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Fair Credit Reporting: 17.2.7.1.1 Introduction

A number of key CROA prohibitions apply to any “person,”201 and not just to credit repair organizations. Thus, the plain language of the Act provides that these prohibitions can be applied to persons and entities that do not meet the definition of “credit repair organization.” “Person” is clearly a broader term than “credit repair organization,” and courts should give effect to the apparent intent of Congress when it chose this broader term to define the scope of these prohibitions.202

Fair Credit Reporting: 17.2.7.1.2 Decisions that limit the scope of any “person”

A number of courts have resisted a broad application of any “person” and held that the substantive prohibitions apply only to credit repair organizations.207 Some have done so on the theory that, if the prohibitions are not confined to credit repair organizations, there is no requirement of a tie to interstate commerce, and the Act would then exceed the authority of Congress.208 However, these courts misread the statute: the CROA prohibitions that apply to any “person” do limit themselves to int

Fair Credit Reporting: 17.2.7.3 Concealment of the Consumer’s Identity

The second prohibition applicable to any person states that no person may make any statement to a CRA or an actual or potential creditor which is intended to alter the consumer’s identification for the purpose of concealing adverse information which is accurate and not obsolete.231 Advising the consumer to take these steps is also prohibited.

Fair Credit Reporting: 17.2.7.4 Misrepresentations Regarding the Services of a Credit Repair Organization

The third provision applicable to any person states that no person may make “any untrue or misleading representation” about the services of a credit repair organization.235 The statute prohibits such statements in broad terms. A false representation would violate this prohibition whether it was made to the consumer, to the public generally, or even to creditors and CRAs. A statement is misleading if it would deceive the least sophisticated consumer.236

Consumer Banking and Payments Law: Introduction and Listing of Provisions

The Check Clearing for the 21st Century Act (Check 21 Act)—12 U.S.C. §§ 5001–5018—is reprinted below. The public law section number from the original enactment of the Act, Pub. L. No. 108–100, 117 Stat. 1177 (2003), is found in brackets at the end of the title of each codified section.

Title 12—Banks and Banking

Chapter 50—Check Truncation

Sec.

5001. Findings; purposes [§ 2]

5002. Definitions [§ 3]

5003. General provisions governing substitute checks [§ 4]

Consumer Banking and Payments Law: 12 U.S.C. § 5001. Findings; purposes

(a) Findings

The Congress finds as follows:

(1) In the Expedited Funds Availability Act, enacted on August 10, 1987, the Congress directed the Board of Governors of the Federal Reserve System to consider establishing regulations requiring Federal reserve banks and depository institutions to provide for check truncation, in order to improve the check processing system.

(2) In that same Act, the Congress—

Consumer Banking and Payments Law: 12 U.S.C. § 5002. Definitions

For purposes of this Act, the following definitions shall apply:

(1) Account

The term “account” means a deposit account at a bank.

(2) Bank

The term “bank” means any person that is located in a State and engaged in the business of banking and includes—

(A) any depository institution (as defined in section 461 (b)(1)(A) of this title);

Consumer Banking and Payments Law: 12 U.S.C. § 5004. Substitute check warranties

A bank that transfers, presents, or returns a substitute check and receives consideration for the check warrants, as a matter of law, to the transferee, any subsequent collecting or returning bank, the depositary bank, the drawee, the drawer, the payee, the depositor, and any endorser (regardless of whether the warrantee receives the substitute check or another paper or electronic form of the substitute check or original check) that—

Consumer Banking and Payments Law: 12 U.S.C. § 5008. Delays in an emergency

A delay by a bank beyond the time limits prescribed or permitted by this chapter shall be excused if the delay is caused by interruption of communication or computer facilities, suspension of payments by another bank, war, emergency conditions, failure of equipment, or other circumstances beyond the control of a bank and if the bank uses such diligence as the circumstances require.

[Pub. L. No. 108-100, § 9, 117 Stat. 1188 (Oct. 28, 2003)]

Consumer Banking and Payments Law: 12 U.S.C. § 5009. Measure of damages

(a) Liability

(1) In general

Except as provided in section 5005 of this title, any person who, in connection with a substitute check, breaches any warranty under this chapter or fails to comply with any requirement imposed by, or regulation prescribed pursuant to, this chapter with respect to any other person shall be liable to such person in an amount equal to the sum of—

(A) the lesser of—

Consumer Banking and Payments Law: 12 U.S.C. § 5011. Consumer awareness

(a) In general

Each bank shall provide, in accordance with subsection (b), a brief notice about substitute checks that describes—

(1) how a substitute check is the legal equivalent of an original check for all purposes, including any provision of any Federal or State law, and for all persons, if the substitute check—

Consumer Banking and Payments Law: 12 U.S.C. § 5013. Variation by agreement

(a) Section 5007

Any provision of section 5007 of this title may be varied by agreement of the banks involved.

(b) No other provisions may be varied

Except as provided in subsection (a), no provision of this chapter may be varied by agreement of any person or persons.

[Pub. L. No. 108-100, § 14, 117 Stat. 1190 (Oct. 28, 2003)]

Consumer Banking and Payments Law: 12 U.S.C. § 5015. Study and report on funds availability

(a) Study

In order to evaluate the implementation and the impact of this chapter, the Board shall conduct a study of—

(1) the percentage of total checks cleared in which the paper check is not returned to the paying bank;

(2) the extent to which banks make funds available to consumers for local and nonlocal checks prior to the expiration of maximum hold periods;

Consumer Banking and Payments Law: 12 U.S.C. § 5016. Statistical reporting of costs and revenues for transporting checks between reserve banks

In the annual report prepared by the Board for the first full calendar year after October 28, 2003 and in each of the 9 subsequent annual reports by the Board, the Board shall include the amount of operating costs attributable to, and an estimate of the Federal Reserve banks’ imputed revenues derived from, the transportation of commercial checks between Federal Reserve bank check processing centers.

[Pub. L. No. 108-100, § 17, 117 Stat. 1191 (Oct. 28, 2003)]