Credit Repair Organizations Act
Title 44. Trade and Commerce Chapter 11.
Regulations Concerning Particular Businesses Article 7. Credit Services § 44-1701. Definitions
In this article, unless the context otherwise requires:
1. "Buyer" means any natural person who is solicited to purchase or who purchases the services
of a credit services organization.
2. "Credit services organization" means a person who, with respect to the extension of credit by
others, sells, provides, performs or represents that he can or will sell, provide or perform any of
the following services in return for the payment of monies or other valuable consideration:
(a) Improving a buyer's credit record, history or rating.
(b) Obtaining an extension of credit for a buyer.
(c) Providing advice or assistance to a buyer with regard to either subdivision (a) or (b) of this
3. "Extension of credit" means the right to defer payment of debt or to incur debt and defer its
payment, which is offered or granted primarily for personal, family or household purposes.
§ 44-1702. Exemptions
This article does not apply to:
1. A person who is organized, chartered or holding a license or authorization certificate to make
loans or extensions of credit pursuant to the laws of this state or the United States and who is
subject to regulation and supervision by an official or agency of this state or the United States.
2. A bank or savings and loan institution whose deposits or accounts are eligible for insurance by
the federal deposit insurance corporation or the federal savings and loan insurance corporation.
3. A person licensed as a real estate broker by this state if the person is acting within the course
and scope of that license.
4. A person licensed to practice law in this state if the person renders services within the course
and scope of his practice as an attorney at law.
5. A broker-dealer registered with the securities and exchange commission or the commodity
futures trading commission if the broker-dealer is acting within the course and scope of such
6. Any nonprofit organization exempt from taxation under § 501(c)(3) of the Internal Revenue
§ 44-1702.01. Repealed by Laws 1977, Ch. 126, § 1
§ 44-1703. Credit services organizations; prohibited activities
A credit services organization and its salespersons, agents and representatives who sell or
attempt to sell the services of a credit services organization shall not do any of the following:
1. Charge or receive monies or other valuable consideration before full and complete
performance of the services the credit services organization has agreed to perform for or on
behalf of the buyer, unless the credit services organization, in conformity with § 44-1708, has
obtained a surety bond issued by a surety company authorized to do business in this state. If a
credit services organization is in compliance with this paragraph, the salesperson, agents and
representatives who sell the services of the organization are not required to obtain the surety
bond provided for in § 44-1708.
2. Charge or receive monies 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 which is or will be extended
to the buyer is on substantially the same terms as those available to the general public.
3. Make or counsel or advise a buyer to make any statement which is untrue or misleading and
which is known, or which by the exercise of reasonable care should be known, to be untrue or
misleading to a consumer credit reporting agency or to any person who has extended credit to a
buyer or to whom a buyer is applying for an extension of credit, with respect to a buyer's
creditworthiness, credit standing or credit capacity.
4. Make or use any untrue or misleading representations in the offer or sale of the services of a
credit services organization or engage, directly or indirectly, in an act, practice or course of
business which operates or would operate as a fraud or deception on a person in connection with
the offer or sale of the services of a credit services organization.
§ 44-1704. Information statement; necessity and time of delivery to buyer; acknowledgment of
delivery; retention on file
Before the execution of a contract or agreement between the buyer and a credit services
organization or before the receipt by the credit services organization of monies or other valuable
consideration, whichever occurs first, the credit services organization shall provide the buyer
with a statement, in writing, containing all the information required by § 44-1705. The credit
services organization shall maintain on file or microfilm for a period of two years an exact copy
of the statement, personally signed by the buyer, acknowledging receipt of a copy of the
§ 44-1705. Information statement; contents
The information statement shall include all of the following:
1. A complete and accurate statement of the buyer's right to review any file on the buyer
maintained by a consumer credit reporting agency and the right of the buyer to receive a copy of
that file, as provided by § 44-1693. The statement shall include the approximate price the buyer
will be charged by the credit reporting agency for a copy of the file.
2. A complete and accurate statement of the buyer's right to dispute the completeness or accuracy
of any item contained in any file on the buyer maintained by any consumer credit reporting
agency as provided by § 44-1694.
3. A complete and detailed description of the services to be performed by the credit services
organization for or on behalf of the buyer and the total amount the buyer has to pay, or become
obligated to pay, for the services.
4. If the credit services organization is required to obtain a surety bond pursuant to § 44-1703,
the statement shall set forth both of the following:
(a) The buyer's right to proceed against the bond under the circumstances and in the manner set
forth in § 44-1708.
