3 California FTC Laws for Credit Repair Companies you need to know.

3 California FTC Laws for Credit Repair Companies you need to know.

• 1789.16. Contracts; requirements; contents

(a) A credit services organization shall not provide any service to a buyer except pursuant to a written contract that complies with this section. Every contract between the buyer and a credit services organization for the purchase of the services of the credit services organization shall be in writing, shall be dated, signed by the buyer, and include all of the following:
(1) A conspicuous statement in size equal to at least 10-point boldface type, 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 prior to midnight of the fifth 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 some other 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 date by which the services are to be performed, or the estimated length of time for performing the services not to exceed six months or a shorter period consistent with the purposes of this title as may be prescribed by the Department of Justice.
(4) The credit services organization's principal business address and the name and address of its agent, other than the Secretary of State, in the State of California , authorized to receive service of process.
(b) 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 type of at least 10-point the following statement written in the same language as used in the contract:
"Notice of Cancellation" "You may cancel this contract, without any penalty or obligation, within five days from the date the contract is signed. "If you cancel, any payment made by you under this contract must be returned within 15 days following receipt by the seller of your cancellation notice. "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."
_________________________________       _______________________________________
(date)                             (purchaser's signature)

A copy of the fully completed contract and all other documents the credit services organization requires the buyer to sign shall be given to the buyer at the time they are signed.

• 1789.17. Seller's breach of contract or obligation; violation of title

The seller's breach of a contract under this title or of any obligation arising therefrom shall constitute a violation of this title.

• 1789.18. Surety bonds; compliance requirements; filing of copy

No credit services organization shall conduct business in this state unless the credit services organization has first obtained a surety bond in the principal amount of one hundred thousand dollars ($100,000) issued by an admitted surety and the bond complies with all of the following:
(a) The bond shall be in favor of the State of California for the benefit of any person who is damaged by any violation of this title. The bond shall also be in favor of any individual damaged by those practices.
(b) Any person claiming against the bond for a violation of this title may maintain an action at law against the credit services organization and against the surety. The surety shall be liable only for actual damages and not the punitive damages permitted under Section 1789.21. The aggregate liability of the surety to all persons damaged by a credit services organization's violation of this title shall in no event exceed the amount of the bond.
(c) The bond shall be maintained for two years following the date on which the credit services organization ceases to conduct business in this state.
A copy of the bond shall be filed with the Secretary of State.

• 1789.19. Waiver of rights by buyer; prohibition; attempt to obtain; violation of title; burden of proof on exemption or exception from definition

(a) Any waiver by a buyer of the provisions of this title shall be deemed contrary to public policy and shall be void and unenforceable. Any attempt by a credit services organization to have a buyer waive rights given by this title shall constitute a violation of this title.
(b) In any proceeding involving this title, the burden of proving an exemption or an exception from a definition is upon the person claiming it.

• 1789.20. Violations; misdemeanor; injunction; prosecutor

(a) Any person who violates any provision of this title is guilty of a misdemeanor. Any superior court of this state shall have jurisdiction in equity to restrain and enjoin the violation of any provision of this title.
The duty to institute actions for violation of this title, including equity proceedings to restrain and enjoin such a violation, is hereby vested in the Attorney General, district attorneys, and city attorneys. The Attorney General, any district attorney, or any city attorney may prosecute misdemeanor actions or institute equity proceedings, or both.
This section shall not be deemed to prohibit the enforcement by any person of any right provided by this or any other law.
(b) The misdemeanor provision of this section does not apply to a seller's breach of a contract subject to this title.

• 1789.21. Actions for recovery of damages or injunctive relief

(a) Any buyer injured by a violation of this title or by the credit services organization's breach of a contract subject to this title may bring any action for recovery of damages, or for injunctive relief, or both. Judgment shall be entered for actual damages, but in no case less than the amount paid by the buyer to the credit services organization, plus reasonable attorney's fees and costs. An award, if the trial court deems it proper, may be entered for punitive damages.
(b) Any person, including, but not limited to, a consumer credit reporting agency, as defined in subdivision (d) of Section 1785.3, and any consumer of, or user of, a consumer credit report under the Consumer Credit Reporting Agencies Act (Title 1.6 (commencing with Section 1785.1)), and any furnisher of credit information under the Consumer Credit Reporting Agencies Act, may bring an action for the recovery of damages or for injunctive relief, or both, for a violation of this title. Any person bringing such an action who prevails in the action shall be entitled to reasonable attorney's fees and costs.