--> Learn Your FCBA

CREDIT REPORT AND BILLING ERRORS:
HOW TO HANDLE THEM

By: David A. Szwak, Esq.

http://www.intnet.net/pub/CREDIT/Credit.report.errors.handle


It is inevitable that you will be incorrectly billed in your
life. It is even more likely that your credit reports will contain
inaccurate information causing greater heartache. This article
gives an overview of the Fair Credit Billing Act, the federal Act
designed to govern disputes between the creditor and consumer. The
article also explains how you can obtain your credit reports and
what to do once you find errors in them. These tidbits of
knowledge are necessary in the credit and information age where
your consumer report has taken over your real identity and replaced
your home town reputation.

THE FAIR CREDIT BILLING ACT [FCBA] (15 U.S.C. 1666-1666j):

http://www.ftc.gov/os/statutes/fcb/fcb.pdf


The first step is to determine of you have a "billing error".
If so, you must follow the guidelines of the FCBA. A "billing
error" means any of the following:

(1) a reflection on a statement of an extension of credit
which was not made to the obligor or, if made, was not in
the amount reflected on such statement;

(2) a reflection on a statement of an extension of credit for
which the obligor requests additional clarification
including documentary evidence thereof;

(3) a reflection on a statement of goods or services not
accepted by the obligor or his designee or not delivered
to the obligor or his designee in accordance with the
agreement made at the time of a transaction;

(4) the creditor's failure to reflect properly on a statement
a payment made by the obligor or a credit issued to the
obligor;

(5) a computational error or similar error of an accounting
nature of the creditor on a statement;

(6) failure to transmit the statement required under section
1637(b) of this Title to the last address of the obligor
which has been disclosed to the creditor, unless that
address was furnished less than twenty (20) days before
the end of the billing cycle for which the statement is
required;

(7) any other error described in regulations of the Board.

For the full text of the definition of "billing error" refer to 15
U.S.C. 1666(b).

Next, you must decide if you are engaged in a dispute with a
"creditor". The term "creditor(s)" under FCBA means those person
or entities meeting the definition of the term as found in 15
U.S.C. 16O2. The term would include all card issuers regardless of
whether they meet the definition under the Truth-In-Lending Act.
15 U.S.C. 1602(f); Reg. Z, 12 C.F.R. 226.2(17). The last critical
phrase defines the type of relationship between the consumer and
the creditor, which must exist in order to fall under the FCBA.
The phrase "open end credit plan" means a plan under which the
creditor reasonably contemplates repeated transactions. 15 U.S.C.
1602(i); Jacobs v. Marine Midland Bank, 475 N.Y.S.2d 1003 (1984).
The FCBA only applies to transactions under open-end credit plans.
Jacobs v. Marine Midland Bank, N.A., 475 N.Y.S.2d 1003, 124 Misc.2d
162 (1984).

The consumer has a right to challenge a creditor's statement
of an account in the consumer's name. The consumer can obtain
resolution and correction of the dispute in a timely and orderly
fashion. 15 U.S.C. 1666a. The FCBA provides protection to the
consumer from the "shrinking billing period" which is the time
within which to avoid the imposition of finance charges by payment
of the balance or portion of the debt. 15 U.S.C. 1666b. The
consumer has a right to make the creditor promptly post payments
and credits to his account. 15 U.S.C. 1666c-1666e. If the creditor
fails to comply with 15 U.S.C. 1666 and 1666a, the creditor is
subject to forfeiture of their right to collect the disputed
amount. 15 U.S.C. 1666(e). The consumer has the right to assert
all claims and defenses against the credit card issuer which the
cardholder has against the merchant honoring the card. 12 C.F.R.
226.12; 15 U.S.C. 1666i; 15 U.S.C. 1666j. The FCBA applies to
credit cards. 12 C.F.R. 226.13.


The consumer has an action for actual damages sustained from
the creditor for violating the FCBA and the creditor must pay a
civil penalty of twice the finance charge (minimum of $100.00,
maximum of $1,000.00), plus court costs and a reasonable attorney's
fees. 15 U.S.C. 1640(a). Class actions may be instituted under 15
U.S.C. 1640.

