CREDIT REPAIR LAWS IN MISSOURI
Note: Missouri regulates the credit services/credit repair industry both under a specific law and under its telemarketing law. Both are below.
MO ST 407.635
Chapter 407. Merchandising Practices
Credit Service Organizations
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.
407.637. Credit service organizations–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; [FN1]
(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;
(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.
[FN1] 26 U.S.C.A. � 501(c)(3).
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 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.
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 [FN1] 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.
[FN1] Revisor’s note–1991: 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.
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.
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.
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
(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.
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.
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.
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.
Vernon’s Annotated Missouri Statutes Currentness
As used in sections 407.1070 to 407.1085, the following terms shall mean:
(1) “Advertisement”, as defined in section 407.010;
(2) “Caller identification service”, a type of telephone service which permits telephone subscribers to see the telephone number of incoming telephone calls;
(3) “Consumer”, a natural person who purchases, may purchase or is solicited for purchase of merchandise or an investment opportunity by a telemarketer through telemarketing;
(4) “Established business relationship”, a prior or existing relationship formed by a voluntary two-way communication between a seller or telemarketer and a consumer with or without an exchange of consideration, on the basis of an inquiry, application, purchase or transaction by the consumer regarding products or services offered by such seller or telemarketer, which relationship has not been previously terminated by either party;
(5) “Fictitious name”, any name, other than the legal name, used by a seller or telemarketer;
(6) “Investment opportunity”, anything tangible or intangible that is offered for sale, sold or traded based wholly or in part on representations, either express or implied, about past, present or future income, profit or appreciation;
(7) “Material aspect or element”, any factor likely to significantly influence the consumer’s choice of, or conduct regarding, merchandise;
(8) “Merchandise”, any objects, wares, goods, commodities, intangibles, real estate or services; except that merchandise shall not include any services, goods or memberships given to a contributor by an entity, organized pursuant to Chapter 501(c)(3) of the United States Internal Revenue Code, while such entity is engaged in fund-raising to support the charitable purpose for which the entity was established provided that a bona fide member of such exempt organization makes the voice communication;
(9) “Prize”, anything offered or purportedly offered or given or purportedly given to a consumer by chance. For purposes of this definition, chance exists if a consumer is guaranteed to receive anything of value and, at the time of the offer or purported offer, the telemarketer does not identify the specific item that the consumer will receive;
(10) “Promptly”, at the beginning of any call initiated by a telemarketer to a consumer;
(11) “Seller”, any person who, in connection with a telemarketing transaction, provides, offers to provide, or arranges for others to provide merchandise to the consumer in exchange for consideration;
(12) “Telemarketer”, any person, or any recorded, computer-generated, electronically generated or other voice communication of any kind, who, in connection with telemarketing, initiates or receives telephone calls to or from a consumer. A telemarketer includes, but is not limited to, any such person that is an owner, operator, officer, director or partner to the management activities of a business;
(13) “Telemarketing”, a plan, program or campaign which is conducted to induce the purchase or lease of merchandise by use of one or more telephones and which involves more than one telephone call.
407.1073. Telemarketers, disclosures to consumers, misrepresentations
1. A telemarketer shall disclose, promptly and in a clear and conspicuous manner, to the consumer receiving the telephone call the following:
(1) That the purpose of the telephone call is to make a sale;
(2) The telemarketer’s identifiable name and the seller on whose behalf the solicitation is being made;
(3) The nature of the merchandise or investment opportunity being sold;
(4) That no purchase or payment is necessary to be able to win a prize or participate in a prize promotion if a prize promotion is offered. This disclosure shall be made before or in conjunction with the description of the prize to the consumer called; and
(5) If the telephone call is made by any recorded, computer-generated, electronically generated or other voice communication of any kind. When engaged in telemarketing, such voice communication shall, promptly at the beginning of the telephone call, inform the consumer that the call is being made by a recorded, computer-generated, electronically generated or other type of voice communication, as the case may be.