(b) The name and address of the surety company which issued the bond.
§ 44-1706. Contracts; requirements; contents
A. Every contract between the buyer and a credit services organization for the purchase of the
services of the credit services organization must be in writing, be dated, be signed by the buyer
and include all of the following:
1. A conspicuous statement in size equal to at least ten point type 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
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 some other 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 date by which the services are to be performed or the estimated length of time
for performing the services.
4. The credit services organization's principal business address and the name and address of its
agent authorized to receive service of process.
B. The contract shall be accompanied by a completed form in duplicate, entitled "Notice of
Cancellation", which shall be attached to the contract and easily detachable and which shall
contain in at least ten point type the following statement written in the same language as used in
Notice of Cancellation
You may cancel this contract without any penalty or obligation within three days from the date
the contract is signed.
If you cancel, any payment made by you under this contract will be returned within fifteen days
after receipt by the credit services organization of your cancellation notice.
To cancel this contract, mail or deliver a signed and dated copy of this cancellation notice, or any
other written notice, to _______________(Name of credit services organization) at
_______________(Address of credit services organization) _______________(Place of
business) not later than midnight ________(Date).
I hereby cancel this transaction. ________(Date)
____________________ (Purchaser's signature)
C. A copy of the fully completed contract and all other documents the credit services
organization requires the buyer to sign shall be given to the buyer at the time they are signed.
§ 44-1706.01. Repealed by Laws 1973, Ch. 74, § 6
§ 44-1707. Credit service organization's breach of contract or obligation; violation of article
The credit services organization's breach of a contract under this article or of any obligation
arising from the contract constitutes a violation of this article.
§ 44-1708. Surety bond; procedures to obtain or establish; claim by action at law; limit of
A. If a credit services organization is required to obtain a surety bond pursuant to § 44-1703, the
following procedures apply:
1. A copy of the bond shall be filed with the corporation commission.
2. The bond required shall be in favor of this state for the benefit of any person who is damaged
by any violation of this article. The bond shall also be in favor of any person damaged by the
3. A person claiming against the bond for a violation of this article may maintain an action at law
against the credit services organization and against the surety.
B. The surety is liable only for actual damages and not the punitive damages permitted under §
44-1711. The aggregate liability of the surety to all persons damaged by a credit services
organization's violation of this article shall in no event exceed the amount of the bond.
C. The bond shall be in an amount equal to five per cent of the total amount of the fees charged
buyers by the credit services organization under the contracts entered into between the credit
services organization and the buyers during the previous twelve months, but in no case shall the
bond be less than five thousand dollars or more than twenty-five thousand dollars. The amount
required shall be adjusted once a year, no later than the tenth day of the first month of the credit
services organization's fiscal year.
§ 44-1709. Waiver of rights by buyer; prohibition; burden of proof on exemption or exception
A. A waiver by a buyer of the provisions of this article is deemed contrary to public policy and is
void and unenforceable. An attempt by a credit services organization to have a buyer waive
rights given by this article consitutes [FN1] a violation of this article.
B. In any proceeding involving this article the burden of proving an exemption or an exception is
on the person claiming it.
[FN1] So in original. Probably should read "constitutes".
§ 44-1710. Violation; classification; enforcement
A. A person who violates § 44-1703, 44-1704, 44-1705, 44-1706 or § 44-1709, subsection A, is
guilty of a class 1 misdemeanor.
B. The superior court has jurisdiction to restrain and enjoin any violation of this article.
C. The duty to institute actions for violations of this article, including proceedings to restrain and
enjoin such a violation, is vested in the attorney general, county attorneys and city attorneys. The
attorney general, a county attorney or a city attorney may prosecute misdemeanor actions or
institute proceedings to restrain and enjoin such violations, or both.
D. This section does not prohibit the enforcement by a person of a right provided by this or any
E. The class 1 misdemeanor provision of this section does not apply to a seller's breach of a
contract subject to this article.
§ 44-1711. Action for recovery of damages by buyer
A buyer injured by a violation of this article or by the credit services organization's breach of a
contract subject to this article may bring any action for recovery of damages. Judgment shall be
entered for actual damages, but in no case less than the amount paid by the buyer to the credit
services organization, plus reasonable attorney fees and costs. If the trial court deems it proper,
the court may enter an award for punitive damages.
