Industry Evolution

In the absence of a federal framework during to regulate the credit repair industry, the FTC subsequently, a trend of illusory “quick fix” credit repair schemes that explicitly promised the removal of negative information by exploiting the limitations in the dispute process emerged in the 1990s.

The FCRA obligated CRAs to remove negative trade lines 30 days after a dispute was submitted if the investigation was still ongoing. However, unscrupulous companies submitted CRAs with disputes knowing that due to limitations in communications technology it was often technically difficult for disputes to be resolved within 30 days, resulting in high rates of “reinsertion,” or the reappearance of negative information previously removed in response to a consumer dispute.

Over the past 24 years, technological improvements in the dispute process, innovation in the credit repair industry, and routine enforcement of CROA by the FTC and state attorneys general have eliminated this problem.

Technological enhancements to e-OSCAR, the automated system that enables data furnishers and CRAs to create and respond to the disputes system, has resulted in the “[completion of disputes] within 10-14 business days and quite often within two to three days,” according to a national CRA. Additionally, the FTC reported in 2015 that “reinsertion” rates have fallen to 1% of all consumer disputes, hardly a systemic threat to the integrity of the credit reporting system.

Furthermore, as previously mentioned, decades of CROA enforcement actions by the FTC and state AGs, such as “Operation Credit Despair”21 and “Operation Clean Sweep,”22 have eliminated these “quick fix” schemes explicitly promising the removal of negative information.