Credit Repair Laws by State

New York

NY GEN BUS Ch. 20, Art.
Article 28-BB. Credit Services Business

General Business Law (Refs & Annos)
Chapter 20. Of the Consolidated Laws
Article 28-BB. Credit Services Business (Refs & Annos)
§ 458-a. Legislative findings and declarations; purposes

The legislature finds and declares:

1. The ability to obtain and use credit has become of great importance to consumers, who have a vital interest in establishing and maintaining their credit worthiness and credit standing. As a result, consumers who have experienced credit problems may seek assistance from credit services businesses which offer to improve the credit standing of such consumers.

Certain advertising and business practices of some companies engaged in the business of credit services have worked a financial hardship upon the people of this state, often those who are of limited economic means and inexperienced in credit matters.

2. The purposes of this article are to provide prospective consumers of services of credit services companies with the information necessary to make an informed decision regarding the purchase of those services and to protect the public from unfair or deceptive advertising and business practices.

<Laws 1909, Chapter 25>

§ 458-b. Definitions

As used in this article:

1. "Credit services business" means any person who sells, provides, or performs, or represents that he can or will sell, provide or perform, a service for the express or implied purpose of improving a consumer's credit record, history, or rating or providing advice or assistance to a consumer with regard to the consumer's credit record history or rating in return for the payment of a fee.

"Credit services business" does not include any of the following:

(a) Any type B not-for-profit corporation licensed pursuant to article twelve-c of the banking law.

(b) Any person admitted to practice law in this state where the person renders services within the course and scope of his or her practice as an attorney at law.

2. "Consumer" means any natural person who is solicited to purchase or who purchases the services of a credit services business.

3. "Person" includes an individual, corporation, partnership, joint venture, or any business entity.

4. The terms "consumer reporting agency", "consumer report", "investigative consumer report", "file", and "adverse information" shall have the meanings ascribed to each by section three hundred eighty-a of this chapter.

<Laws 1909, Chapter 25>

§ 458-c. Information statement; procedure

Prior to the execution of a contract between a consumer and a credit services business, the credit services business shall provide the consumer an information statement in writing, on a separate sheet, containing the information required by section four hundred fifty-eight-d of this chapter. The consumer shall acknowledge receipt of such information statement by placing his signature on the face thereof. The credit services business shall maintain on file or microfilm for a period of two years from the date of such acknowledgement an exact copy of such information statement.

<Laws 1909, Chapter 25>

§ 458-d. Information statement; contents

The information statement shall be printed in at least ten point type and shall include the following:
"RIGHT TO REVIEW YOUR FILE"

"The Federal Fair Credit Reporting Act [FN1] gives you the right to know what your credit file contains, and the consumer reporting agency must provide someone to help you interpret the data. The New York Fair Credit Reporting Act [FN2] gives you the right to receive an actual copy of your credit report. You will be required to identify yourself to the consumer reporting agency and you may be charged a small fee. There is no fee, however, if you have been turned down for credit, employment, or insurance because of information contained in a report within the preceding thirty days."
"INCORRECT INFORMATION"

"Consumer reporting agencies are required to follow reasonable procedures to ensure that subscribing creditors report information accurately. However, mistakes may occur.

When you notify the consumer reporting agency in writing that you dispute the accuracy of information, it must reinvestigate and modify or remove inaccurate data. The consumer reporting agency may not charge any fee for this service. Any pertinent data you have concerning an error should be given to the consumer reporting agency.

If reinvestigation does not resolve the dispute to your satisfaction, you may enter a statement of one hundred words or less in your file, explaining why you think the record is inaccurate.

The consumer reporting agency must include your statement about disputed data -- or a coded version of it -- with any reports it issues about you. New York law also provides that, at your request, the consumer reporting agency must notify any person who has received a report in the previous year that an error existed and furnish such person with the corrected information."
"TIME LIMITS ON ADVERSE DATA"

"Most kinds of information in your file may be reported for a period of seven years. If you have declared personal bankruptcy, however, that fact may be reported for ten years.

After seven years or ten years, the information can't be disclosed by a credit reporting agency unless you are being investigated for a credit application of $50,000 or more, for an application to purchase life insurance of $50,000 or more, or for employment at an annual salary of $25,000 or more."

[FN1] 15 USCA § 1681 et seq.

[FN2] General Business Law § 380 et seq.

<Laws 1909, Chapter 25>

§ 458-e. Advance fees prohibited

It is hereby declared to be an unfair and deceptive trade practice and unlawful for a credit services business to receive or collect from a consumer any fee in advance of the performance of those services specified in the contract as required by section four hundred fifty-eight-f of this chapter.

<Laws 1909, Chapter 25>

§ 458-f. Contracts; requirements and contents

1. Every contract between a consumer and a credit services business shall be in writing, shall be dated, shall contain the street address of the credit services business and the consumer, and shall be signed by the consumer and credit services business. Each contract shall contain the following:

(a) A complete and detailed statement of the services to be performed and the results to be achieved by the credit services business for or on behalf of the consumer, including a list of the adverse information appearing on the consumer's credit report that will be modified, a description of the precise nature of each modification, and the estimated date by which each modification will occur. A copy of the consumer's current credit report issued by a consumer credit reporting agency shall be annexed to the contract with the adverse entries proposed to be modified clearly marked.

