Letter from our attorney stating our federal exemptions

1. Thompson & Thompson
A Professional Corporation
39555 Orchard Hill Place, Suite 205
Novi, Michigan 48375
Robert R. Thompson
Gerald R. Thompson
Kerry L. Morgan*
Licensed in MI, DC, VA Telephone: 248-347-1800
Neil F. Markva* Facsimile: 248-347-1827
Licensed in VA Email: thompson@t-tlaw.com
James I. Van Houten* www.t-tlaw.com
Licensed in MI
*of counsel
June 1, 2009
Michael Toloff, President
Financial Education Services, Inc.
37735 Enterprise Court, Suite 600B
Farm ington Hills, MI 48331
RE: Statutory Com pliance
Dear Mr. Toloff:
You asked m e to briefly sum m arize the m anner in which Financial Education Services, Inc. com plies with
various state and federal statutes relating to credit repair or credit services organizations.
The applicable federal statute is the Credit Repair Organizations Act (15 U.S.C. §§1679, et seq., or “CROA”).
Under CROA, the term “credit repair organization” does not include any federal or state credit union, or any
affiliate or subsidiary of such a credit union. 15 U.S.C. §1679(a)(3)(B)(iii). Further, Financial Education
Services, Inc. is an affiliate of a federal credit union as that term is defined in 12 C.F.R. §716.3(a)(2) and 12
C.F.R. §716.3(g)(1).
Consequently, Financial Education Services, Inc., is exem pt from CROA and the jurisdiction of the Federal
Trade Com m ission, which enforces CROA.
It is our position that Financial Education Services, Inc., is not required to com ply with any state law
inconsistent with CROA, as per the provisions of 15 U.S.C. §§1679j, which states that state law com pliance
is not required to the extent that state law is inconsistent with any provision of CROA, but “only to the extent
of the inconsistency.” However, we are not aware of any case law which has addressed the issue of the
preem ption of federal law over state law as set forth above.
W e believe m ost states, if challenged, would vigorously assert their rights to adopt consum er credit laws
inconsistent with CROA, although not all states have adopted such laws. Currently, state laws regarding credit
services organizations (which typically include credit repair services) generally exem pt federal credit unions
from those laws, and som etim es exem pt affiliates of a federal credit union. However, we have found that the
interpretation of both state and federal laws by state officials is subject to a wide degree of variation. Even
when states have very sim ilar laws, they m ay interpret and enforce them very differently.
In addressing state law com pliance, Financial Education Services, Inc. follows a three-pronged approach: 1)
it operates as a federal credit union affiliate in all those states it can; 2) it operates directly as an assum ed
nam e of a federal credit union where state laws or state agencies dem and it; and 3) where necessary to best
effectuate com pliance, it has registered as a credit services organization under state law. To date, no state
has denied Financial Education Services, Inc. the ability to conduct business in that state.
Very Truly Yours,
Gerald R. Thom pson