Article
30. Credit Repair Services Act
Baldwin's Ohio Revised Code Annotated Currentness
Title XLVII. Occupations--Professions
Chapter
4712.
4712.01 Definitions
As used in sections 4712.01 to 4712.14 of the Revised
Code:
(A) "Buyer" means an individual who is solicited to
purchase or who purchases the services of a credit services organization for
purposes other than obtaining a business loan as described in division (B)(6)
of section 1343.01 of the
Revised Code.
(B) "Consumer reporting agency" has the same meaning as
in the "Fair Credit Reporting Act," 84 Stat. 1128, 15 U.S.C.A. 1681a,
as amended.
(C)(1) "Credit
services organization" means any person that, in return for the payment of
money or other valuable consideration readily convertible into money for the
following services, sells, provides, or performs, or represents that the person
can or will sell, provide, or perform, one or more of the following services:
(a) Improving a buyer's credit record, history, or rating;
(b) Obtaining an extension of credit by others for a buyer;
(c) Providing advice or
assistance to a buyer in connection with division (C)(1)(a) or (b) of this
section;
(d) Removing adverse
credit information that is accurate and not obsolete from the buyer's credit
record, history, or rating;
(e) Altering the buyer's
identification to prevent the display of the buyer's credit record, history, or
rating.
(2) "Credit services organization" does not include any
of the following:
(a) A person that makes
or collects loans, to the extent these activities are subject to licensure or
registration by this state;
(b) A mortgage broker,
as defined in section 1322.01 of the
Revised Code, that holds a valid certificate of registration under sections 1322.01 to 1322.12 of the Revised
Code;
(c) A lender approved by
the United States secretary of housing and urban development for participation
in a mortgage insurance program under the "National Housing Act," 48
Stat. 1246 (1934), 12 U.S.C.A. 1701,
as amended;
(d) A bank, savings
bank, or savings and loan association, or a subsidiary or an affiliate of a
bank, savings bank, or savings and loan association. For purposes of division
(C)(2)(d) of this section, "affiliate" has the same meaning as in
division (A) of section 1101.01 of the
Revised Code and "bank," as used in division (A) of section 1101.01 of the
Revised Code, is deemed to include a savings bank or savings and
loan association.
(e) A credit union
organized and qualified under Chapter 1733. of the Revised Code or the
"Federal Credit Union Act," 84 Stat. 994 (1970), 12 U.S.C.A. 1751,
as amended;
(f) A budget and debt
counseling service, as defined in division (D) of section 2716.03 of the
Revised Code, provided that the service is a nonprofit organization
exempt from taxation under section 501(c)(3) of the "Internal Revenue Code
of 1986," 100 Stat. 2085, 26 U.S.C.A. 501,
as amended, and that the service is in compliance with Chapter 4710. of the Revised Code;
(g) A consumer reporting
agency that is in substantial compliance with the "Fair Credit Reporting
Act," 84 Stat. 1128, 15 U.S.C.A. 1681a,
as amended.
(h) A mortgage banker;
(i) Any political
subdivision, or any governmental or other public entity, corporation, or
agency, in or of the United States or any state of the United States;
(j) A college or university,
or controlled entity of a college or university, as defined in section 1713.05 of the
Revised Code;
(k) A motor vehicle
dealer licensed pursuant to Chapter 4517. of the Revised Code
acting within the scope and authority of that license or a motor vehicle
auction owner licensed pursuant to Chapters 4517. and 4707. of the Revised Code
acting within the scope and authority of that license.
(D) "Extension of credit" means 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. "Extension of
credit" does not include a mortgage.
(E) "Mortgage" means any indebtedness secured by a deed
of trust, security deed, or other lien on real property.
(F) "Mortgage banker" means any person that makes,
services, or buys and sells mortgage loans and is approved by the United States
department of housing and urban development, the United States department of
veterans affairs, the federal national mortgage association, or the federal
home loan mortgage corporation.
(G) "Superintendent of financial institutions" includes
the deputy superintendent for consumer finance as provided in section 1181.21 of the
Revised Code.
