or the United States who is subject to regulation andsupervision by this state or the United States, or a lender approved by theUnited States Secretary of Housing and Urban Development for participation ina mortgage insurance program under the federal National Housing Act, 12 U.S.C.Section 1701, et seq.;

(2) A bank or savings and loan association whose deposits or accountsare eligible for insurance by the Federal Deposit Insurance Corporation, or asubsidiary of such a bank or savings and loan association;

(3) A credit union doing business in this state;

(4) A nonprofit organization exempt from taxation under section501(c)(3) of the Internal Revenue Code;

(5) A person licensed as a real estate broker or salesperson pursuant tochapter 339, RSMo, acting within the course and scope of that license;

(6) A person licensed to practice law in this state acting within thecourse and scope of the person’s practice as an attorney;

(7) A broker-dealer registered with the Securities and ExchangeCommission or the Commodity Futures Trading Commission acting within thecourse and scope of that regulation;

(8) A consumer reporting agency;

(9) A person whose primary business is making loans secured by liens onreal property;

(10) A person who is licensed as a certified public accountant pursuantto chapter 326, RSMo, acting within the course and scope of that license; oran individual who is enrolled to practice before the Internal Revenue Service;or an accountant, who is accredited by the Accreditation Council forAccountancy.

Prohibited activities.
407.638. A credit services organization, a salesperson,agent or representative of a credit services organization, or anindependent contractor who sells or attempts to sell the servicesof a credit services organization may not:

(1) Charge a buyer or receive from a buyer money or othervaluable consideration before completing performance of allservices the credit services organization has agreed to performfor the buyer, unless the credit services organization hasobtained in accordance with section 407.639 a surety bond in theamount required by subsection 4 of section 407.639, issued by asurety company authorized to do business in this state, or hasestablished and maintained a surety account at a federallyinsured bank or savings and loan association located in thisstate in which the amount required by subsection 5 of section407.639 is held in trust as required by section 407.639;

(2) Charge a buyer or receive from a buyer money or othervaluable consideration solely for referral of the buyer to aretail seller who will or may extend credit to the buyer if thecredit that is or will be extended to the buyer is substantiallythe same as that available to the general public;

(3) Make or use a false or misleading representation in theoffer or sale of the services of a credit services organization,including:

(a) Guaranteeing to “erase bad credit” or words to thateffect unless the representation clearly discloses that this canbe done only if the credit history is inaccurate or obsolete; and

(b) Guaranteeing an extension of credit regardless of theperson’s previous credit problem or credit history unless therepresentation clearly discloses the eligibility requirements forobtaining an extension of credit;

(4) Engage, directly or indirectly, in a fraudulent ordeceptive act, practice or course of business in connection withthe offer or sale of the services of a credit servicesorganization;

(5) Make, or advise a buyer to make, a statement withrespect to a buyer’s credit worthiness, credit standing, orcredit capacity that is false or misleading or that should beknown by the exercise of reasonable care to be false ormisleading, to a consumer reporting agency or to a person who hasextended credit to a buyer or to whom a buyer is applying for anextension of credit;

(6) Advertise or cause to be advertised, in any mannerwhatsoever, the services of a credit services organizationwithout filing a registration statement with the director offinance, unless otherwise provided by this chapter.

407.639. Copy of bond to be filed with director of finance–purpose of bond–amount of bond–statement by director of finance.
Copy of bond to be filed with director of finance–purpose ofbond–amount of bond–statement by director of finance.
407.639. 1. This section applies to a credit services organizationrequired by subdivision (1) of section 407.638 to obtain a surety bond orestablish a surety account.

2. If a bond is obtained, a copy of it shall be filed with the directorof finance. If a surety account is established, notification of thedepository, the trustee and the account number shall be filed with thedirector of finance.

3. The bond or surety account required shall be in favor of the statefor the benefit of any person who is damaged by any violation of sections407.635 to 407.644. The bond or surety account shall also be in favor of anyperson damaged by such a violation.

4. Any person claiming against the bond or surety account for aviolation of sections 407.635 to 407.644 may maintain an action at law againstthe credit services organization and against the surety or trustee. Thesurety or trustee shall be liable only for damages awarded under subdivision(1) of subsection 1 of section 407.644 and not the punitive damages permittedunder that section. The aggregate liability of the surety or trustee to allpersons damaged by a credit services organization’s violation of this chaptermay not exceed the amount of the surety account or bond.

5. The bond or the surety account shall be in the amount of ten thousanddollars.

6. A depository holding money in a surety account under sections 407.635to 407.644 shall not convey money in the account to the credit servicesorganization that established the account or a representative of the creditservices organization unless the credit services organization orrepresentative presents a statement issued by the director of financeindicating that section 407.640* has been satisfied in relation to the creditservices organization. The director of finance may conduct investigations andrequire submission of information as is necessary to enforce this section.

7. The bond or surety account shall be maintained until two years afterthe date that the credit services organization ceases operations.

407.640. Registration statements, filing, contents.
Registration statements, filing, contents.
407.640. 1. A credit services organization shall file aregistration statement with the director of finance beforeconducting business in this state. The registration statementmust contain:

(1) The name and address of the credit servicesorganization; and

(2) The name and address of any person who directly orindirectly owns or controls ten percent or more of theoutstanding shares of stock in the credit services organization.

2. The registration statement must also contain either:

(1) A full and complete disclosure of any litigation orunresolved complaint filed by or with a governmental authority ofthis state relating to the operation of the credit servicesorganization; or

(2) A notarized statement that states that there has beenno litigation or unresolved complaint filed by or with agovernmental authority of this state relating to the operation ofthe credit services organization.

