Missouri Credit Repair Laws

CREDIT SERVICE ORGANIZATIONS
Sec.
407.635. Definitions.
407.637. Credit service organization –
exemptions.
407.638. Prohibited activities.
407.639. Copy of bond to be filed with director of
finance – purpose of bond – amount of
bond – statement by director of finance.
407.640. Registration statements, filing,
contents.
407.641. Contract, writing, contents.
407.642. Contract requirements, cancellation
clause.
407.643. Waiver of buyers rights void.
407.644. Actions – damages – penalties.
407.635. Definitions. – As used in
sections 407.635 to 407.644, the following words
and phrases shall mean:
(1) “Buyer”, an individual who is
solicited to purchase or who purchases the
services of a credit services organization;
(2) “Consumer reporting agency”
has the meaning assigned by section 603(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 to incur debt and defer
its payment offered or granted primarily for
personal family or household purposes.
(L. 1991 S.B. 112 § 1)
407.637. Credit service organization
– exemptions. – 1. A credit services organization
is a person who, with respect to the extension of
credit by others and in return for the payment of
money or other valuable consideration, provides
or represents that the person can 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 to 407.644:
(1) A person authorized to make loans
or extensions of credit under the laws of this state
or the United States who is subject to regulation
and supervision by this state or the United States,
or a lender approved by the United States
Secretary of Housing and Urban Development for
participation in a 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 accounts are
eligible for insurance by the Federal Deposit
Insurance Corporation, or a subsidiary 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 section 501(c)(3) of the
Internal Revenue Code;
(5) A person licensed as a real estate
broker or salesperson pursuant to chapter 339,
RSMo, acting within the course and scope of that
license;
(6) A person licensed to practice law in
this state acting within the course and scope of
the person’s practice as an attorney;
(7) A broker-dealer registered with the
Securities and Exchange Commission or the
Commodity Futures Trading Commission acting
within the course and scope of that regulation;
(8) A consumer reporting agency; and
(9) A person whose primary business
is making loans secured by liens on real property;
(10) A person who is licensed as a
certified public accountant pursuant to chapter
326, RSMo, acting within the course and scope of
that license; or an individual who is enrolled to
practice before the Internal Revenue Service; or
an accountant, who is accredited by the
Accreditation Council for Accountancy.
(L. 1991 S.B. 112 § 2)
407.638. Prohibited activities. – A
credit services organization, a salesperson, agent
or representative of a credit services organization,
or an independent contractor who sells or
attempts to sell the services of a credit services
organization may not:
(1) Charge a buyer or receive from a
buyer money or other valuable consideration
before completing performance of all services the
credit services organization has agreed to perform
for the buyer, unless the credit services
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organization has obtained in accordance with
section 407.639 a surety bond in the amount
required by subsection 4 of section 407.639,
issued by a surety company authorized to do
business in this state, or has established and
maintained a surety account at a federally insured
bank or savings and loan association located in
this state in which the amount required by
subsection 5 of section 407.639 is held in trust as
required by section 407.639;
(2) Charge a buyer or receive from a
buyer money or other valuable consideration
solely for referral of the buyer to a retail seller who
will or may extend credit to the buyer if the credit
that is or will be extended to the buyer is
substantially the same as that available to the
general public;
(3) Make or use a false or misleading
representation in the offer or sale of the services
of a credit services organization, including:
(a) Guaranteeing to “erase bad
credit” or words to that effect unless the
representation clearly discloses that this can be
done only if the credit history is inaccurate or
obsolete; and
(b) Guaranteeing an extension of credit
regardless of the person’s previous credit problem
or credit history unless the representation clearly
discloses the eligibility requirements for obtaining
an extension of credit;
(4) Engage, directly or indirectly, in a
fraudulent or deceptive act, practice or course of
business in connection with the offer or sale of the
services of a credit services organization;
(5) Make, or advise a buyer to make, a
statement with respect to a buyer’s credit
worthiness, credit standing or credit capacity that
is false or misleading or that should be known by
the exercise of reasonable care to be false or
misleading, to a consumer reporting agency or to
a person who has extended credit to a buyer or to
whom a buyer is applying for an extension of
credit;
(6) Advertise or cause to be advertised,
in any manner whatsoever, the services of a credit
services organization without filing a registration
statement with the director of finance, unless
otherwise provided by this chapter.