Ordinarily, a consumer must notify creditor of alleged billing
error before bring an action under the FCBA. Payne v. Diner's Club
International, 696 F.Supp. 1153 (U.S.D.C. Ohio). Generally, a
proper consumer dispute, concerning a credit plan, is one that
places the card issuer on notice as to the name of the consumer,
the credit account number, a statement that the account or
reporting is in error, and a statement as to why the consumer
believes the error exists, if possible. 15 U.S.C. 1666(a)(1)-(3);
Gray v. American Express Co., 743 F.2d 10 (C.A. D.C. 1984);
Himelfarb v. American Express Co., 484 A.2d 1013 (Md. 1984);
Saunders v. Ameritrust of Cincinnati, 587 F.Supp. 896 (U.S.D.C.
Ohio 1984). The consumer is not required to send written notice of
billing error to creditor where the creditor continues to report
the account as delinquent, when in fact it had been satisfied and
the creditor had failed to ever send a periodic statement to
consumer. 15 U.S.C. 1637(b), 1666(a), 1666(b)(6); Saunders v.
Ameritrust of Cincinnati, 587 F.Supp. 896 (U.S.D.C. Ohio 1984). In
cases where the creditor must be notified, the sixty (60) days
notice period commences to run from the date the disputed statement
is received by the debtor. Debtor must make written dispute within
sixty (60) days. Pinner v. Schmidt, 805 F.2d 1258 (5th Cir. 1986);
15 U.S.C. 1666(a).

The conduct of a credit issuer, in persistently refusing to
adjust or correct cardholder's statement within statutory time
limit, continuing to demand payment despite being repeatedly
informed that cardholder had cancelled her credit card on
legitimately disputed charges, declining to even acknowledge that
dispute existed, and failing to report the dispute to consumer
reporting agencies, as required by law, was willful conduct and
constituted callous indifference to cardholder's credit rating and
financial difficulty likely to be suffered by cardholder. Young v.
Bank of America Nat. Trust & Savings Assn., 190 Cal.Rptr. 122, 141
C.A.3d 108 (1983). Despite the other notices and delays in
correction which may be reasonable, if a credit issuer is provided
an affidavit of fraud or forgery, then the credit issuer must take
immediate action to correct erroneous information previously
reported to consumer reporting agencies. Smith v. First Nat. Bank
of Atlanta, 837 F.2d 1575 (11th Cir. 1988), cert. denied, 109 S.Ct.
64, 488 U.S. 821, 102 L.Ed.2d 41. It should be noted that the FCBA
does not permit creditors to use "fraud affidavits". Dillards was
assailed by the FTC, in 1994, for using onerous "fraud affidavits"
and holding fraud victims' credit reports hostage, by refusing to
correct fraud-based inaccurate and derogatory reportings, until the
victims agreed to sign an affidavit binding them to unreasonable
and bizarre terms.


Continued:

 

Continued:


Tort claims may not be asserted under FCBA. 15 U.S.C.
1666i(a). The consumer (obligor) must make a "good faith attempt"
to satisfactorily resolve the disagreement with the person honoring
the card. 15 U.S.C. 1666i(a). The amount of the transaction must
exceed $50.00. 15 U.S.C. 1666i(a). The transaction must occur in
the same state as the cardholder's mailing address, or must occur
within 100 miles of the cardholder's mailing address. Cf., Plutchok
v. European American Bank, 540 N.Y.S.2d 135 (U.S.D.C. N.Y. 1989).
The amount of the claims or defenses asserted may not exceed "the
amount of credit outstanding with respect to such transaction at
the time the cardholder first notified the card issuer or person
honoring the credit card. 15 U.S.C. 1666(b). Note that payments
and credits to the cardholder's account are deemed to have been
applied, in the order indicated, to the payment of:

(a) late charges in the order of their entry to the account;

(b) finance charges in order of their entry to the account;

(c) debits to the account (other than those above) in the
order in which each debit entry to the account was made.
15 U.S.C. 1666i(b).

The above mentioned limitations have an exception that exists
when: (1) the amount of the transaction must exceed $50.00; and (2)
the transaction must occur in the same state as the cardholder's
mailing address, or must occur within 100 miles of the cardholder's
mailing address. In essence, those restrictions do not apply when
the person honoring the credit card (retailer):

(a) is the same person as the card issuer;

(b) is controlled by the card issuer;

(c) is under direct or indirect common control with the card
issuer;

(d) is a franchised dealer in the card issuer's products or
services;

(e) has obtained the order for such transaction through a
mail solicitation made by or participated in by the card
issuer; or

(f) where the defense or claim can be classified as a
"billing error" rather than an assertion of a claim or
defense.

