ESCRA Act

Bill Number

H.R. 306

Origin Chamber

House

Congress

119th Congress, Session 1

Policy Area

Finance and Financial Sector

Status

Introduced

Latest Action

2025-01-09: Referred to the House Committee on Financial Services.

Last Updated

2026-04-15T08:05:51Z

AI-Generated Summary

Purpose of the Legislation

The "Ending Scam Credit Repair Act" (ESCRA Act), H.R. 306, aims to strengthen consumer protections in the credit repair industry by amending the Credit Repair Organizations Act (CROA). It targets abusive practices, such as misleading claims and unauthorized fees, to prevent scams and ensure credit repair services deliver verifiable results without exploiting consumers.

Key Provisions

• Definition of Credit Repair Organization: Clarifies that the term excludes good-faith legal services, including those related to bankruptcy or debt collection cases filed within 12 months by attorneys in the same firm. It also excludes fees received for litigation representation.
• Prohibited Practices:
• Requires that any untrue or misleading statements about credit repair services be made "knowingly," and expands options for consumers to report issues to the Bureau of Consumer Financial Protection (CFPB), Federal Trade Commission (FTC), or federal, state, local, or Tribal law enforcement via online portals.
• Bans requesting or receiving payment for credit repair services until a consumer credit report (issued at least 6 months after the service) shows the promised improvements, such as removal of inaccurate information.
• Prohibits "jamming," which is submitting multiple disputes about the same credit information to consumer reporting agencies unless the agency has had time to investigate the prior dispute, results have been shared, and the new dispute specifies inaccuracies.
• Required Disclosures: Mandates that credit repair organizations inform consumers that they can perform these services for free themselves. Updates contact information to include the CFPB and extends record-keeping requirements to 5 years, including all phone recordings of consumer communications.
• Consumer Contracts: Requires organizations to provide consumers with copies of all communications sent on their behalf at the time they are sent.
• Noncompliance Rules: Applies CROA to organizations even if they employ attorneys (except for specific bankruptcy/debt attorneys). Starting January 1, 2026, all credit repair organizations must be licensed by a state.
• Communications with Data Furnishers: Introduces rules for disputes sent to companies that provide credit data (furnishers). These must identify the organization and consumer, use first-class mail with labeled envelopes (including state license if applicable), disclose the organization's role, and respond to furnisher inquiries within 15 business days. Attorneys must certify accuracy based on reliable consumer-provided information. Blank dispute forms must include organization details.
• Civil Liability: Allows consumers to seek damages, including a minimum of $500 per violation, in addition to actual damages or other remedies.

Significant Changes to Existing Law

• Expanded Exclusions and Clarity: Refines the CROA definition to better protect legitimate legal services while closing loopholes for evasion.
• Stricter Payment and Dispute Rules: Introduces a results-based payment prohibition (replacing vague prior language) and the new anti-jamming provision to prevent frivolous or repetitive disputes that burden credit systems.
• Enhanced Oversight and Reporting: Adds CFPB alongside the FTC for regulation and complaint handling; mandates state licensing, which was not previously required federally.
• Improved Transparency and Accountability: Extends disclosure and record-keeping periods, requires real-time sharing of communications, and imposes detailed formatting/disclosure rules for disputes to furnishers—changes not in the original CROA.
• Stronger Remedies: Shifts from "actual damages" to include statutory minimums, making enforcement easier without proving specific financial harm.

Potential Impacts

• On Citizens (Consumers): Increases protection against fraudulent credit repair schemes by delaying payments until results are proven and simplifying reporting of abuses. Consumers may save money by handling disputes themselves (as highlighted in disclosures) and have stronger tools to sue for violations, potentially leading to fewer scams and faster credit improvements.
• On Government Agencies: Boosts the roles of the CFPB and FTC in receiving complaints and enforcing rules through online portals, which could increase their workload but improve coordination with state and local enforcers. State licensing requirements may shift some regulatory burden to state agencies starting in 2026.
• On the Credit Repair Industry: Raises compliance costs due to licensing, record-keeping, and communication rules, potentially weeding out unethical operators while allowing legitimate ones to build trust. Consumer reporting agencies and data furnishers may face fewer baseless disputes, streamlining their investigations.
• On International Relations: No direct impacts, as the bill focuses on domestic consumer credit practices.

Main Stakeholders Affected

• Consumers: Primary beneficiaries, especially those with poor credit seeking repair services, as they gain safeguards against fees for unproven results and easier access to remedies.
• Credit Repair Organizations: Directly regulated, facing new licensing, payment, and communication restrictions that could increase operational costs but reduce scam risks.
• Attorneys and Legal Firms: Protected for bankruptcy/debt-related work but must comply if offering general credit repair; certification rules add accountability.
• Data Furnishers and Consumer Reporting Agencies: Benefit from clearer, identifiable disputes, reducing administrative burdens from vague or repetitive claims.
• Government Entities: CFPB, FTC, and state regulators gain expanded enforcement tools; law enforcement at all levels can receive more targeted fraud reports.

Notable Legal, Constitutional, or Political Implications

• Legal Implications: Bolsters consumer protection under federal law by aligning CROA with the Fair Credit Reporting Act (which governs credit disputes) and increasing civil penalties, likely leading to more lawsuits and easier class actions. The state licensing mandate could create a patchwork of regulations, prompting future federal guidance.
• Constitutional Implications: Regulates commercial practices and speech (e.g., disclosures and prohibitions on misleading statements) without restricting core rights, as it targets fraud prevention—a permissible government interest under the First Amendment. No apparent due process or equal protection issues, though small organizations might challenge licensing costs.
• Political Implications: Addresses widespread credit repair scams, promoting bipartisan consumer advocacy (introduced by Representatives McBride and Kim). It could enhance public trust in financial markets but may face industry pushback over added bureaucracy.

This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.

Sponsor

Rep. McBride, Sarah [D-DE-At Large]

Cosponsors (7)

Rep. Kim, Young [R-CA-40], Rep. Bynum, Janelle S. [D-OR-5], Rep. Lawler, Michael [R-NY-17], Rep. Gottheimer, Josh [D-NJ-5], Rep. Fitzpatrick, Brian K. [R-PA-1], Rep. Sherman, Brad [D-CA-32], Rep. Van Drew, Jefferson [R-NJ-2]

Recent Actions

• 2025-01-09: Referred to the House Committee on Financial Services.
• 2025-01-09: Introduced in House
• 2025-01-09: Introduced in House

Bill Versions

• Ending Scam Credit Repair Act — issued 2025-01-09 — PDF (11 pages)