§ 44-1712. Application of other laws; remedies as additional
A. The provisions of this article are not exclusive and do not relieve the parties or the contracts
subject to this article from compliance with any other applicable provision of law.
B. The remedies provided in this article for a violation of this article are in addition to any other
procedures or remedies for any violation or conduct provided for in any other law.
§ 44-1712.01. Renumbered as § 32-1197
§§ 44-1713, 44-1714. Repealed by Laws 1977, Ch. 126, § 1
§§ 44-1713, 44-1714. Repealed by Laws 1977, Ch. 126, § 1
Current through legislation effective May 25, 2007, and also includes election results from the
November 7, 2006 general election.
END OF DOCUMENT
Findings and purpose from the Arizona Credit Repair Organizations Act Laws 1988, Ch. 350,
§ 1, provides:
"Section 1. Findings and purpose
"A. The legislature finds and declares that:
"1. The ability to obtain and use credit has become of great importance to consumers. Consumers
have a vital interest in establishing and maintaining their creditworthiness and credit standing. As
a result, consumers who have experienced credit problems may seek assistance from credit
services organizations which offer to obtain credit or improve the credit standing of the
"2. Certain advertising and business practices of some credit services organizations have worked
a financial hardship on the people of this state, often those who are of limited economic means
and inexperienced in credit matters. Credit services organizations have significant impact on the
economy and well-being of this state and its people.
"B. The purposes of this act are to provide prospective buyers of services of credit services
organizations with the information necessary to make an intelligent decision regarding the
purchase of those services and to protect the public from unfair or deceptive advertising and
"C. This act shall be construed liberally to achieve these purposes."
Case Law I identified only one case construing the act. In State ex rel. Woods v. Sgrillo, 176
Ariz. 148, 859 P.2d 771 (Ariz.App. Div. 2,1993), the court ruled that the Arizona Credit Repair
Organizations Act is not limited to conduct that affects in state residents. Conduct by in state
residents that affects out of state residents is also included. State ex rel. Woods v. Sgrillo 176
Ariz. 148, 859 P.2d 771 (Ariz.App. Div. 2,1993) STATE of Arizona ex rel. Grant WOODS,
Attorney General, Plaintiff/Appellee/Cross-Appellant,
Ronald T. SGRILLO and Barbara Jean Sgrillo, also known as Bobbie Sgrillo, husband and wife,
Jam Marketing, Inc., a corporation or purported corporation, individually and doing business as
Baron Financial Group, Baron Financial Services, Baron Financial Systems, International Credit
Card Services, Premier Credit Card Services, and Premier Group; and Valley National Bank of
Arizona, Defendants/Appellants/Cross-Appellees. No. 2 CA-CV 93-0176. Aug. 26, 1993. State
filed action under Credit Services Organization Act (CSOA) and Consumer Fraud Act (CFA)
against sellers of information purporting to put consumers in position to acquire low interest
credit cards. The Superior Court, Maricopa County , Cause No. CV91-04440, Alfred J. Rogers,
J., entered judgment in favor of state. Sellers appealed and state cross-appealed. The Court of
Appeals, Livermore, P.J., held that: (1) CSOA applied to criminal conduct within state directed
at nonresidents, and (2) fraudulent conduct of sellers was either sale of “merchandise” within
meaning of CFA or deceptive acts in connection with sale of “merchandise.”
Affirmed in part and reversed in part. West Headnotes
 KeyCite Notes
92B Consumer Credit
92BI In General
92Bk1 k. In General. Most Cited Cases
Credit Services Organization Act (CSOA) applied to criminal conduct within state directed at
nonresidents, despite portion of Act's statement of purposes that referred to harm suffered by
residents from practices proscribed by Act. A.R.S. §§ 44-1701 to 44-1712.
 KeyCite Notes
29T Antitrust and Trade Regulation
29TIII Statutory Unfair Trade Practices and Consumer Protection
29TIII(A) In General
29Tk139 Persons and Transactions Covered Under General Statutes
29Tk145 k. Goods or Services. Most Cited Cases
(Formerly 92Hk6 Consumer Protection)
Fraudulent conduct in selling information purporting to put consumers in position to acquire low
interest credit cards was either sale of “merchandise” within meaning of Consumer Fraud Act
(CFA) or deceptive acts in connection with sale of “merchandise” within meaning of CFA, in
light of statutory definition of “merchandise” to include sale of services, and in light of fact that
book or magazine containing information would fit within statutory definition of
“merchandise.”A.R.S. §§ 44-1521, subd. 5, 44-1522.