4712.02 Certificates of
registration
(A) A credit services organization shall file a registration
application with, and receive a certificate of registration from, the division
of financial institutions before conducting business in this state. The
registration application shall be accompanied by a one-hundred-dollar fee and
shall contain all of the following information:
(1) The name and address of the credit services organization;
(2) The name and address of any person that directly or indirectly
owns or controls ten per cent or more of the outstanding shares of stock in the
organization;
(3) Either of the following:
(a) A full and complete
disclosure of any litigation commenced against the organization or unresolved
complaint that relates to the operation of the organization and that is filed
with the attorney general, the secretary of state, or any other governmental
authority of the United States, this state, or any other state of the United
States;
(b) A notarized
statement stating that no litigation has been commenced and no unresolved
complaint relating to the operation of the organization has been filed with the
attorney general, the secretary of state, or any other governmental authority
of the United States, this state, or any other state of the United States.
(4) Any other information required at any time by the division.
(B)(1) Except as otherwise provided in division (B)(2) of this
section, each credit services organization shall notify
the division in writing within thirty days after the date of a change in the
information required by division (A) of this section.
(2) Each organization shall notify the division in writing no
later than thirty days prior to any change in the information required by
division (A)(1) or (2) of this section and shall receive approval from the
division before making any such change.
(C)(1) A credit services organization shall attach both of the
following to the registration application submitted pursuant to division (A) of
this section:
(a) A copy of the
contract that the organization intends to execute with its customers;
(b) Evidence of the bond
required under section 4712.06 of the
Revised Code.
(2) Any modification made to the contract described in division
(C)(1)(a) of this section shall be filed with the division prior to its use by
the organization.
(D) Each credit services organization registering under this
section shall maintain a copy of the registration application in its files. The
organization shall allow a buyer to inspect the registration application upon
request.
(E) Each nonresident credit services organization registering
under this section shall designate and maintain a resident of this state as the
organization's statutory agent for purposes of receipt of service of process.
(F) If, in order to issue a certificate of registration to a
credit services organization, investigation by the division outside this state
is necessary, the division may require the organization to advance sufficient
funds to pay the actual expenses of the investigation.
(G) Each credit services organization registering under this
section shall use no more than one fictitious or trade name.
(H)(1) A certificate of
registration issued by the division pursuant to this section shall expire
annually on the thirtieth day of April.
(2) A credit services
organization may renew its certificate of registration by filing with the
division a renewal application accompanied by a one-hundred-dollar renewal fee.
(I) All money collected by the division pursuant to this section
shall be deposited by it in the state treasury to the credit of the consumer
finance fund.
(J)(1) No credit services organization shall fail to comply with
division (A) of this section.
(2) No credit services organization shall fail to comply with division
(B), (D), (E), (F), or (G) of this section.
4712.03 Suspension,
revocation, or refusal of certificate of registration
After notice and a hearing conducted in accordance with Chapter
119. of the Revised Code, the superintendent of financial institutions may
suspend, revoke, or refuse to issue or renew a certificate of registration if
any of the following conditions applies to the applicant for registration or
registrant:
(A) The applicant or registrant obtained a certificate of
registration through any false or fraudulent representation or made any
substantial misrepresentation in any registration application.
(B) The applicant or registrant made false promises through
advertising or other means or engaged in a continued course of
misrepresentations.
(C) The applicant or registrant violated any provision of Chapter
1345. or sections 4712.01 to 4712.14 of the Revised
Code or the rules adopted thereunder.
(D) The applicant or registrant was convicted, in a court of
competent jurisdiction of this state or any other state, of a felony or any
criminal offense involving fraud, or failed to notify the division of financial
institutions of any such conviction.
(E) The applicant or registrant engaged in conduct that constituted
improper, fraudulent, or dishonest dealings.