(L. 1991 S.B. 112 § 3)
407.639. Copy of bond to be filed
with director of finance – purpose of bond –
amount of bond – statement by director of
finance. – 1. This section applies to a credit
services organization required by subdivision (1)
of section 407.638 to obtain a surety bond or
establish a surety account.
2. If a bond is obtained, a copy of it
shall be filed with the director of finance. If a
surety account is established, notification of the
depository, the trustee and the account number
shall be filed with the director of finance.
3. The bond or surety account
required shall be in favor of the state for the
benefit of any person who is damaged by any
violation of sections 407.635 to 407.644. The
bond or surety account shall also be in favor of
any person damaged by such a violation.
4. Any person claiming against the
bond or surety account for a violation of sections
407.635 to 407.644 may maintain an action at law
against the credit services organization and
against the surety or trustee. The surety or
trustee shall be liable only for damages awarded
under subdivision (1) of subsection 1 of section
407.644 and not the punitive damages permitted
under that section. The aggregate liability of the
surety or trustee to all persons damaged by a
credit services organization’s violation of this
chapter may not exceed the amount of the surety
account or bond.
5. The bond or the surety account
shall be in the amount of ten thousand dollars.
6. A depository holding money in a
surety account under sections 407.635 to 407.644
shall not convey money in the account to the
credit services organization that established the
account or a representative of the credit services
organization unless the credit services
organization or representative presents a
statement issued by the director of finance
indicating that section 407.640* has been satisfied
in relation to the credit services organization. The
director of finance may conduct investigations and
require submission of information as is necessary
to enforce this section.
7. The bond or surety account shall be
maintained until two years after the date that the
credit services organization ceases operations.
(L. 1991 S.B. 112 § 4)
*Revisor’s note: Original rolls contain reference to “subsection
6 of section 5” (407.640). An apparent typographical error
since section 407.640 does not contain a subsection 6. All of
section 407.640 seems germane to the original reference.
407.640. Registration statements,
filing, contents. – 1. A credit services
organization shall file a registration statement with
the director of finance before conducting business
in this state. The registration statement must
contain:
(1) The name and address of the credit
services organization; and
(2) The name and address of any
person who directly or indirectly owns or controls
ten percent or more of the outstanding shares of
stock in the credit services organization.
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2. The registration statement must
also contain either:
(1) A full and complete disclosure of
any litigation or unresolved complaint filed by or
with a governmental authority of this state relating
to the operation of the credit services
organization; or
(2) A notarized statement that states
that there has been no litigation or unresolved
complaint filed by or with a governmental authority
of this state relating to the operation of the credit
services organization.
3. The credit services organization
shall update the statement not later than the
ninetieth day after the date on which a change in
the information required in the statement occurs.
4. Each credit services organization
registering under this section shall maintain a
copy of the registration statement in the office of
the credit services organization. The credit
services organization shall allow a buyer to
inspect the registration statement on request.
5. The director of finance may charge
each credit services organization that files a
registration statement with the director of finance
a reasonable fee not to exceed one hundred
dollars to cover the cost of filing. The director of
finance may not require a credit services
organization to provide information other than that
provided in the registration statement as part of
the registration process.
(L. 1991 S.B. 112 § 5)
407.641. Contract, writing, contents.
– 1. Before executing a contract or agreement
with a buyer or receiving money or other valuable
consideration, a credit services organization shall
provide the buyer with a statement in writing,
containing:
(1) A complete and detailed description
of the services to be performed by the credit
services organization for the buyer and the total
cost of the services;
(2) A statement explaining the buyer’s
right to proceed against the bond or surety
account required by subdivision (1) of section
407.638;
(3) The name and address of the
surety company that issued the bond, or the name
and address of the depository and the trustee,
and the account number of the surety account;
(4) A complete and accurate statement
of the buyer’s right to review any file on the buyer
maintained by a consumer reporting agency, as
provided by the 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 no charge on request made
to the consumer reporting agency within thirty
days after the date of receipt of notice that credit
has been denied, and that the buyer’s file is
available for a minimal charge at any other time;
(6) A complete and accurate statement
of the buyer’s right to dispute directly with the
consumer reporting agency the completeness or
accuracy of any item contained in a file on the
buyer maintained by that consumer reporting
agency;
(7) A statement that accurate
information cannot be permanently removed from
the files of a consumer reporting agency;
(8) A complete and accurate statement
of when consumer information becomes obsolete
and of when consumer reporting agencies are
prevented from issuing reports containing
obsolete information; and
(9) A complete and accurate statement
of the availability of nonprofit credit counseling
services.
