If I dispute a debt with a collection agency, does the collection agency then notify the original creditor that the collection is in dispute? The reason I am asking is because I am wondering what would stop the following scenario: Contact collection agency A that account is in dispute. They return the debt to original creditor. OC hands it over to CA B who again contacts you and you dispute it. They give it back to OC...and so on....each time the new CA inquiries into your credit report creating a massive list of inquiries. I am just wondering if, after contacting the first CA, if the OC can pass this debt around to other CA's even if it remains in dispute with the first CA and the OC never contacts you with any documentation supporting the debt?
In theory they are supposed to notify the OC, because that is whom they have to look to for validation. The rest of your scenario - happens all the time.
Can the scenario be stopped? I would think that, if the OC is notified that the account is in dispute, they would not be able to transfer it to a new CA unless they have some proof that the collection is valid. Or am I wrong?
Some of us have been testing the "Subsequent CA strategy" letter in the sample letters forum, and sending a copy to the OC letting them know that they now have knowledge, and can be held liable (so far no case law though). I haven't heard any definitive results, mine just seemed to shut the CA down, but only time will tell.
I still want to know if a CA cannot validate that means they have to stop all collection activities so wouldn't selling the debt to another CA constitute collection activity? I wish someone took this to federal court.
I would say so...although you might not be able to find a specific reference to such a scenario in case law or from the FTC, I think many judges would interpret it to be continued collection activity. However, if the debt was not purchased but rather assigned, the scenario is a little tougher because it is the CA that returns it to the OC and then it is the OC who is continuing collection activity. And since the OC is not required to follow the FDCPA, you have a problem.
Yes Nancy, That's exactly the point of the "Subsequent CA Strategy". Although I haven't seen a whole lot of technical feedback at how it's getting a situation resolved, it is shutting these guy's down rather quickly. Keep workin with it guy's. It is in fact throwing a monkey wrench into their wheel. In time we'll get all the info. we need.
This also is exactly correct. In the original thread we hammered these issues pretty carefully. Unfortunately during the move from the board to the sample letters section a good deal of discussion got lost. I've just never had time to rehash the issue. Sunhawk is right. We need to determine whether or not the case went straight to the Subsequent CA, or whether it was returned to the OC and then sent to a second CA. This will trigger a different response.
Also, the CA MUST notify the OC that a dispute exists. In our thread "-->What Is Validation" I outline the major points required for a validation to be proper. We see the following: "It must have come from the OC within the 30 day period within which the CA must investigate. In other words, it must be FRESH, not some old item that's been laying around in their office for the last 5 years." It is required that validation come directly from the OC to the CA and then be sent to you, the consumer.
Re: Re: Does CA notify OC of dispute? You are right. Selling the debt to another CA may not techinically constitute collection activity. However, if the debt remains in a period of validation / dispute, the debt is assumed to be invalid. If the CA then sells it to someone else, they are knowly selling a disputed / invalid debt to another CA which I am sure is a violation of something if I looked hard enough.
Re: Re: Does CA notify OC of dispute? Sunhawk, Have you even read the Subsequent CA Strategy letter? (You don't have to look very hard).
Re: Re: Re: Does CA notify OC of dispute? Yes, I checked it out a few times but I didn't see a reference to anything which supported the point that selling an invalid debt to another was a violation. Did I miss something? I do see that, if the second CA contacts you, you could send them that letter which may freeze them up. But, what I was hoping to do was scare the first collection agency so that they would not attempt to sell the debt to anyone else or scare the original creditor so that they would not attempt to pawn the debt off to someone else (so I didn't have to possibly end up with a new negative tradeline or inquiry while the account was re-disputed with a new CA). As a previous poster stated, since they are not attempting to collect from the debtor when they sell the debt to someone else, it probably isn't considered collection activity. BTW, I just read your thread on what is validation. Awesome post! It really helped me out a lot. I love the 30 day limit using the FCRA (as opposed to the FDCPA). Actually had an attorney contact me stating that as long as they don't attempt to contact me, the account can remain as disputed indefinately.
I used one scare tactic with the OC. American Family Publishers (AFP), signed a consent decree a few years ago, with the FTC. They were held responsible for the CA's actions because they were aware of the CA's actions. You can go to the FTC site and do a search on AFP to read about it. That is why I also sent a letter to the OC at the same time I sent out the subsequent CA letter (if I remember correctly the credit goes to LKH for pointing out this aspect) My letter basically let them know that "they were on notice" of the CA's possible illegal activities. Please note though - we have not found case law to support this, as AFP signed a consent decree, and it does not have the weight of case law. Since that time, I have also started focusing on my state laws (TX). It is absolutely in the code that an OC can be held liable. 392.306. USE OF INDEPENDENT DEBT COLLECTOR. A creditor may not use an independent debt collector if the creditor has actual knowledge that the independent debt collector repeatedly or continuously engages in acts or practices that are prohibited by this chapter. You might look to your state's FDCPA statutes, and you might also look at fed and state Deceptive Trade Practices Act. Texas mentions that a violation of Chap 392 is also a violation of the state DTPA.
Can the scenario be stopped? SUNHAWK ============== This can only happen on assigned accounts. There is another scenario with sold accounts CA 1 sells to CA 2 CA2 sells to Ca3 to Ca4 etc etc.In this one The OC isn't involved. The END ************************* LB 59