2. Before a consumer pays for merchandise offered for sale through telemarketing, the telemarketer shall disclose, in a clear and conspicuous manner, the following:
(1) The seller or telemarketer’s identifiable name and the address or telephone number where the seller or telemarketer can be reached;
(2) The total cost and quantity of the merchandise that is the subject of the telemarketing sales call;
(3) Any material restriction, limitation or condition to purchase, receive or use the merchandise that is the subject of a telemarketing sales call;
(4) Any material aspect of the nature or terms of the refund, cancellation, exchange or repurchase policies, including the absence of such policies;
(5) Any material aspect of an investment opportunity being offered, including benefits, the price of the land or other investment, and the location of the investment;
(6) Material elements of a prize promotion, including:
(a) The odds of being able to receive the prize and, if the odds are not calculable in advance, the factors and methods used in calculating the odds;
(b) That no purchase or payment of any kind is required to win a prize or to participate in a prize promotion;
(c) The no-purchase or no-payment method of participating in the prize promotion, with either instructions on how to participate or an address or local or toll-free telephone number to which consumers may write or call for information on how to participate; and
(d) All material conditions to receive or redeem the prize.
3. A telemarketer shall not misrepresent, directly or by implication, any of the following:
(1) A description of the prize;
(2) Its market value;
(3) The actual number of each prize to be awarded;
(4) The date by which the prize will be awarded.
4. A telemarketer shall not misrepresent any material aspect of the performance, quality, efficacy, nature or basic characteristics of merchandise that is the subject of a telemarketing sales call.
407.1076. Telemarketers or sellers, prohibited conduct
It is an unlawful telemarketing act or practice for any seller or telemarketer to engage in the following conduct:
(1) Misrepresent any material fact required pursuant to section 407.1073. It is a defense to this subdivision if a seller or telemarketer shows, by a preponderance of the evidence, that the misrepresentation resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adopted to avoid the error, and no civil penalties shall be imposed if this defense is met;
(2) Threaten, intimidate or use profane or obscene language;
(3) Cause the telephone to ring or engage any consumer in telephone conversation repeatedly or continuously in a manner a reasonable consumer would deem to be annoying, abusive or harassing;
(4) Knowingly and willfully initiate a telemarketing call to a consumer, or transfer or make available to others for telemarketing purposes a consumer’s telephone number when that consumer has stated previously that he or she does not wish to receive solicitation calls by or on behalf of the seller unless such request has been rescinded;
(5) Engage in telemarketing to a consumer’s residence at any time other than between 8:00 a.m. and 9:00 p.m. local time at the called consumer’s location;
(6) Request or receive payment in advance to remove derogatory information from or improve a consumer’s credit history, credit record or credit rating;
(7) Request or receive payment in advance from a consumer to recover or otherwise aid in the return of money or any other item lost by the consumer in a prior telemarketing transaction, except that this provision shall not apply to services provided by a licensed attorney;
(8) Obtain or submit for payment a check, draft or other form of negotiable paper drawn on a consumer’s checking, savings, share or similar account without the consumer’s express written or oral authorization. Such authorization shall be deemed verifiable if any of the following means are employed:
(a) Express written authorization by the consumer, which may include the consumer’s signature on the negotiable instrument;
(b) Express oral authorization which is tape-recorded and made available upon request to the consumer’s bank and which evidences clearly both the consumer’s authorization of payment for the merchandise that is the subject of the sales offer and the consumer’s receipt of all of the following information:
a. The date of the draft or drafts;
b. The amount of the draft or drafts;
c. The payor’s name;
d. The number of draft payments;
e. A telephone number for consumer inquiry that is answered during normal business hours; and
f. The date of the consumer’s oral authorization; or
(c) Written confirmation of the transaction, sent to the consumer prior to submission for payment of the consumer’s check, draft or other form of negotiable paper, which shall include:
a. All of the information contained in paragraph (b) of this subdivision; and
b. The procedures by which the consumer can obtain a refund from the seller or telemarketer in the event that the confirmation is inaccurate;
(9) Procure the services of any professional delivery, courier or other pick-up service to obtain immediate receipt or possession of a consumer’s payment, unless the merchandise or investment opportunity is delivered with the opportunity to inspect before any payment is collected;
(10) Knowingly provide assistance or support to any telemarketer when that person knows or consciously avoids knowing that the telemarketer is engaged in any act in violation of sections 407.1070 to 407.1085; or
(11) Knowingly utilize any method to block or otherwise circumvent a consumer’s use of a caller identification service.
