Is it permissible under the FCRA for a data furnisher (namely a collection agency) to verify a tradeline that has been previously notated as disputed even though no validation has been provided to the consumer (namely an original contract and a full account history)? If yes, why and if no, why? In other words: 1) I dispute a debt with a CA and request validation. 2) The CA updates their tradeline as disputed. 3) I dispute the tradeline with the CRA. 4) The CA verifies it w/o ever providing any validation materials. Although I understand that, in US v. Performance Capital Management, they must VERIFY their listing with original account records, it does not state that they have to forward you these original account records AS LONG AS they don't contact you OR remove the disputed notation. The FDCPA simply says that they can't continue collecting / communicating until validation is provided. If the tradeline is listed as disputed, I don't think that is considered collection activity. Although the FTC defines listing a debt on a credit report as collection activity, they also state that notating it as disputed nullifies the need to delete that listing when a dispute is received from the consumer. And lastly, although the FDCPA defines communication as the conveying of information regarding a debt directly or indirectly to any person through any medium, a disputed tradeline may not be considered as "conveying information regarding a debt" since that debt is listed as disputed? Permissible or not? A tough one I think!!
Here is an FTC opinion letters for you on this subject. UNITED STATES OF AMERICA FEDERAL TRADE COMMISSION WASHINGTON, D.C. 20580 Federal Trade Commission December 23, 1997 Robert G. Cass Compliance Counsel Commercial Financial Services, Inc. 2448 E. 81st Street, Suite 5500 Tulsa, OK 74137-4248 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 Enclosure
Where? Also - it's not the "listing of the TL to a CRA" which constitutes collection activity. It's the doing so "particularly at this stage of the collection process", which constitutes "collection activity" on the part of the collector. Goes to state-of-mind. .
On your other thread Sunhawk, Cnoob brought up the "intent" and "spirit" of the law. The doctrine of maximum fairness to the consumer would dictate that once a DF receives a DV, and subsequently receives a dispute from the CRA, the DF MUST permit the TL to "slip away", even if only temporarily, until validation is obtained and furnished to the consumer. Then of course the certification is required. If an error does occur, it must accrue to the benefit of the consumer, not to his detriment. Listing an [as of yet] un validated TL after your dispute, even if only listing it as "disputed", does not alleviated the DF from this responsibility. .
I was actually referencing the CASS letter when I stated: Although the FTC defines listing a debt on a credit report as collection activity, they also state that notating it as disputed nullifies the need to delete that listing when a dispute is received from the consumer. The CASS letter is very clear about it being a violation to report a TL during the validation period. However, I have not found anything that states continued reporting of a disputed TL constitutes continued collection activity. The main point of my other thread, Dispute notation nullify deletion?, was to find out if continuing to list an account as disputed justifies continued verification of that account information WITHOUT original account records EXISTING. I think Butch and cnoob make some excellent points that helps me justify my answer that yes, without original account records, they must delete. However, contrast that with what I am hoping to ask in this thread. The main point of this thread is, if original accounts records DO exist (in the possesion of the OC) and the CA verifies that the OC has these records [via phone] and what they are reporting matches what is in these records BUT they do not actually obtain these records, would that not justify as a complete investigation and allow for verification of their tradeline as long as they DO NOT contact me until they provide me these records OR would continued reporting, despite the $0 past due notation and the DISPUTED notation, be itself considered collection activity? I am asking this because, USA v PCM simply states they must verify the account with original account records. It does not state that they must provide you those account records. And, the FDCPA says they must provide you with validation before they can continue collecting and before they can communicate with you again but is listing an account as disputed with a $0 balance considered communication in the FDCPA sense of the word or continued collection activity? I am just trying to reason why, Asset would not delete dispite the USA v PCM case and dispite not providing me any original account records. I am wondering if the scenario I reference above is playing out and if so, if they can still be held liable given that they don't themselves have original account records. Although the FTC states, in order to validate, these records must come from the OC to the CA and then the consumer before collections can continue, verifying and investigating a CRA dispute may not be considered continued collections AS LONG AS they don't contact me. However, speaking out loud, I would guess listing the account as disputed and $0 balance would be considered continued collection activity because the FTC clearly states that "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." Even though it is listed as disputed and $0 balance, the reporting mechanism ITSELF is still being used to persuade payment. BUT THEN, wouldn't that mean, when validation is requested from a CA but their tradeline is NOT disputed through the CRA, that they would have to delete their TL anyway simply because, if they can't validate at the time validation is requested and since credit reporting itself is collection activity (and since collection activity must stop until validation is provided). However, we know this is NOT the case because the CASS letter clearly states if they are already reporting and validation is requested, they must only update the account as disputed but not delete it. This is why we simultaneously dispute their TL at the same time we request validation. In the CASS letter, the FTC simply states the account must be updated as disputed until validation is provided, it does not say the account must be deleted which is in direct opposite of my reasoning that: Since reporting itself is collection activity (reference: CASS FTC opinion letter) and since collection activity must cease until validation is provided (reference: FDCPA), requesting validation would require deletion REGARDLESS of whether or not the TL is disputed through the CRA but as clearly stated in the CASS letter, this is NOT the case...it just has to be updated as DISPUTED. Which brings me back to: If an OC has original account records and the CA verifies their listing with the OC (via phone) that the original account records are valid and justify their collection activities, would continuing to list the account as disputed be okay even if they didn't actually obtain those records and re-direct them to me since that technically is okay according to the CASS letter (since it remains DISPUTED). This is VERY confusing......
