CA reports without validating debt?

This issue has been partially discussed in the "what is my next step?" thread (which I unfortunately cannot link to because I haven't made 25 posts yet), and the main issue of contention seems to be whether or not reporting an alleged debt to the CRAs constitutes "continued collection activity," or if it even constitutes an FDCPA or FCRA violation at all. In PMs, I've started discussing the merits of Sullivan v. Equifax (which again, I unfortunately cannot link to but is definitely obtainable if you Google it) with Mr. Bauer, but I figured since I can get around the "can't link to anything I'm citing" stumbling block, I might as well discuss it here since that was my original intention anyway.

While there are references to such cases as Rivers v. Bank One, Matter of Sommersdorf, and Ditty v. CheckRite, Sullivan v. Equifax doesn't appear to establish much about whether or not reporting is "continued collection activity" or not. It does, however, seem pretty clear on establishing that the act of reporting a "disputed" debt to a CRA without noting it as such constitutes 1) a violation of §1681sâ??2(b) of the FCRA and 2) a violation of §1692e(8) of the FDCPA. However, I do notice some differences between this case and our hypothetical debtor situation:

1) Taking the facts as they are stated, we're left to assume that InoVision never contacted Mary Sullivan in an attempt to collect the alleged debt, but merely placed the adverse information on her credit report(s) in a case of mistaken identity.

2) The debt in question was, in acutality, not owed by the plantiff, but rather by someone with the same name. Again, a case of mistaken identity.

Contrast this with our hypothetical debtor situation:

1) CA contacts debtor by phone and/or sends a dunning letter through the mail notifying them that they're attempting to collect a debt which they do, in fact, owe.

2) Debtor requests validation of the debt pursuant to §1681g(b) and sends it CMRRR.

3) While validation is pending (the alleged debt has yet to be validated), the CA places entries on the debtor's credit reports for a "past due collections account."

4) Our debtor discovers this when he applies for a loan or gets an alert from the credit monitoring service he subscribes to, and immediately notifys the CRA that the debt is disputed and that his requests for validation have not been honored.

Whether or not the circumstances of our debtor change the "rules of the game," as it were, Sullivan v. Equifax does seem to establish that it is the duty of a "furnisher of information" to notate that an alleged debt is disputed if and when the CRA notifys them that the debt has been disputed by the consumer, and that it is violating not only the FCRA but also the FDCPA by continuing to report on it after failing to conduct an investigation.

However, our debtor requested validation of the alleged debt before the entries were made on his reports, therefore rendering the alleged debt in "disputed status" even though the debt was not disputed with the CRAs because it was impossible to do so; the entries simply did not exist at that time. Furthermore, the debt in question was reported to the CRAs after a request for validation was submitted to the CA but before validation was provided. Ergo, reporting this debt to the CRAs in the first place automatically constitutes a de facto violation of §1692e(8) of the FDCPA and simply updating the already reported information to note that it's "disputed" is "closing the barn door after the horse has bolted," so to speak.

We'll stop here, because I want to know my reasoning is sound and I'm not stretching logic. If this logic is sound, I'd like to discuss the possible courses of action by the CA and the potential outcomes of each. I want to thank everyone in advance for their time, and I look forward to hearing everyone's thoughts on this.

 

Incidentally, I'm having one heck of a time trying to find the text of Rivera v. Bank One. Would anyone happen to have a link or PDF of it? I'm curious because it contains the legendary statement that reporting a debt to a CRA is a "powerful tool designed, in part, to wrench compliance with payment terms," and I want to see the full context of it.

I do believe that in our hypothetical debtor situation, however, we're better off looking at the FDCPA §1692e(8) and FCRA §1681sâ??2(a) angles rather than the FDCPA §1692g(b) angle.

N.B. In my original post, I cited §1681sâ??2(b) as opposed to §1681sâ??2(a). §1681sâ??2(b) pertains to the duty of a "furnisher of information" to investigate a dispute brought forth by the CRA on behalf of the consumer. §1681sâ??2(a) pertains to the duty of a "furnisher of information" to provide accurate information to CRAs. While (b) is not irrelevant to our hypothetical debtor situation, (a) is more pertinent. I apologize for the mistake.

 

I also failed to argue that in addition to violating §1692e(8) of the FDCPA, our CA is also willfully violating §1681sâ??2(a)(1)(A), §1681sâ??2(a)(1)(B), and §1681sâ??2(a)(3) of the FCRA in that it's reporting innacurate and disputed information to the CRAs. I say "willfully" because it does this despite having been notified by the debtor in writing that he disputes the debt pursuant to FDCPA §1681g(b). Ergo, the CA "knew" the debt was disputed yet reported it anyway and without a "disputed" notation.

 

You make an excellent point, especially if the negative entries were placed on the debtor's credit reports within days or even hours of the validation letter being sent out. When that "gap" extends to months or even years, I don't think it's a great stretch of logic to presume that a "we didn't know," "we haven't processed it yet," or "our systems needed time to update" defense lacks weight when the debtor can prove through a preponderence of evidence (namely, the return receipt and perhaps a delivery confirmation printout from the USPS website) that the letter was in the collector's possession for quite some time, and therefore the CA knew fully well that the debtor disputed the alleged debt when it made the entries.

I think Mr. Bauer makes a good point in that while FTC letters are convincing enough on the surface, it takes case precedent to really "put the final nail in the coffin" so to speak.

Sullivan v. Equifax gives mention to such cases as Rivera v. Bank One, Matter of Sommersdorf, and Ditty v. CheckRite in regards to whether a negative entry on a debtor's credit report constitutes "continued collection activity" on behalf of the CA. Unfortunately, I've yet to find their texts on the Internet. I may very well have to pay to read them.

And again, pursuing this through the "inaccurate information" avenue may be easier than alleging "continued collection activity."

Absolutely, and I agree wholeheartedly. Incidentally, I send DV letters to any collector who contacts me. It keeps them honest.

Let's make things more interesting... Suppose the collections agency is a debt buyer who employs another debt collector to collect the alleged debt. It's the same hypothetical scenario, only now it's the debt buyer placing negative information on the debtor's credit reports while validation is pending.

In this scenario, was the debt properly "disputed" as far as the debt buyer is concerned? Does the DB have an obligation to validate or is it solely the CA's reponsibility? What if the DB plays the "we're a creditor, not a debt collector" card?

I'd be very interested in seeing what anyone contributes.

 

Mr. Bauer, if I'm correctly understanding what you're saying, then everything becomes even clearer. In other words, the more dissimilar the cases are, the greater the risk that a pro se litigant will be unable to present a compelling argument in Federal court (and make themselves look like a fool in the process). If the cases are dissimilar enough, one should avoid citing them entirely and instead find another or simply argue their case based solely on its merits (if indeed it's worth pursing). Of course, if we're not on the same page, I welcome any corrections.

Incidentally, I'm currently having an issue with a CA who refuses to validate yet keeps calling me. I have proof I mailed my DV letter to them, and they have yet to validate the alleged debt. They're currently at 4 violations and counting. I feel I have enough evidence to prove there are no issues of material fact and request a summary judgment. The only reason I'm not pursuing this aggressively is because 1) I'm poor and 2) I've yet to learn the Federal Rules of Court and Procedure, Rules of Evidence, and so on. Thank goodness for the one year SOL, but still... The sooner I get a resolution, the better because these guys are really irritating me.

Then again, that's kind of their intention, no? Provoke a reaction. ANY reaction. Especially if it ultimately results in making you throw your arms up in despair and giving (or paying) up.