4712.04 Written
statements
(A) 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 written statement containing all of the
following information:
(1) A complete and detailed description of the services to be
performed by the organization for the buyer and the total cost of the services;
(2) A statement explaining the buyer's rights against the surety
bond required pursuant to section 4712.06 of the
Revised Code;
(3) The name and address of the surety company that issued the
surety bond;
(4) A complete and
accurate statement of the availability of nonprofit budget and debt counseling
services.
(B) The written statement required under division (A) of this
section shall be printed in at least ten-point boldface type and shall include
the following statement or any alternative statement prescribed by the division
of financial institutions:
"Credit Reporting Practices
Rights
of Consumers Under
Under the federal Fair Credit Reporting Act, you have all of the
following legal rights:
You have a right to obtain a copy of your credit report from a
consumer reporting agency. You may be charged a reasonable fee. However, there
is no fee if you have been turned down within the
preceding sixty days for credit, employment, insurance, or a rental dwelling
because of information in your credit report. The consumer reporting agency
must provide someone to help you interpret the information in your credit file.
You have a right to dispute inaccurate information by contacting
the consumer reporting agency directly. However, neither you nor any credit
services organization has the right to have accurate, current, and verifiable
information removed from your consumer reporting agency report. The consumer
reporting agency must remove accurate, negative information from your report
only if it is more than seven years old. Bankruptcy information can be reported
for ten years. Accurate information cannot be permanently removed from the
files of a consumer reporting agency. Credit reporting agencies are required to
follow reasonable procedures to ensure that creditors report information
accurately. However, mistakes may occur.
You may, on your own, notify a consumer reporting agency in
writing that you dispute the accuracy of information in your credit file. The
consumer reporting agency then must reinvestigate and
modify or remove inaccurate information. The consumer reporting agency must not
charge any fee for this service. Any pertinent information and copies of all
documents you have concerning an error should be given to the consumer
reporting agency.
If reinvestigation does not resolve the dispute to your
satisfaction, you may send a brief statement to the consumer reporting agency
to keep in your file, explaining why you think the record is inaccurate. The
consumer reporting agency must include your statement about disputed
information in any reports it issues about you.
Under
(C) The credit services
organization shall maintain a copy of the statement, signed by the buyer,
acknowledging receipt of the statement. The copy shall be maintained in the
organization's files for at least two years after the date on which the
statement is provided to the buyer.
(D) The credit services organization, in a timely manner, shall
notify each buyer of all substantive changes in the "Fair Credit Reporting
Act," 84 Stat. 1128, 15 U.S.C.A. 1681a,
and shall provide each buyer with copies of those changes.
(E) No credit services organization shall fail to comply with this
section.
4712.05 Contracts
(A) Each contract between the buyer and a credit services
organization for the purchase of the services of the organization shall be in
writing, dated and signed by the buyer, and shall include all of the following:
(1) A statement, in type that is boldfaced, capitalized,
underlined, or otherwise conspicuously set out from surrounding written
material and that is in immediate proximity to the space reserved for the
signature of the buyer, as follows:
"If you, the buyer, have been denied credit within the last
sixty days, you may obtain a free copy of the consumer credit report from the
consumer reporting agency. You also have the right to dispute inaccurate
information in a report.
You may cancel this
contract at any time before midnight of the third business day after the date
you signed it. 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 for the buyer by the credit services organization, including all
guarantees and all promises of full or partial refunds, and the estimated
length of time, not exceeding sixty days or any shorter time period prescribed
by the superintendent of financial institutions, for performing the services;
(4) The address of the credit services organization's principal
place of business and the name and address of its agent in this state
authorized to receive service of process;
(5) With respect to the
previous calendar year or the time period during which the credit services
organization has been in business, whichever is shorter, the percentage of the
organization's customers for whom the organization has fully and completely
performed the services the organization agreed to perform for the buyer.
(B) The contract shall have attached two easily detachable copies
of a notice of cancellation. The notice shall be in boldface type and in the
following form:
"Notice of Cancellation
You may cancel this contract, without any penalty or obligation,
within three business days after the date the contract is signed.
