I thought Iâ??d float some ideas on the concept of CAâ??s reporting to CRAs. If anyone has used any of these arguments, successfully or not, please let me know. It is my belief, based on FDCPA and FCRA, that CAâ??s should not legally be allowed to post a trade line or make â??hardâ? inquiries; Iâ??ll try to support this argument as follows: FCRA § 604. Permissible purposes of consumer reports [15 U.S.C. § 1681b] (a) In general. Subject to subsection (c), any consumer reporting agency may furnish a consumer report under the following circumstances and no other: (3) To a person which it has reason to believe (A) intends to use the information in connection with a credit transaction involving the consumer on whom the information is to be furnished and involving the extension of credit to, or review or collection of an account of, the consumer; or (C) intends to use the information in connection with the underwriting of insurance involving the consumer; or (E) intends to use the information, as a potential investor or servicer, or current insurer, in connection with a valuation of, or an assessment of the credit or prepayment risks associated with, an existing credit obligation; or (F) otherwise has a legitimate business need for the information (this is eerily vague - however, I believe it should only apply to location information requests for CAâ??sâ?? soft inquiry) (i) in connection with a business transaction that is initiated by the consumer; or (ii) to review an account to determine whether the consumer continues to meet the terms of the account. (c) Furnishing reports in connection with credit or insurance transactions that are not initiated by the consumer. (1) In general. A consumer reporting agency may furnish a consumer report relating to any consumer pursuant to subparagraph (A) or (C) of subsection (a)(3) in connection with any credit or insurance transaction that is not initiated by the consumer only if (A) the consumer authorizes the agency to provide such report to such person; or (B) (i) the transaction consists of a firm offer of credit or insurance; § 603. Definitions; rules of construction [15 U.S.C. § 1681a] (m) Credit or insurance transaction that is not initiated by the consumer. The term â??credit or insurance transaction that is not initiated by the consumer" does not include the use of a consumer report by a person with which the consumer has an account or insurance policy, for purposes of (1) reviewing the account or insurance policy; or (2) collecting the account. My theory is that the CA may have an account with the OC, but has never offered or provided an account with the consumer. This covers two different approaches: 1. If the consumer has not initiated an extension of credit or insurance, the CA should not be allowed to make a hard inquiry. If they have enough information to obtain a credit report, surely they have enough information to send a dunning notice and start collection activities. Interestingly, this argument places a good portion of the responsibility on the CRA, since the law applies to their release of information more so than the CAâ??s request for information. (This argument would also make a CA civilly liable to the CRA for requesting information under false pretenses.) 2. Since the consumer has not initiated a credit transaction with the CA, the consumer canâ??t have an account with the CA. The only accounts that truly exist are the account between the consumer and OC, and the account between OC and CA. While an agreement with the OC may allow the assignment of the account to the CA, the account is still between the consumer and OC. (Oddly, I had an account that was listed with the OC and with the OCâ??s collection division. They rearranged the numbers but had the same name and dollar amount) FDCPA § 803. Definitions [15 USC 1692a] As used in this title â?? (2) The term "communication" means the conveying of information regarding a debt directly or indirectly to any person through any medium § 804. Acquisition of location information [15 USC 1692b] Any debt collector communicating with any person other than the consumer for the purpose of acquiring location information about the consumer shall -- (2) not state that such consumer owes any debt; (5) not use any language or symbol on any envelope or in the contents of any communication effected by the mails or telegram that indicates that the debt collector is in the debt collection business or that the communication relates to the collection of a debt (b) COMMUNICATION WITH THIRD PARTIES. Except as provided in section 804, without the prior consent of the consumer given directly to the debt collector, or the express permission of a court of competent jurisdiction, or as reasonably necessary to effectuate a postjudgment judicial remedy, a debt collector may not communicate, in connection with the collection of any debt, with any person other than a consumer, his attorney, a consumer reporting agency if otherwise permitted by law, the creditor, the attorney of the creditor, or the attorney of the debt collector. In effect, an inquiry, whether hard or soft, is a communication to the CRA that the consumer allegedly owes a debt, as is â??Collection Accountâ? status. Also, updating individual reports on a monthly basis would seem to be a continuing violation. § 806. Harassment or abuse [15 USC 1692d] A debt collector may not engage in any conduct the natural consequence of which is to harass, oppress, or abuse any person in connection with the collection of a debt. Without limiting the general application of the foregoing, the following conduct is a violation of this section: (3) The publication of a list of consumers who allegedly refuse to pay debts, except to a consumer reporting agency or to persons meeting the requirements of section 603(f) or 604(3)1 of this Act. This almost seems to contradict the previous section regarding third parties. However, it could be read to say that the CA can provide the CRA with a list of alleged debtors, but not necessarily â??updateâ? individual reports. Again, harassment on a monthly basis. § 807. False or misleading representations [15 USC 1962e] A debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt. Without limiting the general application of the foregoing, the following conduct is a violation of this section: (10) The use of any false representation or deceptive means to collect or attempt to collect any debt or to obtain information concerning a consumer. Another argument against hard inquiries. I realize some of the arguments are wide open to interpretation, but I welcome any responses, anecdotal or theoretical.