3. The credit services organization shall update thestatement not later than the ninetieth day after the date onwhich a change in the information required in the statementoccurs.

4. Each credit services organization registering under thissection shall maintain a copy of the registration statement inthe office of the credit services organization. The creditservices organization shall allow a buyer to inspect theregistration statement on request.

5. The director of finance may charge each credit servicesorganization that files a registration statement with thedirector of finance a reasonable fee not to exceed one hundreddollars to cover the cost of filing. The director of finance maynot require a credit services organization to provide informationother than that provided in the registration statement as part ofthe registration process.

407.641. Contract, writing, contents.
Contract, writing, contents.
407.641. 1. Before executing a contract or agreement with a buyer orreceiving money or other valuable consideration, a credit servicesorganization shall provide the buyer with a statement in writing, containing:

(1) A complete and detailed description of the services to be performedby the credit services organization for the buyer and the total cost of theservices;

(2) A statement explaining the buyer’s right to proceed against the bondor surety account required by subdivision (1) of section 407.638;

(3) The name and address of the surety company that issued the bond, orthe name and address of the depository and the trustee, and the account numberof the surety account;

(4) A complete and accurate statement of the buyer’s right to review anyfile on the buyer maintained by a consumer reporting agency, as provided bythe federal Fair Credit Reporting Act, 15 U.S.C. Section 1681, et seq.;

(5) A statement that the buyer’s file is available for review at nocharge on request made to the consumer reporting agency within thirty daysafter the date of receipt of notice that credit has been denied, and that thebuyer’s file is available for a minimal charge at any other time;

(6) A complete and accurate statement of the buyer’s right to disputedirectly with the consumer reporting agency the completeness or accuracy ofany item contained in a file on the buyer maintained by that consumerreporting agency;

(7) A statement that accurate information cannot be permanently removedfrom the files of a consumer reporting agency;

(8) A complete and accurate statement of when consumer informationbecomes obsolete and of when consumer reporting agencies are prevented fromissuing reports containing obsolete information; and

(9) A complete and accurate statement of the availability of nonprofitcredit counseling services.

2. The credit services organization shall maintain on file, for a periodof two years after the date the statement is provided, an exact copy of thestatement, signed by the buyer, acknowledging receipt of the statement.

407.642. Contract requirements, cancellation clause.
Contract requirements, cancellation clause.
407.642. 1. Each contract between the buyer and a creditservices organization for the purchase of the services of thecredit services organization must be in writing, dated, signed bythe buyer and must include:

(1) A statement in type that is boldfaced, capitalized,underlined, or otherwise set out from surrounding writtenmaterial so as to be conspicuous, in immediate proximity to thespace reserved for the signature of the buyer, as follows:”YOU, THE BUYER, MAY CANCEL THIS CONTRACT AT ANY TIME BEFOREMIDNIGHT OF THE THIRD DAY AFTER THE DATE OF THE TRANSACTION. SEETHE ATTACHED NOTICE OF CANCELLATION FORM FOR AN EXPLANATION OFTHIS RIGHT”;

(2) The terms and conditions of payment, including thetotal of all payments to be made by the buyer, whether to thecredit services organization or to another person;

(3) A full and detailed description of the services to beperformed by the credit services organization for the buyer,including all guarantees and all promises of full or partialrefunds, and the estimated length of time, not to exceed onehundred eighty days, for performing the services; and

(4) The address of the credit services organization’sprincipal place of business and the name and address of itsregistered agent in the state authorized to receive service ofprocess.

2. The contract must have attached two easily detachablecopies of a notice of cancellation. The notice must be inboldfaced type and in the following form:



DATE: …………………………

BUYER’S SIGNATURE: …………………………………”

3. The credit services organization shall give to the buyera copy of the completed contract and all other documents thecredit services organization requires the buyer to sign at thetime they are signed.

4. The breach by a credit services organization of acontract under this section, or of any obligation arising from acontract under this section, is a violation of sections 407.635to 407.644.

407.643. Waiver of buyer’s rights void.
Waiver of buyer’s rights void.
407.643. 1. A credit services organization may not attemptto cause a buyer to waive a right under sections 407.635 to407.644.

2. A waiver by a buyer of any part of sections 407.635 to407.644 is void.

407.644. Actions–damages–penalties.
407.644. 1. (1) A buyer injured by a violation ofsections 407.635 to 407.644 may bring an action for recovery ofdamages. The damages awarded may not be less than the amountpaid by the buyer to the credit services organization, plusreasonable attorney’s fees and court costs.

(2) The buyer may also be awarded punitive damages.

2. The attorney general or a buyer may bring an action in acourt of competent jurisdiction to enjoin a violation of sections407.635 to 407.644.

3. A violation of sections 407.635 to 407.644 is anunlawful practice pursuant to sections 407.010 to 407.130, andthe violator shall be subject to all penalties, remedies andprocedures provided in sections 407.010 to 407.130.

4. An action may not be brought under subsection 1 or 3 ofthis section after four years after the date of the execution ofthe contract for services to which the action relates.

5. A person who violates any provision of sections 407.635to 407.644 is guilty of a class B misdemeanor.

6. In an action under this section the burden of proving anexemption under section 407.637 is on the person claiming theexemption.

7. The remedies provided by sections 407.635 to 407.644 arein addition to other remedies provided by law.