(Cite as: 176 Ariz. 148, 859 P.2d 771, **771)
(Cite as: 176 Ariz. 148, *148, 859 P.2d 771, **771)
Grant Woods, Atty. Gen. by H. Leslie Hall and John W. Wall, Phoenix, for plaintiff, appellee,
Jones, Skelton & Hochuli by Booker T. Evans, Jr., Phoenix , for defendants, appellants, cross-
LIVERMORE, Presiding Judge.
The state alleged that defendants Ronald and Barbara Sgrillo violated the Credit Services
Organization Act (CSOA), A.R.S. §§ 44-1701-1712, and the Consumer Fraud Act (CFA), A.R.S.
§§ 44-1521-1534, by their conduct through various entities in selling information about low
interest credit cards. On cross-motions for summary judgment, the trial court found that all the
conduct violated the CSOA and that a portion of it violated the CFA. The remainder, it ruled, did
not violate the CFA. Judgment was entered accordingly with remedial injunctive relief, civil
penalties of $2,038,000, and a substantial award of attorneys' fees and costs. The Sgrillos appeal
the applications of the statutes. The state cross-appeals the adverse summary judgment on the
CFA and the scope of the remedy granted. We affirm in part and reverse in part.
 While admitting that their conduct would violate the CSOA, defendants contend**772 that it
does not because all victims were non-residents of Arizona victimized only by use of mail and
telephone. This novel criminal immunity is derived from a portion of the statement of purposes
of the CSOA contained in Laws 1988, Ch. 350, § 1, saying that “the people of this state” have
been harmed by the practices now proscribed. Of course, our legislature was motivated in large
part by the harm caused Arizona residents. How that can lead to the conclusion that the
legislature intended to allow Arizona residents to engage in criminal conduct against non-
residents escapes us. The best protection of our residents is in eliminating criminal conduct
entirely not in limiting it to non-residents. Accordingly, we conclude that the CSOA applies to
conduct within the state directed at those without it. See State ex rel. Corbin v. Pickrell, 136
Ariz. 589, 667 P.2d 1304 (1983) (RICO); State ex rel. Corbin v. Goodrich, 151 Ariz. 118, 726
P.2d 215 (App.1986) (CFA).
 Defendants' second argument on appeal, that what they sold is not “merchandise” within the
meaning of the CFA, is equally unavailing. A.R.S. § 44-1521(5) reads: “ ‘Merchandise’ means
any objects, wares, goods, commodities, intangibles, real estate, or services.” Given the breadth
of this definition, the argument that the sale of information is not covered cannot be sustained. A
book or magazine, containing information, would fit within the definition. So, too, would the
packet of information sent by those for whom defendants acted. Defendants seek to avoid this
conclusion by arguing that their acts were in aid of a sale by another entity. This is of no
assistance because A.R.S. § 44-1522 forbids deceptive acts “in connection with the sale” of any
merchandise regardless of whether the deceiver is the seller. If the acts of defendants in
purporting to put consumers in a position to acquire low interest credit cards is not the sale of an
object, ware, or good within the meaning of A.R.S. § 44-1521(5), it surely is the sale of a
“service” and thus would still be covered. The broadly remedial purposes of the CFA should not
be defeated by niggling distinctions unrelated to the protection of consumers by the elimination
of fraud. Villegas v. Transamerica Financial Services, Inc., 147 Ariz. 100, 708 P.2d 781
We deal summarily with the state's cross-appeal. We have examined the evidence to which the
state has directed us, and the existence of which is not disputed by defendants, and find it
sufficient to preclude summary judgment under the CFA. The state's claim for additional
remedies can be pursued in connection with the trial of those claims. Because we have not been
furnished a transcript of the hearing on remedies, we cannot find an abuse of discretion in the
remedies ordered. We note that the civil penalties ordered will have the substantial deterrent
effect which the state claims would be provided by the additional remedies it seeks.
Summary judgment in favor of defendants on the consumer fraud claims is reversed. In all other
respects the judgment is affirmed. The state is awarded a portion of its attorneys' fees on appeal
under A.R.S. § 44-1534 in an amount to be determined upon filing the statement required by
Rule 21, Ariz.R.Civ.App. 1, 17B A.R.S.
LACAGNINA and FERNANDEZ, JJ., concur.