To cancel this contract, mail or deliver a signed, dated copy of
this cancellation notice, or other written notice, to:
______________________________ at __________________________________________
(Name of Seller) (Address of Seller) (Place of Business)
Not later than midnight ______________________________________________________
(Date)
I hereby cancel this transaction.
Dated: ___________________________ __________________________________________
(Buyer's signature)"
(C) The credit services organization, at the time of signing,
shall give to the buyer a copy of the completed contract and all other
documents the organization requires the buyer to sign.
(D) No credit services organization shall breach a contract
described in this section or fail to comply with any
obligation arising from such a contract.
(E) No credit services organization shall fail to comply with
division (A), (B), or (C) of this section.
4712.06 Surety bonds
(A) No credit services organization shall conduct business in this
state unless the organization has obtained a surety bond issued by a surety
company authorized to do business in this state and all of the following conditions
are met:
(1) A copy of the bond is filed with the division of financial
institutions.
(2) The bond is in favor of any person, and of the state for the
benefit of any person, that is injured by any violation of sections 4712.01 to 4712.14 of the Revised
Code.
(3) The bond is in the amount of fifty thousand dollars.
(4) The bond is maintained and in effect for at least two years
after the date on which the credit services organization ceases to conduct
business in this state.
(B) Any person claiming against the bond for a violation of sections 4712.01 to 4712.14 of the Revised
Code may maintain an action at law against the credit services
organization and against the surety company. However, the surety company is
liable only for damages awarded under division (A)(2) of section 4712.10 of the
Revised Code and not for punitive damages awarded under division
(A)(3) of section 4712.10 of the
Revised Code. The aggregate liability of the surety company to all
persons injured by a credit services organization's violation of sections 4712.01 to 4712.14 of the Revised
Code shall not exceed the amount of the bond.
4712.07 Prohibitions
No credit services organization, salesperson, agent, or representative
of a credit services organization, or independent contractor that sells or
attempts to sell the services of a credit services organization shall do any of
the following:
(A) Charge or receive directly or indirectly from a buyer money or
other consideration readily convertible into money until all services the
organization has agreed to perform for the buyer are completed within the time
periods described in division (A)(3) of section 4712.05 of the
Revised Code.
(B) Charge or receive directly or indirectly from a buyer money or
other consideration readily convertible into money for the referral of the
buyer to a person that makes an extension of credit or to a consumer reporting
agency, except when credit has actually been extended as a result of that
referral;
(C) Make or use a false or misleading representation in the offer
or sale of the services of the organization, including either of the following:
(1) Guarantying or
otherwise stating that the organization is able to delete an adverse credit
history, unless the representation clearly discloses that this can be done only
if the credit history is inaccurate or obsolete;
(2) Guarantying or
otherwise stating that the organization is able to obtain an extension of
credit regardless of the buyer's previous credit problems or credit history,
unless the representation clearly discloses the eligibility requirements for
obtaining an extension of credit.
(D) Engage, directly or indirectly, in an unconscionable, unfair,
or deceptive act or practice, as those terms are used and defined in Chapter
1345. of the Revised Code, in connection with the offer or sale of the services
of a credit services organization;
(E)(1) Make or advise a
buyer to make a false or misleading statement concerning the buyer's
creditworthiness, identification, credit standing, or credit capacity to any of
the following:
(a) A consumer reporting
agency;
(b) A person that has
made an extension of credit to the buyer;
(c) A person to which
the buyer is applying for an extension of credit.
(2) Division (E)(1) of
this section applies to any statement that the organization, salesperson,
agent, representative, or independent contractor knows or should know to be
false or misleading through the exercise of reasonable care.
(F) Advertise or cause to be advertised, in any manner, the
services of a credit services organization without being registered with the
division of financial institutions;
(G) Fail to maintain a statutory agent as required under division
(E) of section 4712.02 of the
Revised Code;
(H) Transfer or assign a certificate of registration issued by the
division pursuant to section 4712.02 of the
Revised Code;
(I) Submit the buyer's disputes to a consumer reporting agency
without the buyer's knowledge as evidenced by positive identification,
including the buyer's correct current residence address, and written
authorization personally signed by the buyer;
(J) Fail to maintain, for a period of time as determined by the
superintendent of financial institutions, all of the following:
(1) A log of all
contracts;
(2) Copies of each
contract;
(3) Documentation that
substantiates the validity of the representation made pursuant to division
(A)(5) of section 4712.05 of the
Revised Code;
(4) Any other record
specified by the superintendent.
