Credit Repair Telemarketing: The TSR Fee Rule and the TCPA

Six months is the number credit repair sellers should know. Under the FTC’s Telemarketing Sales Rule, a company selling credit repair by phone can’t collect its fee until it delivers a consumer report showing the promised results, issued more than six months after the results were achieved. Federal and California credit repair statutes add their own bans on advance fees, and the TCPA governs how the company reaches prospects. A compliant fee structure and clean consent records answer both kinds of claim.

What does the TSR require when credit repair is sold by phone?

It bars collecting a fee until the results are proven. Under 16 C.F.R. § 310.4(a)(2), it’s an abusive practice to request or receive payment “for goods or services represented to remove derogatory information from, or improve, a person’s credit history, credit record, or credit rating” until the promised time frame has passed and the seller has given the person “documentation in the form of a consumer report from a consumer reporting agency demonstrating that the promised results have been achieved, such report having been issued more than six months after the results were achieved.”

That’s a demanding standard. A monthly subscription billed from the first call doesn’t meet it, and neither does a first-work fee charged before any dispute letters go out. The rule looks at what the seller represented, so a script that promises a higher score or deleted collection accounts brings the sale within it.

Inbound calls don’t escape the rule. The TSR usually exempts calls a customer places in response to an ad, but § 310.6(b)(5) carves out “advertisements involving offers for goods or services described in § 310.3(a)(1)(vi) or § 310.4(a)(2) through (4).” A credit repair company that runs search or social ads and takes the calls is still doing covered telemarketing. The post on the 2024 TSR amendments covers the rule’s recordkeeping and exemption changes.

How do the federal and California credit repair statutes add to that?

They ban advance fees outright, and they let consumers sue. The Credit Repair Organizations Act, at 15 U.S.C. § 1679b(b), bars a credit repair organization from charging for any service “which the credit repair organization has agreed to perform for any consumer before such service is fully performed.” That ban reaches any kind of payment, not just cash, so a deposit or a postdated check counts too.

The private remedy is what makes the federal statute a class action risk. Under 15 U.S.C. § 1679g(a), actual damages are at least “any amount paid by the person to the credit repair organization,” and the court may add punitive damages. In a class action, the statute allows punitive damages for each class member “without regard to any minimum individual recovery.” A plaintiff’s lawyer who can show an advance fee across a customer base has a refund theory for every customer.

California has a parallel statute. Civil Code § 1789.13(a) bars a credit services organization from charging for its work “prior to full and complete performance of the services.” The same section bars advertising the services “without being registered with the Department of Justice.” Under Civil Code § 1789.21(a), judgment for an injured consumer is for actual damages “but in no case less than the amount paid by the consumer to the credit services organization,” along with reasonable fees and costs.

Which TCPA rules apply to credit repair calls and texts?

The telemarketing rules, because the calls sell a service. Under the FCC’s rule at 47 C.F.R. § 64.1200(a)(2), a call to a cell phone that “includes or introduces an advertisement or constitutes telemarketing” using an autodialer or an artificial or prerecorded voice needs “the prior express written consent of the called party.” The Do Not Call rule at § 64.1200(c)(2) bars telephone solicitations to a “residential telephone subscriber who has registered his or her telephone number on the national do-not-call registry,” subject to its exceptions.

Exposure is per call. The statute at 47 U.S.C. § 227(b)(3) allows “$500 in damages for each such violation,” and the court may increase that up to three times if it finds the defendant “willfully or knowingly violated” the subsection. A credit repair campaign that sends several follow-up texts to each lead multiplies that number quickly.

Why are purchased leads the weak point?

Because credit repair prospects can come from someone else’s form. A consumer who filled out a debt relief or loan-matching form may have agreed to hear from that site’s partners, but whether the agreement covers a particular credit repair company depends on the form’s wording and on how the lead was passed along. A plaintiff can sue the seller over those calls, not just the lead vendor. And a vendor that has gone out of business or can’t be found leaves the seller holding the consent question alone.

