The "Ending Scam Credit Repair Act" or "ESCRA Act" aims to protect consumers from deceptive credit repair practices by updating the Credit Repair Organizations Act to include stricter definitions, prohibit misleading practices, mandate specific disclosures, and set communication standards. It also requires credit repair organizations to be licensed by the state starting in 2026 and increases the penalties for non-compliance.
Sarah McBride
Representative
DE
The Ending Scam Credit Repair Act, or ESCRA Act, amends the Credit Repair Organizations Act to combat deceptive practices in the credit repair industry. It broadens the definition of prohibited practices, including making false statements, lying to credit agencies, and charging premature fees. The bill mandates specific disclosures, consumer contracts, and communication standards for credit repair organizations, including licensing requirements and transparency in disputes. Additionally, it sets a fixed amount for damages for each violation of the title.
New Bill Cracks Down on Scam Credit Repair Companies, Starting 2026
The "Ending Scam Credit Repair Act," or ESCRA, is all about protecting you from shady credit repair companies. It's updating the existing Credit Repair Organizations Act with some serious teeth to stop these companies from taking advantage of people trying to fix their credit.
Stopping the Scams
This bill updates the definition of a "credit repair organization" to make it harder for scammers to slip through the cracks. One key change? It makes it illegal for these companies to lie to the Consumer Financial Protection Bureau (CFPB), the Federal Trade Commission (FTC), or any law enforcement agency, and you can now file complaints against them online (SEC. 3). They also can't lie to credit reporting agencies or creditors. Plus, they can't charge you upfront for removing negative information from your credit report. They have to actually deliver results, proven by a credit report issued at least 6 months after their services, before they can get paid (SEC. 3).
No More "Jamming"
ESCRA also tackles the annoying practice of "jamming," where credit repair companies flood agencies with repeated disputes about the same information. Now, they have to wait for the credit reporting agency or data furnisher to investigate the first dispute and get back to you before sending another one, unless there are real, material changes to the information (SEC. 3). Think of it like this: if you're arguing with your landlord about a leaky faucet, you can't just keep sending the same complaint every day without giving them time to fix it, or at least show that something new and significant has changed.
Transparency and Accountability
The bill forces credit repair companies to be way more transparent. They have to give you copies of everything they send on your behalf, when they send it (SEC. 5). Plus, starting January 1, 2026, all credit repair organizations will need to be licensed by the state they operate in (SEC. 6). This makes it easier to track them down and hold them accountable. If they are using a lawyer, they are still subject to this law (SEC. 6). And if they send dispute letters, those letters must clearly state that they were prepared by a credit repair organization (SEC. 7). They also have to respond within 15 business days if the recipient of the dispute asks for clarification. (SEC. 7)
Real Consequences
Finally, ESCRA increases the penalties for companies that break the rules. If a company violates the law, they could be on the hook for $500 per violation (SEC. 8). This isn't just about actual damages anymore; it's a flat fee to discourage bad behavior. This is a big deal because it gives consumers more power to fight back against these scams.