15 U.S.C. 1666i(a)(3); Izraelewitz v. Manufacturers Hanover Trust
Co., 465 N.Y.S.2d 486 (1980); Gray v. American Express Co., 743
F.2d 10 (D.C. Cir. 1984); Lachman v. Bank of Louisiana, 510 F.Supp.
753 (U.S.D.C. Ohio 1981); Lincoln Nat. Bank, N.A. v. Carlson, 426
N.Y.S.2d 433 (1980).

CREDIT REPORT ERRORS: MORE OFTEN THAN YOU THINK!

A 1989 study by Consolidated Information Services, a user of
credit reports, found an error rate of forty-three (43%) percent in
a random sample of 1,500 reports reviewed. A survey by Consumers
Union found that forty-eight (48%) percent of the credit report
sample contained inaccurate information. Consumers Union, "What Are
They Saying About Me? The Results of a Review of 161 Credit Reports
from the Three Major Credit Bureaus," (April 29, 1991).
Nonetheless, the industry claims that 99.5% of credit reports are
accurate. "Bad Credit, No Reason," U.S. News & World Report,
January 27, 1992, p.65. This contention by the industry is based
upon the number of errors investigated in 1988 (3 million
complaints) with the number of reports they claim to have issued
that year (9 billion). This is not a fair analysis. The
comparison should be made against the number of consumers who
actually saw their reports and complained (9 million). The latter
comparison produces an error rate of thirty-three (33%) percent. E.
Mierzwinski, "Nightmare on Credit Street or How the Credit Bureau
Ruined My Life," (U.S. Public Interest Research Group, Washington,
D.C.), June 12, 1990; David A. Szwak, Esq., "Theft of Identity: A
Credit Nightmare," Texas Bar Journal, Texas Bar Association, Vol.
56, No. 10, pp.994-999 (November, 1993).

TIGHTENING THE SCREWS ON THE CUSTOMER:

A credit issuer's "ability to report on the credit habits of
its customers is a powerful tool designed, in part, to wrench
compliance with payment terms from its cardholder." Thus, a
creditor's "refusal to correct mistaken information can only be
seen as an attempt to tighten the screws on a non-paying customer."
Miranda-Riviera v. Bank One, --- F.R.D. ---, 1993 W.L. 30681
(U.S.D.C. Puerto Rico 1993); David A. Szwak, Esq., "Credit Cards In
America," The John Marshall Journal of Computer and Information
Law, John Marshall Law School Law Review, Chicago, Illinois, Vol.
XIII, Issue 4, pp.573-584 (Summer, 1995). After all, erroneous
reports serve no purpose but to substantially harm the target of
the report and prevent them from achieving the benefits of their
good name. Roemer v. Retail Credit Co., 3 Cal.App.3d 368, 83
Cal.Rptr. 540 (1970); In re Retailers Comm. Agency, Inc., 174
N.E.2d 376 (Mass. 1961). Consumer reporting agencies must present
information is a fashion to insure the maximum possible accuracy
and are liable for FCRA violations resulting in harm from the
original publication and all reasonably foreseeable republications.
Alexander v. Moore and Associates, Inc., 553 F.Supp. 948 (U.S.D.C.
Haw. 1982); Luster v. Retail Credit Co., 575 F.2d 609 (8th Cir.
1978) [Ark.].

An erroneous or careless report serves no purpose but to
substantially damage the target of the report, who after
publication can do little to correct the damage caused by the
report. Bartels v. Retail Credit Co., 175 N.W.2d 292 (Neb. 1970).


HANDLING ERRORS IN CREDIT REPORTS:

There are several types of credit report problems that are
common: inquiries made without your approval; errors in personal
information listed on the report; credit or collection accounts you
did not create; negative ratings on accounts which do belong to
you; and/or public records information which is erroneous.

