Errors on your Credit Report

Errors on your Credit Report

Every person is entitled to one free credit report a year at annualcreditreport.com or you can call 1-877-322-8228.  The Fair Credit Reporting Act (“FCRA”) regulates credit reporting agencies and those organizations that furnish credit information, such as creditors and debt collectors. These entities are called furnishers of information.

Disputing inaccuracies on your credit report begins with a letter to the credit reporting agency (Experian, Transunion and/or Equifax) that is reporting the disputed information.  The letter must include your name, address, each item in the report that you dispute, why you dispute the information, and a request that it be removed or corrected.  You should include copies of any documents that support your position.  Try to be as specific as possible in explaining why you believe the item on your report is a mistake.  The reasonableness of the investigation that follows your dispute is evaluated according to the amount of information you provide.

Upon receipt of your dispute letter, the credit reporting agency has 5 business days to pass the dispute to the furnisher of information (the entity that originally provided the disputed information) and 30 days to investigate the dispute.  Within that 30 day period (may be extended by 15 days if the consumer reporting agency receives additional relevant information from the consumer), the credit reporting agency and furnisher of information must conduct reasonable investigations.  Both entities (the credit reporting agency and the furnisher of information) must complete their own investigations within that 30 day dispute period. If either the credit reporting agency or furnisher of information finds the disputed information to be inaccurate it must delete or modify that item of information from the file.

The credit reporting agency must provide you with written results within 5 business days of completion of the reinvestigation.  The results must include: (1) a statement that the reinvestigation is completed; (2) a credit report based upon your file as revised as a result of the reinvestigation; (3) a notice that you may request from the consumer reporting agency a description of the procedure used to determine the accuracy and completeness of the information, including the business name and address of any furnisher of information contacted in connection with such information and the telephone number of such furnisher, if reasonably available; (4) a notice that you have the right to add a statement to your file that indicates you dispute the accuracy or completeness of the information; and (5) a notice that you have the right to request that the consumer reporting agency notify anyone you designate (who has pulled your credit report within the last 2 years for employment purposes or pulled your credit report within the last 6 months for any other reason) that the item has been deleted, disputed, etc.

In many FCRA lawsuits, the issue comes down to the reasonableness of the reinvestigation.  As set forth above, the reasonableness of any investigation is evaluated on a case by case basis, but of primary importance is the information the consumer originally provided to the consumer reporting agency.

A common mistake consumers make is disputing the information directly to the furnisher of information (thinking to resolve the dispute with the entity that provided the inaccurate information in the first place).  When the furnisher of information fails to amend the consumer’s credit report, the consumer sues the furnisher of information for violating the FCRA.  However, liability under the FCRA only arises if you dispute the item of information to the credit reporting agency.  So make sure you dispute the information to the right entity, the credit reporting agency.  It’s the credit reporting agency’s duty to pass the dispute along to the furnisher of information.

If you’ve disputed information to the credit reporting agency and (1) the steps above were not followed or (2) the investigation was not reasonable, the credit reporting agency and the furnisher of information may be liable to you for actual damages, statutory damages, and reasonable attorneys’ fees and costs.

Errors on your Credit Card or Bank Card Statements

The Fair Credit Billing Act (“FCBA”) provides a consumer the right and ability to dispute errors on their credit card or bank statements.  The dispute occurs, by definition, before the debt is placed with a debt collection company.

If you notice an improper charge on your credit card or bank statement, you have 60 days from the date the first error was mailed to you to send written notice to the creditor, disputing the error, at the address it provides for billing inquiries (as opposed to the address you would typically mail a payment).

Your dispute notice must identify your name and account number, the belief that the credit card or bank statement contains a billing error, the amount of the error, and the reason you believe the statement contains a billing error.

The creditor then has 30 days from receipt of your written dispute to send you a written acknowledgement that it has received your dispute; 90 days within which to conduct a reasonable investigation and either correct your account (and notify you of any such corrections), or send you a written explanation of why the creditor believes the disputed statement is accurate.

You can also dispute your credit card or bank statement in situations where you buy something at the store or over the internet and the goods are not delivered to you.  The creditor cannot charge you for the amount unless it can show the goods were actually delivered to you.

For as long as the creditor is investigating your claim, the creditor is prohibited from taking any action to collect the disputed amount.  For example it can’t threaten your credit rating, report you as delinquent, accelerate your debt, or restrict or close your account because your bill is in dispute.

In the event you disagree with the results of the investigation, you have 10 days to send a second written notice to the creditor stating the amount is still in dispute.  At that point the creditor cannot report the amount to a third party as delinquent without also notifying the third party that the amount is in dispute, and at the same time, notify you of the name and address for each party to whom the creditor reports any information regarding the disputed amount.

This act does not apply to disputed finance charges made by your creditor.