Re: Re: Is this permissible under the FCRA? To answer your question, the FTC CASS states, if they are already listing and a validation request is received, they must update it as disputed. The FTC does NOT state it must be deleted. As you state, listing of the TL to a CRA is not collection activity. It is doing so during the validation process. So, if the debt is already being listed and validation is received, continuing to list the debt is not considered continued collection activity. And, under the CASS letter, as long as the TL is updated as disputed, they can continue listing it. Therefore, if they don't have, themselves, original account records and don't provide them to me, they can still verify disputes as long as they verify with the OC (which say, in this case, has them) that original account records exist and justify the listing. Does this at all make sense? Please ignore the big font but I think I sum it up all with this one question. Basically, what I think I am asking is, are they still able to verify and list a debt even if no original account records have been provided to me BUT original account records exist?
Re: Re: Is this permissible under the FCRA? Are we sure though that validation must be obtained and furnished to the consumer? What happens if they verify original account records exist with the OC via phone and verify what they are listing matches these records but they never obtain them and therefore never provide them to you. This seems to be justified by USA v PCM and the FTC as long as it continues to be listed as DISPUTED. Why would they not obtain them even though they know they exist...I don't know? Maybe because they exist only on microfiche and can't be printed or something? If validation is not provided and the TL remains notated as disputed, they can continue listing it even if they don't actually HAVE original account records but verified they exist and verified that information on those original account records match my information via phone with the OC. Maybe? But, let's say they can verify I did have an account with original account records but can't verify the balance so they update it to $0 past due and N/A for everything else. The problem is...if I am $0 past due and no balance exists, how is it still a collection and how can they be listing something on my credit report? I don't understand how, at any time, a CA can list $0 balance, $0 past due, etc but still continue to list! If they are in the business of collecting on debts but can't prove a debt exists, how can they just list $0??
Re: Re: Is this permissible under the FCRA? Basically, what I think I am asking is, are they still able to verify and list a debt even if no original account records have been provided to me BUT original account records exist? If you have sent validation letters to the ca, they must update the tradeline as disputed, if it is already reporting. That is all they can do. If they still have yet to send you validation of the debt, and you dispute it again with the cra's, they at that time can not verify as that would constitute continued collection activity. I am of the opinion that once they received your validation, it should have been updated to disputed immediately. And, when they received your dispute from the cra, they should not have responded.
Re: Re: Is this permissible under the FCRA? If they still have yet to send you validation of the debt, and you dispute it again with the cra's, they at that time can not verify as that would constitute continued collection activity. But is this really the case? As Butch points out, the FTC states that listing a debt on a credit report during the validation period is collection activity. However, they do not specify if, continuing to list a disputed debt on a credit report is collection activity nor do they state (that I am aware of) that verifying a CRA dispute is collection activity. Does it say that somewhere? I am of the opinion that once they received your validation, it should have been updated to disputed immediately. And, when they received your dispute from the cra, they should not have responded. I agree 100% but unfortunately, nothing is crystal clear regarding how long they have to update it as disputed. Even so, they are prohibited under the FDCPA from contacting me but not the CRA so why would responding to them be continued collection activity? I think, if I can figure that out, it would clearly prove that, THEY ABSOLUTELY MUST actually send me validation (not just verify with original account records) before they verify or at the time of verifying a listing with a CRA. Unfortunately, I am not aware of anything stating that verifying = collection activity? Tonyd posted something about this at http://consumers.creditnet.com/stra...ighlight=continued+collection+activity+verify but nobody responded
Re: Re: Re: Is this permissible under the FCRA? Well, I finally think I've isolated the problem here SH. It's in Cass: 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. Are you looking for crystal clarity where the "law is unclear"? .
