Calling All Creditnexperts! Clarity

Bottom line: You are correct. Even after the inital 30-day window, the CA is still required to provide proper validation if the consumer requests so.


Take a look at section 2 of the FTC opinion letter below: (this will also clarify that the CA is required to note the account as being disputed by consumer.

Dear Mr. Cass:

Mr. Medine has asked me to reply to your letter of October 28, 1997, concerning the circumstances under which a debt collector may report a "charged-off debt" to a consumer reporting agency under the enclosed Fair Debt Collection Practices Act. In that letter, you pose four questions, which I set out below with our answers.

I. "Is it permissible under the FDCPA for a debt collector to report charged-off debts to a consumer reporting agency during the term of the 30-day validation period detailed in Section 1692g?" Yes. As stated in the Commission's Staff Commentary on the FDCPA (copy enclosed), a debt collector may accurately report a debt to a consumer reporting agency within the thirty day validation period (p. 50103). We do not regard the action of reporting a debt to a consumer-reporting agency as inconsistent with the consumer's dispute or verification rights under § 1692g.

II. "Is it permissible under the FDCPA for a debt collector to report, or continue to report, a consumer's charged-off debt to a consumer reporting agency after the debt collector has received, but not responded to, a consumer's written dispute during the 30-day validation period detailed in § 1692g?" As you know, Section 1692g(b) requires the debt collector to cease collection of the debt at issue if a written dispute is received within the 30-day validation period until verification is obtained. Because we believe that reporting a charged-off debt to a consumer reporting agency, particularly at this stage of the collection process, constitutes "collection activity" on the part of the collector, our answer to your question is No. Although the FDCPA is unclear on this point, we believe the reality is that debt collectors use the reporting mechanism as a tool to persuade consumers to pay, just like dunning letters and telephone calls. Of course, if a dispute is received after a debt has been reported to a consumer-reporting agency, the debt collector is obligated by Section 1692e(8) to inform the consumer-reporting agency of the dispute.

III. "Is it permissible under the FDCPA to cease collection of a debt rather than respond to a written dispute from a consumer received during the 30-day validation period?" Yes. There is nothing in the FDCPA that requires a debt collector to continue collecting a debt after a written dispute is received. Further, there is nothing in the FDCPA that requires a response to a written dispute if the debt collector chooses to abandon its collection effort with respect to the debt at issue. See Smith v. Transworld Systems, Inc., 953 F.2d 1025, 1032 (6th Cir. 1992).

IV. "Would the following action by a debt collector constitute continued collection activity under § 1692g(b): reporting a charged-off consumer debt to a consumer reporting agency as disputed in accordance with § 1692e(8), when the debt collector became aware of the dispute when the consumer sent a written dispute to the debt collector during the 30-day validation period, and no verification of the debt has been provided by the debt collector?" Yes. As stated in our answer to Question II, we view reporting to a consumer reporting agency as a collection activity prohibited by § 1692g(b) after a written dispute is received and no verification has been provided. Again, however, a debt collector must report a dispute received after a debt has been reported under § 1692e(8).

I hope this is responsive to your request.

Sincerely,

John F. LeFevre
Attorney

 

Two points.

1. They have to note the account as "in dispute" immediately. To not do so is a clear violation of the FCRA.

2. If they can not validate, they must remove. They don't necessarily have to remove during the 30 days, but to borrow a phrase from Johnny Cochrane, If you can't validate, you must eliminate (from the credit report)

 

Actually there are people on this site who have a better grasp of the FCRA and FDCPA than many of the lawyers I know. Check out Whyspers, LKH, mindcrime, Christi, not to mention George who perhaps best understands the futility of it all.

Just keep disputing everything, eventually they will leave you alone. Remember though, a request for validation alone does not make a dispute.

 

Well, if you've sent your validation letter, then estoppel, and finally your intent to sue, all outlined with the violations they've commited, and basically asking for them to delete and you'll go away, and they STILL don't get they picture, you'll probably have to file a lawsuit against them.