(b) A statement in at least ten point type as follows:

"Under New York law no fee may be collected in advance of performance of the services specified in this contract."

2. The contract shall be accompanied by a completed form in duplicate, captioned "Notice of Cancellation," which shall be attached to the contract and easily detachable, and which shall contain in at least ten point type the following:
"Notice of Cancellation"

"You may cancel this contract, without any penalty or obligation, within three days from the date the contract is signed.

"To cancel this contract, mail or deliver a signed and dated copy of this cancellation notice, or any other written notice, to ____________________ at (name of seller) _________________________________________________ (address of seller) (Place of business) not later than midnight ________________. (date)

"I hereby cancel this transaction."

____________________________________
(purchaser's signature)
____________________________________
(date)

3. A copy of the fully completed contract and all other documents shall be given to the buyer at the time the contract is signed.

<Laws 1909, Chapter 25>

§ 458-g. Contracts void and unenforceable

1. Any contract for services which does not comply with the applicable provisions of this article shall be void and unenforceable as contrary to public policy.

2. Any waiver by a consumer of the provisions of this article shall be deemed void and unenforceable by a credit services business as contrary to public policy.

<Laws 1909, Chapter 25>

§ 458-h. Deceptive acts prohibited

It is hereby declared to be an unfair and deceptive trade practice and unlawful for a credit services company to:

1. Misrepresent directly or indirectly in its advertising, promotional materials, sales presentation, or in any manner: the nature of the services to be performed; the time within which services will be performed; the ability to improve a consumer's credit report or credit rating; the amount or type of credit a consumer can expect to receive as a result of the performance of the services offered; the qualifications, training or experience of its personnel.

2. Make or counsel or advise any consumer to make any statement which is untrue or misleading and which is known, or which by the exercise of reasonable care should be known, to be untrue or misleading, to a consumer credit reporting agency or to any person who has extended credit to a consumer or to whom a consumer is applying for an extension of credit, with respect to a consumer's credit worthiness, credit standing, or credit capacity.

3. Represent directly or indirectly in its advertising, promotional materials, sales presentation, or in any manner that it can procure or obtain a credit card for a consumer unless that credit services company has authority to issue the credit card being advertised.

<Laws 1909, Chapter 25>

§ 458-i. Action for recovery of damages by consumer

Any consumer injured by a violation of this article or by the breach by the credit services business of a contract which has been entered into pursuant to section four hundred fifty-eight-f of this chapter may bring an action for recovery of damages. Judgment shall be entered in favor of a consumer in an amount not to exceed three times the actual damages, but in no case less than the amount paid by the buyer to the credit services business. The court may award reasonable attorney's fees to a prevailing plaintiff.

<Laws 1909, Chapter 25>

§ 458-j. Enforcement by attorney general

In addition to the other remedies provided, whenever there shall be a violation of this article, application may be made by the attorney general in the name of the people of the state of New York to a court or justice having jurisdiction by a special proceeding to issue an injunction, and upon notice to the defendant of not less than five days, to enjoin and restrain the continuance of such violations; and if it shall appear to the satisfaction of the court or justice that the defendant has, in fact, violated this article, an injunction may be issued by such court or justice, enjoining and restraining any further violation, without requiring proof that any person has, in fact, been injured or damaged thereby. In any such proceeding, the court may make allowances to the attorney general as provided in paragraph six of subdivision (a) of section eighty-three hundred three of the civil practice law and rules, and direct restitution. Whenever the court shall determine that a violation of this article has occurred, the court may impose a civil penalty of not more than one thousand dollars for each violation. In connection with any such proposed application, the attorney general is authorized to take proof and make a determination of the relevant facts and to issue subpoenas in accordance with the civil practice law and rules.

<Laws 1909, Chapter 25>

§ 458-k. Severability

If any provision of this article or if any application thereof to any person or circumstance is held invalid, the remainder of this article and the application of the provision to other persons and circumstances shall not be affected thereby.

<Laws 1909, Chapter 25>

Case Law

I identified no significant cases construing this statute.

The Annotations include the following practice note, however.

by Richard A. Givens

Former Regional Director, Federal Trade Commission

General Business Law § 458-j in providing specific enforcement authority to the Attorney General, leaves intact the more general powers of the Attorney General under Executive Law § 63(12) to obtain injunctive relief against repeated fraudulent or illegal acts. Even if not a separate violation of § 458, any practice of recommending that consumers seeking credit reparation engage in illegal activity necessarily involves repeated fraudulent as well as independently illegal activity on the part of the recommending party. For example, suggesting that consumers create imaginary or new identities, utilize the names of others, use social security numbers other than their own, or the like to avoid prior bad credit ratings would constitute recommendation of fraud, and hence itself fraudulent. Activities of this type may also constitute a scheme to defraud under Penal Law §§ 190.60 or 190.65.

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