(K) Contact a consumer reporting agency, by telephone or
otherwise, for the purpose of submitting or obtaining
information relative to any buyer, and state or imply that he or she is the
buyer or the buyer's attorney, guardian, or other legal representative;
(L) Engage, directly or indirectly, in any fraudulent or deceptive
act, practice, or course of business in connection with the offer or sale of
the services of a credit services organization.
4712.08 Fraudulent
practices
No credit services organization shall do any of the following:
(A) Obtain a certificate of registration through any false or
fraudulent representation or make any substantial misrepresentation in any registration
application;
(B) Make false promises through advertising or other means in the
conduct of its business or engage in a continued course of misrepresentations
in the conduct of its business;
(C) Engage in conduct that constitutes improper, fraudulent, or
dishonest dealings in the conduct of its business;
(D) Fail to notify the division of financial institutions if the
credit services organization is convicted, in a court of competent jurisdiction
of this state or any other state, of a felony or any criminal offense involving
fraud.
4712.09 Waiver of
buyers' rights
(A) No credit services organization shall cause or attempt to
cause a buyer to waive a right under sections 4712.01 to 4712.14 of the Revised
Code.
(B) Any waiver by a buyer of a right under sections 4712.01 to 4712.14 of the Revised
Code is void.
4712.10 Civil actions;
injunctive relief; criminal prosecutions
(A)(1) A buyer injured
by a violation of sections 4712.01 to 4712.14 of the Revised
Code may bring an action for recovery of damages.
(2) Damages awarded
under division (A)(1) of this section shall not be less than the amount paid by
the buyer to the credit services organization, plus reasonable attorney's fees
and court costs.
(3) The buyer may be
awarded punitive damages.
(4) No action shall be
brought under division (A)(1) of this section after four years after the date
of the execution of the contract for services to which the action relates.
(B)(1) The division of
financial institutions, the attorney general, or a buyer may bring an action to
enjoin a violation of sections 4712.01 to 4712.14 of the Revised
Code.
(2) The division may
initiate criminal proceedings under sections 4712.01 to 4712.14 of the Revised
Code by presenting any evidence of criminal violations to the
prosecuting attorney of the county in which the offense may be prosecuted. If
the prosecuting attorney does not prosecute the violations, or at the request
of the prosecuting attorney, the division shall present any evidence of
criminal violations to the attorney general, who may proceed in the prosecution
with all the rights, privileges, and powers conferred by law on prosecuting
attorneys, including the power to appear before grand juries and to interrogate
witnesses before such grand juries. These powers of the attorney general shall
be in addition to any other applicable powers of the attorney general.
(C) The remedies provided by this section are in addition to any
other remedy provided by law.
(D) In any proceeding or action brought under sections 4712.01 to 4712.14 of the Revised
Code, the burden of proving an exemption under those sections is on
the person claiming the benefit of the exemption.
(E) No person shall be deemed to violate sections 4712.01 to 4712.14 of the Revised
Code with respect to any act taken or omission made in reliance on a
written notice, written interpretation, or written report from the
superintendent of financial institutions, unless there is a subsequent
amendment to those sections, or the rules promulgated thereunder, that affects
the superintendent's notice, interpretation, or report.
4712.11 Unfair or
deceptive acts or practices
(A) A violation of division (J) of section 4712.02, division (E)
of section 4712.04, division (D) or (E) of section 4712.05, division (A) of
section 4712.06, section 4712.07 or 4712.08, or division (A) of section 4712.09 of the
Revised Code is deemed to be an unfair or deceptive act or practice
in violation of section 1345.02 of the
Revised Code.