Two habits make those cases easier to defend. The first is keeping, for each lead, the form text and the timestamp the vendor captured, not just the vendor’s assurance that consent exists. The second is a vendor contract that requires the vendor to produce that record on request and to stand behind it. The post on TCPA vendor contracts and indemnity covers those terms. For TCPA defense lawyers handling a credit repair case, the lead record is the first thing to request from the client.

What to collect when a credit repair company gets a TCPA demand

1. Place a litigation hold on call and text logs, dialer and texting platform data, and the consent and lead records for every number in the demand.
2. Pull the opt-out and internal do-not-call logs with their dates.
3. Pull the National Do Not Call Registry scrub records and the Registry version dates used for each campaign.
4. Collect the lead vendor contracts and sales scripts, plus the ad copy and any prerecorded or AI-voice files.
5. Talk to a lawyer before replying to the demand or contacting the consumer, and before offering a refund or anything else to settle.

Questions about credit repair telemarketing

Does the TSR apply if the sale closes online after the call?

It can. The TSR looks at whether the seller used telemarketing to induce the purchase, and a call that leads the consumer to a sign-up page is part of that process. A company shouldn’t assume that moving the payment step to a website takes the sale outside the rule. The advance-fee limits in the credit repair statutes apply no matter how the contract is signed.

Is a credit repair text message covered by the TCPA?

Yes. In Campbell-Ewald Co. v. Gomez (2016) 577 U.S. 153, the Court said “A text message to a cellular telephone, it is undisputed, qualifies as a” call under the autodialer provision. Marketing texts to cell phones sent with an autodialer need prior express written consent, and a text that markets credit repair is telemarketing. The autodialer definition is narrow after Facebook, Inc. v. Duguid (2021) 592 U.S. 395, but Do Not Call claims don’t depend on it.

Can a credit repair company charge a setup fee?

Not before performing the services, under the federal and California statutes, and not before the six-month consumer report under the TSR when the sale is made by phone. Labels don’t change that. A fee called a setup or onboarding charge is still a payment for the service if it’s collected before the service is done.

Does a nonprofit credit counselor face the same rules?

Not always. The federal credit repair statute’s definition excludes certain tax-exempt nonprofit organizations, and the TCPA has its own provisions for tax-exempt nonprofits. A counseling agency should check its tax status and its exact services against each law before assuming an exemption applies. A for-profit partner calling on its behalf may not share the exemption.

Defending credit repair calling and texting claims

If your credit repair company has received a TCPA demand letter or class action over sales calls or texts, the lead records and the fee structure usually decide how the case goes. Rosenberger + Kawabata represents businesses defending TCPA lawsuits and class actions through its business litigation practice, including claims involving credit repair sales calls and texts. Contact Rosenberger + Kawabata online for a confidential consultation, or call (310) 894-6921.

Sources

The FTC’s rules are at 16 C.F.R. § 310.4 and 16 C.F.R. § 310.6. The FCC’s rules are at 47 C.F.R. § 64.1200.

The federal statutes are the Credit Repair Organizations Act at 15 U.S.C. § 1679b and 15 U.S.C. § 1679g, the Telemarketing Act at 15 U.S.C. § 6103 and 15 U.S.C. § 6104, and the Telephone Consumer Protection Act at 47 U.S.C. § 227. The court decisions are Campbell-Ewald Co. v. Gomez (2016) 577 U.S. 153 and Facebook, Inc. v. Duguid (2021) 592 U.S. 395. The California statutes are Civil Code § 1789.13 and Civil Code § 1789.21.

This post is general information about the Telephone Consumer Protection Act and related laws as of April 30, 2026. It is not legal advice, and reading it does not create an attorney-client relationship. Courts and the FCC change the rules in this area often, and the outcome of any claim depends on its facts. Past results do not guarantee future outcomes.