Re: Re: Re: Is this permissible under the FCRA? No... I know the law is very unclear. What I am looking for a very specific defense like Merlin said in the other thread. I am just preparing for the worst. In court, they may state: No, we did not have original account records therefore we never provided them to the plantiff. However, after receiving each dispute, we contacted the OC who does have original account records and the OC always verified our reporting was valid and accurate. However, since we did not have these records, we could not send him validation as he requested but we did properly investigate each dispute. ME: Although they may have properly investigated each dispute under the FCRA, the FDCPA says that, when I request valiation, validation must be provided to me before they can continue collection activity. By simply verifying each dispute, they are continuing collection activity. So, even though they may have followed the FCRA, they violated the FDCPA since verifying what they are reporting is, in itself, collection activity. Judge: Why is verifying continued collection activity? The FTC simply says they have to mark the account as disputed which they did. ----> THIS IS WHERE I AM STUCK <-----
Re: Re: Re: Is this permissible under the FCRA? I think you're focusing a little too much just on this one component. Your adversary will of course raise the exact defense you mention, and without question a whole lot more. This necessarily requires that you somehow access the ability to â??find out the truthâ?, often a very difficult proposition when dealing with these people. I know you're talkin FDCPA, but I already know where the FCRA stuff is, so let's look at that. You'll see that the same concepts apply to your case as well. In the event the furnishers establishment of the defenses [which Sunhawk brings up] this necessarily establishes the consumers alternative claim that the CRA breached itâ??s duty to notify the furnisher. These litigation alternatives illustrate that whether the CRA or the furnisher (or both) is/are ultimately responsible for the failure to reinvestigate the consumers dispute is virtually impossible to know PRIOR to formal discovery. This emphasizes the utility of joining claims against BOTH the CRA and the furnisher when suing either party for breaching their fiduciary duties. Jaramillo v. Experian info. Solutions. Whiteside v. Equifax Credit info. Services inc. nclc Now this contemplates the FCRA claim against a CRA, and or the furnisher, for failure to perform a reasonable investigation. But when you DV a CA they are required to notify the OC, gain the documents and forward to the consumer. This procedure is NOT optional. So the same primary issue here [that of suing all parties involved] is the same, whether your discussing the FCRA or the FDCPA, which is where you are now. Again, in Sheffer: SHEFFER v. EXPERIAN: (quoting Sullivan) Under the FCRA, a credit reporting agency that has received a notice of a dispute from a consumer is required to promptly provide notification of that dispute to the furnisher of the relevant credit information. See 15 U.S.C. § 1681i(a)(2). Thus, in light of Plaintiff's allegations, it appears that [the merchant] would have been notified by the Defendants about the disputed information in Plaintiff's credit report unless those credit reporting agencies were acting in violation of the FCRA. In any event, this issue is one appropriately resolved after discovery has been completed. See Sullivan v. Equifax, Inc., Civ. A. No. 01-4336, 2002 WL 799856, 2002 U.S. Dist. LEXIS 7884, at * 6 n.3 (E.D. Pa. April 19, 2002). (emphasis added) The courts are replete with examples that there is ONE way and ONE way ONLY whereby a poor slob of a consumer can, or ever will â??get to the truthâ? of the matter. What will happen then is that your primary target will answer with the defense you mention, (or whatever else they can think of) and then file a â??cross claimâ? against the CRA, (in this example) or against the OC, in your instant case, which will of course increase the nuisance level for all your adversaries and thereby raise the probability of a settlement out of court. Your answer then, ADD ALL INVOLVED PARTIES AS CO-RESPONDENTS IN YOUR ORIGINAL COMPLAINT. If you really want to get to the bottom of your complaint you must file against all parties and begin formal discovery. There is no other choice. Illustrating my long held philosophy: NUKE EM ALL ... and let God, (a jury) sort it out. Ok? .
Re: Re: Re: Is this permissible under the FCRA? I understand...pretty much. But as cnoob said (and I agreed), most people do not wish to file lawsuits, especially a lawsuit in the civil division (as opposed to just the small claims division). CA's are well aware of this and therefore continue to break the law, even if they know they are, because they know 99% of the time, they will get away with it. As you clearly point out, unless I were to file a regular lawsuit, this will probably end up being the case. That however is unfortunate. I do have one question. If the CA does not provide me with original account records (but maybe they exist), how am I suppose to know the date of last activity to determine when the SOL runs out (so I can file suit in small claims) without being counter sued? They report on my Equifax one date as the date of last activity but their computer print out has another date of last activity...one being 3/1998 and one being 8/1998. If original account records were to surface after serving them, I want to make sure the SOL is up. As you know, when a CA is being sued, their intent to get original account records rises dramatically. The SOL is 6 years here. Should I let this reporting linger until 9/2004 before filing suit or???
Re: Re: Re: Is this permissible under the FCRA? Don't know SH. About all you can do is put on your detective hat and start diggin. See if you can find an independent confirmation for either of the 2 dates. It's probably the earlier one tho. But can't be too careful. Go read what I just wrote to Kathy on her DOLA thread. Applies to you too. .