I believe LKH included a copy of a settlement agreement to the CA after he filed, and they went for it (they finally realized he meant business). Sometimes they're so dense, they just can't get it through their heads that you've got them on the hook, and they need to be served before they are willing to cooperate and actually obey the law.

 

One last point, the FDCPA is probably the muddiest, most incomprehensible statutes this side of the US Tax code. No one really understands it all. Even the opinion letter above has to make some assumptions to get the point across.

This is to our advantage if you want to play hardball. The CA is going to wonder if maybe you have a point and maybe they're going to be on the hook for a couple grand in violations, so it might be better to give up. There aren't going to be a lot of cases where the CA lawyer will be able to comfortably state that they are in the right. And even if they can, it's still a couple grand in legal fees to find out.

Case in point, let's see if anyone has ever LOST a case against a CA or CRA on this board. My bet is that every one of them is settled.

 

Very true. I believe it was Christi who was having difficulties with TU, and one of the higher-ups she had been dealing with had informed Christi to go ahead and file a lawsuit, they've never lost one yet.

What she (TU) neglected to say was they (most probably) settled on every one that they knew they would lose if it actually went to trial. Which, from my recolletion, is what happened with Christi. They settled out of court, and she got what she wanted.

The same will go for CA's. Once presented with a lawsuit, one they know they've got problems on (i.e. the consumer has them on several violations) they'll want to settle things quietly out of court. No CA wants to have a judgement against them, and no CA wants to have the tables turned and have someone calling THEM and asking for money

 

Once presented with a lawsuit, one they know they've got problems on (i.e. the consumer has them on several violations) they'll want to settle things quietly out of court. No CA wants to have a judgement against them, and no CA wants to have the tables turned and have someone calling THEM and asking for money


Not only that, it's going to cost at least 5-10k in attorney fees to fight it out. Why bother if you're a CRA. Settle and move on. This is a HUGE point. The CRA's have NOTHING to gain by going to court. They don't have to prove any points. The last thing they want to do is risk a judgment that will create a precedent for others.

 

Keller,

Are you a lawyer too?

 

You're welcome Keller.

BTW, "Gumbo law" or not, the FDCPA works for us, not the CA It's our shield, our sword, and its "too bad, so sad" for the lonesome CA.

In fact, most CA reps probably couldn't even tell you what FDCPA stands for, let alone tell you what it's all about.

 

Keller,

Yes it is.

You've given them 40 + days to respond [although you sure do have an odd way of setting up your validation requests] , and have made 4 total requests asking for validation.

If they can't get their act together in that amount of time, then "oh well". Unfortunately, alot of CA's are like this, and yes, as both wolverine and I have said, short of filing a lawsuit to show them how serious you are, they'll ignore your lawful request until the last possible moment.

 

Guys, then "WHY" don't people file earlier on? This is what I see "A LOT" on this board

Because it's a huge pain in the a**. Hell, I have a law degree and I wouldn't want to do it. It costs money, you have to take the time out of your day to go stand in line, get your forms filled out in triplicate, arrange for service blah blah blah. Most of us would prefer to delude ourselves into thinking that if we keep giving them one more chance, they will fix things.

Of course they won't most of the time...

 

I joined our group in November. This board has truly woken me up about every aspect of credit. The knowledge I've learned here is priceless. Having members of this board who post frequently and who are knowledgeable (you all know who you are) in different aspects is wonderful.

I've never been in a business where court proceedings, or different aspects of the law came into play on a daily basis, however, after learning about "how it all works" I've become very interested in pursuing some type of career that involves credit, the FCRA, FDCPA, SOL's, law cases, etc.

As someone said eariler, this is an untapped market. One that's only going to grow as the population ages. And as long as CRA's are still evil, and the general population does not truly understand their rights, there will be a need for someone to offer them their assistance.