Washington Senate Bill Report ESHB 1311 (March 15, 2023)
- Issuer
- Congressional materials
- Document type
- Report
- Date
- 2023-03-16
- Case
- 2023 03 16 A30969 D257759 Bill Report 1311 S E Sba Bfgt 23
Summary
A Senate Bill Report on ESHB 1311, addressing credit repair services performed by a credit services organization, as of March 15, 2023, for the Senate Committee on Business, Financial Services, Gaming & Trade. The report states the bill passed the House on 3/6/23 by 91-5 and was heard in committee on 3/16/23. It describes the Credit Services Organizations Act established in 1986, including its exemptions, prohibited actions and information statement requirements. The bill summary narrows the attorney exemption, adds prohibited acts, sets when consumer reporting agencies, creditors and collection agencies need not communicate with a credit services organization, requires redaction of consumer personal information, extends recordkeeping from two years to four years and limits service duration to 180 days. The effective date is ninety days after adjournment of the session.
Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used
Full text
SENATE BILL REPORT
ESHB 1311
As of March 15, 2023
Title: An act relating to credit repair services performed by a credit services organization.
Brief Description: Addressing credit repair services performed by a credit services
organization.
Sponsors: House Committee on Consumer Protection & Business (originally sponsored by
Representatives Reeves, Corry, Chapman, Reed and Cheney).
Brief History: Passed House: 3/6/23, 91-5.
Committee Activity: Business, Financial Services, Gaming & Trade: 3/16/23.
Brief Summary of Bill
• Removes the exemption for certain types of law practices from being
defined as credit services organizations.
• Adds prohibited acts to the Credit Services Organization Act.
• Specifies conditions in which a consumer reporting agency, creditor, or
collection agency do not need to communicate with a credit services
organization.
• Requires credit services organizations to redact certain personal
information of a consumer when sending written communication.
• Requires credit services organizations to receive explicit written
approval from the consumer before using a consumer's signature for
credit repair services.
• Requires credit services organizations to provide consumers with a
notice about their ability to file complaints with the attorney general and
their rights.
SENATE COMMITTEE ON BUSINESS, FINANCIAL SERVICES, GAMING & TRADE
This analysis was prepared by non-partisan legislative staff for the use of legislative
members in their deliberations. This analysis is not part of the legislation nor does it
constitute a statement of legislative intent.
Senate Bill Report -1- ESHB 1311
Staff: Clinton McCarthy (786-7319)
Background: In 1986, the Legislature established the Credit Services Organizations Act. A
credit service organization (CSO) is regarded as a business that charges fees to customers in
an effort to obtain an extension of credit, improve a person's credit rating or prevent
foreclosure of a mortgage or security agreement. Under the CSO Act, a CSO means any
person who, with respect to the extension of credit by others, sells, provides, performs, or
represents that they can or will sell, provide, or perform, in return for the payment of money
or other valuable consideration any of the following services:
• improving, saving, or preserving a buyer's credit record, history, or rating;
• obtaining an extension of credit for a buyer;
• stopping, preventing, or delaying the foreclosure of a deed of trust, mortgage, or other
security agreement; or
• providing advice or assistance to a buyer with regard to any of these three types of
services.
CSOs are not:
• persons authorized to make loans or extensions of credit;
• banks;
• credit unions;
• nonprofit organizations exempt from taxation under section 501(c)(3) of the internal
revenue code;
• state licensed real estate brokers;
• entities licensed as a collection agency;
• any person licensed to practice law in this state if the person renders services within
the course and scope of their practice as an attorney;
• broker-dealers registered with the securities and exchange commission or the
commodity futures trading commission;
• consumer reporting agencies as defined in the Federal Fair Credit Reporting Act; or
• mortgage brokers.
Prohibited Actions. Under this chapter CSOs are prohibited from the following activities:
• charging or receiving money or other consideration prior to full and complete
performance of services the CSO has agreed to do, unless the CSO has a $10,000
surety bond, and is a company that can legally do business in the state of Washington;
• charging or receiving money or other consideration for referral of the buyer to a retail
seller that will or may extend credit to the buyer;
• making or counseling a buyer to make untrue or misleading statements when a buyer
is applying for credit; and
• making or using any untrue or misleading representations in the offer or sale of credit
services.
Information Statements and Notice of Cancellation. Prior to the execution of a contract
between a buyer and a CSO, the CSO must provide a buyer with an information statement.
Senate Bill Report -2- ESHB 1311
This information statement must include:
• a statement of the buyer's right to review any file on the buyer maintained by any
credit reporting agency;
• a statement that the buyer may review their consumer reporting agency file at no
charge if the request is made within 30 days after receiving notice that credit has been
denied; and
• the approximate price the buyer will be charged by the CSO to review their consumer
reporting agency file.