407.1079. Telemarketers or sellers, recordkeeping
1. A seller or telemarketer shall keep for a period of twenty-four months from the date the record is produced all verifiable authorizations and records as required in sections 407.1070 to 407.1085, in the form, manner, format or place as they keep such records in the ordinary course of business, including but not limited to:
(1) All substantially different advertising, brochures, telemarketing scripts and promotional materials;
(2) For any prize with a value of twenty-five dollars or greater, the name and last known address of each prize recipient and the prize awarded;
(3) The name and last known address of each consumer, the merchandise purchased, the date such merchandise was shipped or provided and the amount paid by the consumer for the merchandise;
(4) The name, any fictitious name used, the last known home address and telephone number, and the job title for all current and former employees directly involved in telephone sales, provided, that if the seller permits fictitious names to be used by employees, each fictitious name must be traceable to only one specific employee; and
(5) All written authorizations required to be provided or received pursuant to sections 407.1070 to 407.1085.
2. For offers of consumer credit products subject to The Truth in Lending Act, 15 U.S.C. et seq., and Regulation Z, 12 CFR 226, compliance with the record-keeping requirements pursuant to The Truth in Lending Act and Regulation Z shall constitute compliance with subdivision (3) of subsection 1 of this section.
3. The seller and the telemarketer calling on behalf of the seller may, by written agreement, allocate responsibility between themselves for the record keeping required by this section. When a seller and telemarketer have entered into such an agreement, the terms of the agreement shall govern, and the seller or telemarketer, as the case may be, need not keep records that duplicate those of the other. If the agreement is unclear as to who must maintain any required record, or if no such agreement exists, the seller shall be responsible for complying with subdivisions (1), (2), (3) and (5) of subsection 1 of this section and the telemarketer shall be responsible for complying with subdivision (4) of subsection 1 of this section.
4. In the event of any dissolution or termination of the telemarketer’s business, the telemarketer shall maintain all records as required pursuant to this section. In the event of any sale, assignment or other change in ownership of the seller’s business, the successor shall maintain all records required pursuant to this section.
1. It is unlawful pursuant to section 407.020 to violate any provision of sections 407.1070 to 407.1085 or to misrepresent or omit the required disclosures of section 407.1073 or 407.1076, and pursuant to sections 407.010 to 407.130, the violator shall be subject to all penalties, remedies and procedures provided in sections 407.010 to 407.130. The remedies available in this section are cumulative and in addition to any other remedies available by law.
2. Any person who willfully and knowingly engages in any act or practice declared to be unlawful by any provision of subdivisions (2) to (5) of section 407.1076 shall be guilty of a class A misdemeanor. Any person who willfully and knowingly engages in any act or practice declared to be unlawful by any provision of subdivision (1) of section 407.1076, or of subdivisions (6) to (11) of section 407.1076, shall be guilty of a class D felony. Any person previously convicted of a class D felony pursuant to this subsection shall, for each subsequent conviction, be guilty of a class D felony punishable by the term of years set out for a class D felony, but with a fine of not more than five thousand dollars or a fine equal to triple the gain, with no limit on the amount recoverable pursuant to any triple-the-gain penalty. Any person who willfully and knowingly fails to keep the records required in section 407.1079 shall be guilty of a class A misdemeanor.
3. In addition to the remedies already provided in sections 407.1070 to 407.1085, any consumer that suffers a loss or harm as a result of any unlawful telemarketing act or practice pursuant to section 407.1076 may recover actual and punitive damages, reasonable attorney’s fees, court costs and any other remedies provided by law.
407.1085. Exempt acts or practices–complaints
1. The following acts or practices are exempt from the provisions of sections 407.1070 to 407.1082:
(1) Telephone calls in which the sale of merchandise is not completed, and payment or authorization of payment is not required, until after a face-to-face sales presentation by the telemarketer or seller; or
(2) Telephone calls in which the sale of merchandise is completed and a written contract is forwarded to the consumer so long as the consumer may return the merchandise within fourteen days of receipt of the merchandise and receive a refund of any moneys paid except for any coverage, fees or services earned; provided that the telemarketer shall inform the consumer at the time of the call that:
(a) A written contract regarding the sale of the merchandise will be forwarded to the consumer;
(b) The approximate date of the delivery of the merchandise; and
(c) The consumer will have a right to terminate the contract within fourteen days of receipt of the merchandise, and upon returning the merchandise, shall have a right to a refund as provided in this subdivision.
The term “merchandise” as used in this subdivision shall mean merchandise sold by a person, institution or company that is under the direction and supervision of the director of the department of insurance, director of the division of credit unions or director of the division of finance or federally chartered banks, savings and loans and credit unions;
(3) Telephone calls initiated by a consumer that:
(a) Are not the result of any advertisement by a seller or telemarketer;