4712.12 Investigations;
cease and desist orders
(A) The division of financial institutions may investigate alleged
violations of sections 4712.01 to 4712.14 of the Revised
Code, or the rules adopted thereunder, or complaints concerning any
such violation. The division may make application to the court of common pleas
for an order enjoining any such violation and, upon a showing by the division
that a person has committed, or is about to commit, such a violation, the court
shall grant an injunction, restraining order, or other appropriate relief.
(B) In conducting any investigation pursuant to this section, the
division may compel, by subpoena, witnesses to testify in relation to any
matter over which it has jurisdiction, and may require the production of any
book, record, or other document pertaining to such matter. If a person fails to
file any statement or report, obey any subpoena, give testimony, produce any
book, record, or other document as required by such a subpoena, or permit
photocopying of any book, record, or other document subpoenaed, the court of common pleas of any county in this state, upon application
made to it by the division, shall compel obedience by attachment proceedings
for contempt, as in the case of disobedience of the requirements of a subpoena
issued from the court or a refusal to testify therein.
(C) If the division determines that a person is engaged in, or is
believed to be engaged in, activities that may constitute a violation of sections 4712.01 to 4712.14 of the Revised
Code, the division may, after notice and a hearing conducted in
accordance with Chapter 119. of the Revised Code, issue a cease and desist
order. Such an order shall be enforceable in the court of common pleas.
4712.13 Disclosure of
numbers
A credit services organization shall disclose in any printed or
published advertisement relating to the credit services organization's
services, the number designated on the certificate of registration that is
issued to the credit services organization by the division of financial
institutions under sections 4712.01 to 4712.14 of the Revised
Code. No credit services organization shall fail to comply with this
section.
4712.14 Rulemaking
powers
The superintendent of financial institutions may adopt, in
accordance with Chapter 119. of the Revised Code, reasonable rules to carry out
the purposes of sections 4712.01 to 4712.14 of the Revised Code.
4712.99 Penalties
Whoever violates division (J)
of section 4712.02, division (E) of section 4712.04, division (D) or (E) of
section 4712.05, division (A) of section 4712.06, section 4712.07 or 4712.08,
or division (A) of section 4712.09 of the
Revised Code is guilty of a felony of the fifth degree.
Case Law
Denying request to certify a
class action against car dealership for violations of the Credit Services Organization Act. Hall v. Jack
There is a split of authority in
Automobile buyers brought suit against a car dealer alleging that
the dealer’s conduct in helping to obtain credit for the car purchase, as an
inducement to sale, was regulated under the Credit Services Organization Act
and that the buyer was entitled to rescind within three days. The court ruled that even if the dealers were
engaged in a credit services business, the car buyers were not “buyers” within
the meaning of the act because they did not pay the car dealer for that
service. Snook v. Ford Motor Co.,
142
Plaintiffs who made payments to automobile dealership by check and
trade-in equity as part of "mixed transaction" of credit services,
which resulted in a lease agreement with lender and ultimately acquisition of
motor vehicle pursuant to lease with lender, were "buyers" of
services of dealership, which was a "credit services organization,"
for purposes of Credit Services Organization Act (CSOA). Sannes v. Jeff
Wyler Chevrolet, Inc., 107
In an unpublished decision, the
Ohio Court of Appeals has ruled that the Credit Services Organization Act is a
strict liability statute pursuant to which a violator could be enforced without
demonstrating mens rea. State v. Schlosser, Not Reported in
N.E.2d, 1996 WL 280038 (
Hall v. Jack Walker Pontiac Toyota, Inc.
143
December 01, 2000
143
Court of
Appeals of
Second
District,
HALL et al., Appellants,
v.
JACK WALKER PONTIAC TOYOTA, INC. et al., Appellees.
Automobile
purchasers and lessors brought actions against automobile dealerships alleging
that dealerships violated Credit Services Organization Act. The
Affirmed.
[1] KeyCite Notes
30 Appeal and
Error
30XVI Review
30XVI(H) Discretion of Lower Court