If you use the help of a credit repair company to improve your credit report or obtain credit, Ohio law provides you with some protection. Ohio's Credit Services Organization Act (CSOA) regulates credit repair companies that charge you for their services, and protects against certain potential deceptive or misleading practices by debt repair companies. CSOA supplements the protections provided by the federal Credit Repair Organizations Act (CROA).
Read on to learn what Ohio laws require and prohibit, who is covered by the laws, and what you can do if your rights are violated under the CSOA.
The federal Credit Repair Organizations Act (CROA) controls what debt repair clinics can promise and do for you. CROA was enacted to protect consumers from credit repair clinics that made false or misleading promises to “fix” your bad credit but then failed to deliver on those promises. The CROA:
To learn more about the CROA, see Federal Laws Governing Credit Repair Organizations.
In 2004, Ohio enacted the Credit Services Organization Act (CSOA). Its purpose is to protect Ohio consumers from being taken advantage of by credit repair companies that charge fees for doing things that consumers could perform themselves to improve their credit, usually for free.
The CSOA provides practically the same protections as the federal CSOA, including the three-day right to cancel the contract. However, it provides some additional protections. For example, the CSOA also requires credit repair companies to be bonded. This bond is an important layer of insurance for consumers who are damaged by violations of the CSOA. In addition, it makes it easier for you to collect damages if a company violates the law.
The CSOA governs any credit services organization (CSO). A CSO is any person or agency that offers, performs, or promises to perform the following services in exchange for money or other valuable consideration:
A CSO does not include the following:
All CSOs covered under the CSOA must be registered with the State of Ohio. This means that they must have a valid certificate of registration from Ohio's division of financial institutions. They must also maintain certain records of their transactions and services.
Every CSO is required to have a surety bond of at least $50,000. What this means is that a third party, usually the surety company, has agreed to pay up to $50,000 for any losses or damages that you suffer as a result of a CSO's violation of the CSOA. In that event, the surety company would be named as an additional defendant in a lawsuit, and is obligated to pay any court-awarded damages—except punitive damages--of up to $50,000.
Under the CSOA, before entering into an agreement, a CSO must give you a written statement that contains the following:
If, after reviewing and signing the initial written statement, you decide to hire the CSO, the CSOA requires the agreement to be in writing. The agreement must contain the following disclosures:
A CSO cannot lie about or misrepresent what it is going to do for you, or engage in certain other practices with regard to your credit. Under the CSOA, a CSO cannot:
You have a private cause of action if a CSO harms you in violation of the CSOA. This means that you can file a lawsuit in Ohio against the CSO for damages. You have up to four years from the date of the agreement to bring a lawsuit. If you win, the court may award to you:
The CSO may be subject to civil injunctions and criminal sanctions, enforceable by the local county prosecutor or Ohio attorney general. If you have a potential claim against a CSO, you can visit Ohio's Division of Financial Insititutions webpage at www.com.ohio.gov/fiin/CSAbout.aspx.
For more details on what Ohio's CSOA does and does not cover, you can read Ohio's Credit Services Organization Act, General Statutes §4712.01 to 4712.99. To learn how to find state statutes, visit Nolo’s Legal Research Center.