Each contract for purchase services must include a notice of cancellation. A buyer has the
right to cancel the contract at any time prior to midnight of the fifth day after the
transaction.
Summary of Bill: Narrowing the Exemption for Attorneys from the Definition of Credit
Services Organization. The exemption for attorneys from the definition of CSOs is
narrowed by removing the exemption for law practices that primarily work with consumers
to improve their credit rating, or assist consumers in obtaining an extension of credit. These
type of law practices would be considered CSOs with this definitional change.
Additional Prohibited Credit Services Organization Actions. CSOs are prohibited from
failing to provide a monthly statement to a consumer that details the services the CSO has
performed on their behalf. This includes an accounting of any funds paid by a consumer
and held or disbursed on the consumer's behalf.
The list of entities the CSO may not counsel or advise consumers to make untrue or
misleading statements to is expanded to include creditors, collection agencies, and
regulatory entities. CSOs cannot advise a consumer to submit a dispute without a good
faith belief in the accuracy of the dispute.
CSOs are prohibited from sending communications to a consumer reporting agency,
creditor, collection agency or regulatory entity without authorization from the consumer.
CSOs cannot fail to make written communication sent on behalf of a consumer to the
consumer.
It is not allowed to be considered a service of a CSO when a CSO seeks to obtain a credit
report and the performance of other services necessary to determine the needs of a
consumer for the reinvestigation of any accounts.
Communication Obligations of Consumer Reporting Agencies, Creditors, or Collection
Agencies to a Credit Service Organization. If a consumer reporting agency, creditor, or
collection agency knows that a consumer is represented by a CSO, they are permitted to
communicate with that CSO unless:
• the CSO fails to respond within 30 days to communication from the consumer
reporting agency, creditor, or collection agency; or
Senate Bill Report -3- ESHB 1311
• the consumer expressly directs the consumer reporting agency, creditor, or collection
agency not to communicate with the CSO.
A consumer reporting agency, creditor, or collection agency is not required to communicate
with a CSO if:
• the account subject to the dispute has been paid, settled, or resolved;
• the account subject to the dispute has been removed from the consumer's credit
report;
• the debt collector has provided to the CSO or to the consumer the verification
information regarding the account in dispute;
• the debt collector is a debt buyer and has provided to the CSO or to the consumer the
information or documentation regarding the account subject to the dispute; or
• the consumer reporting agency, creditor, or collection agency reasonably determines
the dispute is frivolous or irrelevant.
Identity Theft Prevention. CSOs are directed to redact personal information of the consumer
unless inclusion of the information is required by law. This includes:
• all except for the last four digits of the social security number;
• taxpayer identification number;
• financial account number;
• credit card number;
• debit card number; and
• month and year of the consumer's date of birth.
Credit Service Organization Recordkeeping Requirements. The period of time a CSO must
maintain a file for a consumer is extended from two years to four years following the
completion or termination of the CSO agreement.
Contents of the Information Statement. The information statement must include in 10 point
type at the top of the statement an outline of how a CSO will work on behalf of a
consumer. The notice will also include a statement directing consumers to reach out to the
Office of the Attorney General if they have a complaint about fees charged by the CSO.
The statement will also include the consumer's rights under federal and state law.
Credit Service Organization Contract Requirements. Contracts between a CSO and a
consumer must include explicit written approval from the consumer that the CSO may use
the consumer's signature to facilitate credit repair services. The duration of time under
which a CSO provides a consumer credit services is limited to 180 days.
The "Notice of Cancellation" component of the contract is updated to provide for electronic
means of communication as a way of cancelling. The duration of time a consumer has to
cancel is modified to provide for midnight on the fifth day after the contract is executed.
CSOs are required to provide cancellation instructions on its website that are easily
understood and provide easily exercised cancellation instructions.
Senate Bill Report -4- ESHB 1311
Attorney Fees. In case of an action by a consumer against a CSO, damages must be awarded
in an amount not less than the amount of money the consumer paid to the CSO.
Appropriation: None.
Fiscal Note: Available.
Creates Committee/Commission/Task Force that includes Legislative members: No.
Effective Date: Ninety days after adjournment of session in which bill is passed.
Senate Bill Report -5- ESHB 1311
File and source
- File
- 2023-03-16_a30969_d257759_bill-report-1311-s-e-sba-bfgt-23.pdf
- Size
- 13,187 bytes
- SHA-256
- 66e4c74d3b8f3a9ad24806ceeaa167e6c9cf5c5984aeff63d530b29bbf904ddc
- Original
- app.leg.wa.gov