It is unlawful and grounds for a civil action when a person
inquires about your credit without a permissible purpose. 15 U.S.C.
1681b, 1681q. See Yohay v. City of Alexandria Employees Credit
Union, Inc., 827 F.2d 967 (4th Cir. 1987) [Va.]; Heath v. Credit
Bureau of Sheridan, Inc., 618 F.2d 693 (C.A. Wyo. 1980); Hansen v.
Morgan, 582 F.2d 1214 (C.A. Idaho 1978); Russell v. Shelter Fin.
Services, 604 F.Supp. 201 (U.S.D.C. W.D. Mo. 1984). Persons
capable of accessing consumer reports ave a limited license
afforded by the FCRA to access those reports. You should determine
how and why each and every inquiry was made into your report. If
the probing party does not afford an explanation as to why they
accessed your report, you should notify the U.S. Secret Service,
the FTC and file a civil action against them. Impermissible
accesses are a great source of fraud. Fraudsters peruse databases
looking for valuable data to commit fraud. Concerning the improper
inquiry, you need to dispute the inquiry to the consumer reporting
agency and the peering creditor or person. Excessive inquiries on
your report alone are a basis for a creditor to deny you credit.
Inquiries are factored into the credit score the bureau assigns to
you.


Continued:

 

Continued:


If you find any errors in your address, employment or other
personal information, you must write the consumer reporting agency
and demand correction. In each situation discussed, ask for a
corrected copy of the report to be sent to recent inquirers.

When you find an error in credit account or public records
information you must first determine whether the listed account or
information is something which you created or allowed to be opened
in your name. If the trade line is yours, you have a "billing
dispute". 15 U.S.C. 1666(a),(b). You must write the creditor and
each CRA.


Erroneous public record data or public record data improperly
placed on a consumer's report can be the most damaging type. It is
widely acknowledged that a bankruptcy, which can stay on your
credit reports for ten (10) years from judgment, is the most
negative mark which can be placed on a credit report. 15 U.S.C.
1681c. If you have erroneous public records data on your report,
you need to communicate directly with the consumer reporting
agency.

After receiving your notice of dispute the creditor must,
within 30 days, send you written acknowledgment of your dispute
and, not later than 90 days after receipt of your notice, either
make the appropriate corrections in your report or send a written
explanation to you, after conducting an investigation of your
dispute, setting forth the reasons why the creditor believes the
present, disputed entry on your report is correct. 15 U.S.C.
1666(a).

After you provide a dispute letter to the creditor, the
creditor "may not directly or indirectly threaten to report
adversely on the obligor's credit rating or credit standing because
of the obligor's failure to pay the amount (the disputed
amount)..." 15 U.S.C. 1666a. You must pay any undisputed portion
of the bill. If the dispute persists, a civil action may be
required to remove the error from your report.

Consumer reporting agencies must not only assure the "maximum
possible accuracy" of data entered on your report but must employ
reasonable procedures to promptly investigate disputed matters. 15
U.S.C. 1681e, 1681i. Currently, consumer reporting agencies cater
to their subscribers and very rarely delete disputed data unless
the creditor-subscriber directly orders the deletion. This is one
area where the industry refuses to comply with the FCRA. The FCRA
provides limited immunity to creditors-subscribers for the
reporting of false data. 15 U.S.C. 1681h(e). Nonetheless, the
reporting or failure to cause deletion of false or improper data
previously reported by the creditor-subscriber can dispense with
immunity and provides a basis for reckless and willful conduct.

Also, immediately write the reporting agency, in the separate
request, and demand that a "victim's statement" be added to your
credit report. 15 U.S.C. 1681i(b),(c). The "victim's statement" is
also referred to as the "statement of dispute" or "consumer
statement". Be sure that each consumer reporting agency lists the
statement on your report. Each credit report issued by each
consumer reporting agency must bear the victim's statement.


CONCLUDING REMARKS

Be assertive and direct in enforcing your credit rights. Stay
away from credit repair companies suggesting they can get accurate
information removed from your credit report. Also, beware the
suggestion that obtaining a Federal Tax Identification Number.
Further, use of another person's social security number is also
fraud. Trying to obtain credit via fraud will ultimately catch up
with you. Use of the Fair Credit Billing Act and Fair Credit
Reporting Act should ultimately result in correction of any
errors. Litigation is another increasingly popular means of
getting the creditor's and bureau's compliance regarding persistent
errors when all else fails.


>End<

 

Sunday Bump

 

Bumping for Nub.



Good convo. anyway.

.

 

I agree with ya Jam.

There are MANY great threads which no longer get attention.

Unfortunate

.

 

Time 2 bump

 

Bump 4 Phoenix.