2. The credit services organization
shall maintain on file, for a period of two years
after the date the statement is provided, an exact
copy of the statement, signed by the buyer,
acknowledging receipt of the statement.
(L. 1991 S.B. 112 § 6)
407.642. Contract requirements,
cancellation clause. – 1. Each contract between
the buyer and a credit services organization for
the purchase of the services of the credit services
organization must be in writing, dated, signed by
the buyer and must include:
(1) A statement in type that is
boldfaced, capitalized, underlined, or otherwise
set out from surrounding written material so as to
be conspicuous, in immediate proximity to the
space reserved for the signature of the buyer, as
follows:
“YOU, THE BUYER, MAY CANCEL THIS CONTRACT AT ANY TIME BEFORE MIDNIGHT OF
THE THIRD DAY AFTER THE DATE OF THE
TRANSACTION. SEE THE ATTACHED NOTICE
OF CANCELLATION FORM FOR AN EXPLANATION OF THIS RIGHT”;
(2) The terms and conditions of
payment, including the total of all payments to be
made by the buyer, whether to the credit services
organization or to another person;
(3) A full and detailed description of the
services to be performed by the credit services
organization for the buyer, including all
guarantees and all promises of full or partial
refunds, and the estimated length of time, not to
exceed one hundred eighty days, for performing
the services; and
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(4) The address of the credit services
organization’s principal place of business and the
name and address of its registered agent in the
state authorized to receive service of process.
2. The contract must have attached
two easily detachable copies of a notice of
cancellation. The notice must be in boldfaced
type and in the following form:
“NOTICE OF CANCELLATION
YOU MAY CANCEL THIS CONTRACT,
WITHOUT ANY PENALTY OR OBLIGATION,
WITHIN THREE DAYS AFTER THE DATE THE
CONTRACT IS SIGNED. IF YOU CANCEL, ANY
PAYMENT MADE BY YOU UNDER THIS
CONTRACT WILL BE RETURNED WITHIN TEN
DAYS AFTER THE DATE OF RECEIPT BY THE
SELLER OF YOUR CANCELLATION NOTICE.
TO CANCEL THIS CONTRACT, MAIL OR
DELIVER A SIGNED DATED COPY OF THIS
CANCELLATION NOTICE, OR OTHER
WRITTEN NOTICE TO:
(NAME OF SELLER) AT (ADDRESS OF
SELLER) (PLACE OF BUSINESS) NOT LATER
THAN MIDNIGHT (DATE). I HEREBY CANCEL
THIS TRANSACTION.
DATE: ____________________
BUYER’S SIGNATURE: ___________________
”
3. The credit services organization
shall give to the buyer a copy of the completed
contract and all other documents the credit
services organization requires the buyer to sign at
the time they are signed.
4. The breach by a credit services
organization of a contract under this section, or of
any obligation arising from a contract under this
section, is a violation of sections 407.635 to
407.644.
(L. 1991 S.B. 112 § 7)
407.643. Waiver of buyer’s rights
void. – 1. A credit services organization may not
attempt to cause a buyer to waive a right under
sections 407.635 to 407.644.
2. A waiver by a buyer of any part of
sections 407.635 to 407.644 is void.
(L. 1991 S.B. 112 § 8)
407.644. Actions – damages –
penalties. – 1. (1) A buyer injured by a violation
of sections 407.635 to 407.644 may bring an
action for recovery of damages. The damages
awarded may not be less than the amount paid by
the buyer to the credit services organization, plus
reasonable 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 a court of competent
jurisdiction to enjoin a violation of sections
407.635 to 407.644.
3. A violation of sections 407.635 to
407.644 is an unlawful practice pursuant to
sections 407.010 to 407.130, and the violator shall
be subject to all penalties, remedies and
procedures provided in sections 407.010 to
407.130.
4. An action may not be brought under
subsection 1 or 3 of this section after four years
after the date of the execution of the contract for
services to which the action relates.
5. A person who violates any provision
of sections 407.635 to 407.644 is guilty of a class
B misdemeanor.
6. In an action under this section the
burden of proving an exemption under section
407.637 is on the person claiming the exemption.
7. The remedies provided by sections
407.635 to 407.644 are in addition to other
remedies provided by law.
(L. 1991 S.B. 112 §§ 9 to 15)