Need a billing setup that keeps you CROA compliant?
- 15+ years placing high-risk merchants
- 99% approval rate, same-day decisions
- No long-term contracts and no hidden fees
- No sudden account freezes or terminations
- 4.9 Google rating across 871 reviews
Prefer to talk? Call (818) 731-2227
Apply Now
By submitting this form you are consenting to our terms. We do not distribute your information.
Here’s the strange part about this question: it sounds like it should have a one-sentence answer. It doesn’t, because two different federal rules answer it two different ways, and which one applies to you depends on how you market. Getting this right isn’t just a legal matter. It’s a payments matter, because your billing timing determines your payment flow, your payment flow determines your dispute profile, and your dispute profile determines whether your merchant account survives.
The usual disclaimer applies: we’re payments people, not your lawyers. This is the landscape, not legal advice. Your compliance attorney gets the final word on your billing model.
CROA: Do the Work, Then Get Paid
The Credit Repair Organizations Act, 15 U.S.C. § 1679 et seq., is the federal statute written specifically for this industry. Its billing rule lives in § 1679b(b): no credit repair organization may charge or receive money for a service before that service is fully performed.
CROA also requires a written contract with specific elements, a full description of services, the total of all payments, performance timelines, plus a separate Consumer Rights Statement delivered before signing, and a three-business-day right to cancel under § 1679e.
In practice, the advance-fee prohibition is why the industry’s standard model bills monthly in arrears. This month’s invoice covers last month’s completed work. It’s also why “pay us $500 to get started” setups draw regulatory fire: enforcement agencies have taken the position that collecting anything of value before performing services violates the statute, and courts have read “valuable consideration” broadly.
One more provision worth knowing: under § 1679f, any waiver of a consumer’s CROA protections is void and unenforceable. A client can’t sign away the advance-fee rule. “But they agreed to it in the contract” isn’t a defense, it’s an exhibit.
The TSR: The Stricter Rule Most Owners Haven’t Read
If your company markets through telemarketing, and the FTC reads that term broadly, covering inbound and outbound calls connected to your advertising, you’re also subject to the Telemarketing Sales Rule’s credit repair provision at 16 C.F.R. § 310.4(a)(2).
The TSR doesn’t just prohibit advance fees. It says a telemarketed credit repair service can’t request or receive payment until two conditions are met: the time frame in which you said you’d deliver results has expired, and you’ve given the customer a consumer report, issued more than six months after the promised results were achieved, demonstrating those results.
Read that again, because it surprises everyone the first time: under the TSR, payment comes six months after documented results. Not after signup. Not after the first round of disputes. And unlike CROA claims, TSR enforcement is a favorite tool of the CFPB.
What Happened When the Biggest Player Ignored This
In CFPB v. Progrexion Marketing, a federal court in Utah ruled in March 2023 that the companies behind Lexington Law and CreditRepair.com violated the TSR’s advance-fee provision by charging customers without meeting those payment preconditions. The fallout was severe: the companies filed for Chapter 11, shut down roughly 80% of their business, and agreed to a settlement imposing a $2.7 billion judgment and a ten-year ban on telemarketing credit repair services.
The aftershock reached consumers’ mailboxes in late 2025, when the CFPB began distributing $1.8 billion from its victims relief fund to 4.3 million affected customers, the largest distribution in the fund’s history.
After Progrexion, underwriters across the industry started asking harder questions about billing models before approving credit repair accounts. A merchant whose contract and payment flow clearly follow the rules is now a categorically better file than one whose billing model an underwriter can’t map to the law.
What This Means for Your Merchant Account
Your billing model is an underwriting document. Monthly-in-arrears billing tied to itemized completed work reads as a company that knows CROA. Large upfront charges read as a future enforcement headline.
Compliant billing is also chargeback prevention. Clients who understand exactly what they’re paying for, because the invoice describes last month’s actual work, dispute less. For why that ratio matters more than ever in 2026, see our Visa VAMP guide for credit repair.
Your marketing channel matters to your payment setup. A company that enrolls clients exclusively online has a different rule set than one running a call center. If phone sales are part of your model, the TSR’s timing rules are a conversation to have with your attorney before wiring up recurring billing, not after a demand letter arrives.
Documentation wins disputes. CROA’s contract requirements, itemized services, stated totals, cancellation rights, double as chargeback evidence. The compliance file and the dispute-response file are the same file.
The Bottom Line
CROA says do the work, then get paid. The TSR says, for telemarketed services, do the work, prove it, wait, then get paid. Build your billing on those rails, with your attorney’s sign-off, and you become the kind of merchant that banks approve, keep, and price competitively.
Get a Credit Repair Merchant Account Review
Call (818) 731-2227 or Apply Online