Washington, DC—Leading consumer advocates and Credit Repair Organizations (CROs) Lexington Law Firm and Progrexion are calling on the Consumer Financial Protection Bureau (CFPB) to support human trafficking survivors by rescinding language in a new rule that will have dire unintended consequences for victims.
Recently, the CFPB proposed a new rule ostensibly designed to help victims of this heinous crime. Unfortunately, while the rule is designed to help survivors by preventing Credit Ratings Agencies (CRAs) from reporting negative information during the period they were trafficked, it will have unintended consequences by denying survivors the right to seek help from credit repair professionals.
In addition to the physical and mental abuse perpetrators of human trafficking inflict upon their victims, it is financial abuse that further ties victims to their abusers. Abusers will often destroy a victim’s credit, leaving survivors unable to rent an apartment, get a job or buy a car. This makes it even harder for them to escape their abuser’s captivity.
While the CFPB’s rule aims to help break this cycle by allowing survivors to utilize a third party to prepare a statement contesting errors and adverse information on their credit reports, it specifically states that such statements cannot be prepared by a credit repair professional. Many CROs have attempted to offer their services to survivors for free, but they will be prevented from doing so by the CFPB’s new rule.
Reputable CROs like Lexington Law and Progrexion agree with the CFPB that survivors of human trafficking should not be viewed as a revenue stream. In fact, they are actively partnering with the National Survivor Law Collective (NSLC) and Utah’s Safe Harbor Crisis Center to deliver pro bono credit repair, protection and monitoring services to the survivors they serve.
Lexington Law and Progrexion support better tailoring of the rule’s language to prohibit third parties from charging survivors for these services, but as it’s currently written, the CFPB’s proposed rule will have a detrimental impact on survivors who will be left to navigate this complex system on their own without professional help. The Federal Trade Commission (FTC) recently found that half of consumers abandon the credit repair process before completing it because they found it too confusing.
Human trafficking survivors have a right to utilize professional services, such as lawyers or accountants. It’s common sense that they should be able to use credit repair professionals to contest negative information that occurred while they were being abused. CROs are one of the few third-party experts that consumers currently blocked by the credit reporting system utilize to ensure that their federal rights are realized and their credit report is fair, accurate and backed by evidence.
“America’s credit repair professionals are ready to do our part to help survivors rebuild their lives by using our expertise to help remove inaccurate, unfair or unsubstantiated negative information on their credit reports from the period they were being abused,” says John Heath, directing attorney, Lexington Law. “Unfortunately, while its stated goal is to help survivors repair their credit, the CFPB’s new rule will actually restrict their ability to do so by denying them the right to seek help from credit repair professionals. We urge the CFPB to amend this rule and allow human trafficking survivors to seek professional help to repair their credit.”
The CFPB’s new language is even more concerning because it was drafted without any notice or input from the public. Neither the legislation authorizing the CFPB to issue the rule—named the Debt Bondage Repair Act—nor the disclosed public comments mention anything about prohibiting CROs from partnering with victim advocacy organizations to help survivors. Instead, the language was slipped in by the CFPB rulemaking process without any explanation.
Background:
This is not the only instance where Americans are currently denied the right to seek help from credit repair professionals. Rep. Al Lawson (D-FL) recently introduced legislation (H.R. 7919) to repeal a loophole in the Fair Credit Reporting Act (FCRA) currently being exploited by entities in the credit reporting system. Millions of Americans rely on credit repair professionals and other consumer advocates for advice and guidance when they have questions about items on their credit reports.
Regrettably, these consumer advocates are limited in their ability to adequately represent consumers because of this anti-consumer loophole in the FCRA that gives credit furnishers an excuse to ignore, without consideration or explanation, any correspondence sent on behalf of a consumer by a third party, be it a credit repair company or a nonprofit community organization.
Rep. Lawson’s legislation will expand the ability of consumers to use credit repair organizations and positively affect their ability to repair their credit. In meetings on Capitol Hill, the American Association of Consumer Credit Professionals (AACCP) has argued that Americans should have the right to consult with and be represented by consumer advocates with deep knowledge of the consumer credit system and consumer rights when dealing with credit furnishers and debt collectors. The AACCP partnered with nonprofit groups—including the African American Empowerment Coalition, the National Asian American Coalition and the National Diversity Coalition—to lobby Congress to close the FCRA loophole.