You have 1 year from the date of the violation to file a lawsuit under the FCBA.

Step 1: Disputing the Debt

Pursuant to the Fair Debt Collection Practices Act (“FDCPA”), a debt collector is required to send (within 5 days of its initial communication with the consumer) written notice to the consumer notifying the consumer of the debt and the consumer’s ability to dispute owing, and request validation of, the debt.  Section 1692g(a) of the FDCPA specifies that the notice must identify:

(1) the amount of the debt;

(2) the name of the creditor to whom the debt is owed;

(3) a statement that unless the consumer, within thirty days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector;

(4) a statement that if the consumer notifies the debt collector in writing within the thirty-day period that the debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt or a copy of a judgment against the consumer and a copy of such verification or judgment will be mailed to the consumer by the debt collector; and

(5) a statement that, upon the consumer’s written request within the thirty-day period, the debt collector will provide the consumer with the name and address of the original creditor, if different from the current creditor.

This required notice is often referred to as the “validation notice.”

Under § 1692g(b), “[i]f the consumer notifies the debt collector in writing within the thirty-day period described in subsection (a)” that the debt is disputed or requests the name and address of the original creditor, the debt collector shall cease collection of the debt, or any disputed portion thereof, until the debt collector obtains verification of the debt or a copy of a judgment, or the name and address of the original creditor, and a copy of such verification or judgment, or name and address of the original creditor, is mailed to the consumer by the debt collector.

As set forth above, the consumer must dispute the debt, in writing, within 30 days of receipt of the 1692g notice.  Upon receipt of a consumer’s timely dispute letter, the debt collector must stop all collection activities until it can verify the debt.  Importantly, once the consumer disputes owing the debt, debt collection law firms cannot initiate collection lawsuits until the debt is verified/validated.

The dispute/validation process is intended to notify debt collectors that they are trying to collect debt from the wrong person or attempting to collect debt which the consumer has already paid.  If the consumer does not dispute owing the debt within the 30 day time period, the debt collection company may assume the debt is valid.

Disputing the debt and requesting validation should be the first thing a consumer does upon receipt of an initial debt collection letter from a debt collector. Depending on how the debt collection company obtained the account, they may be unable to obtain validation and will cease all collection activities.

When Debt Collectors Call

If you’re being harassed by debt collectors there a few things you should do:

1.  As soon as you receive the debt collection company’s initial notice (a letter from the debt collection company which is required to notify the consumer that the consumer has 30 days to dispute the debt), dispute the debt.  Oftentimes debt collection companies are not able to verify the debt.  If they cannot verify the debt, they must stop all collection activities.  Send the dispute letter to the collection company certified mail so that you have proof it was mailed and received.   Start a file. Place a copy of the debt collection company’s initial collection letter, your dispute letter and the certified mail receipt in the file.

2.  If the debt collection company does verify the debt, keep a notebook by the phone and start recording all phone calls with debt collectors.  Specifically, record the date and time of the call, the person you spoke to, the name of the debt collection company and what the phone call was about.  Be careful about recording conversations.  In certain states, like Nevada, it is illegal to record a conversation without the other party’s consent.

3.  While you may not be able to record your conversations with a debt collector, you are entitled to keep/preserve any recordings they leave on your answering machine or voice mail.  Keep copies of as many messages as possible.

4.  If you feel the debt collection company has violated your rights under the FDCPA, contact an attorney.  Consumers are entitled to up to $1,000 in statutory damages and any actual damages (e.g. humiliation, emotional distress, loss of wages, etc.) suffered.  The FDCPA awards a victorious consumer reasonable attorneys’ fees and costs.  Attorneys’ fees and costs are awarded in addition to the consumer’s award of damages.  In other words, your attorney’s fees and costs won’t be deducted from the $1,000 statutory damages.

When Debt Collectors Sue

Debt collectors have multiple means of collecting debt.  Two primary forms are judicial and non-judicial collections.  Judicial collections refers to collections involving the legal system, such as wage garnishment or debt collection lawsuits.  Non judicial collections refers to phone calls or letters sent by the debt collection company.
There’s been a surge in judicial collections; notably lawsuits.   Debt collection companies receive bulk portfolios of debt containing thousands of accounts, then retain counsel to sue consumers to collect the past-due debt.  Due to the mass transfer of accounts, the debt collection company receives minimal account information such as the consumer’s name, address, phone number, account number and last date of payment. Oftentimes the information is incorrect, out of date, or outside the prescription period/statute of limitations.  Consumers need to confirm the debt collection law firm is filing a proper collection action.
All states have deadlines for filing lawsuits.  In Louisiana (barring some interruption to the prescription period such as acknowledgment of the debt or lawsuit), a creditor must bring a lawsuit within 3 years on an open account (invoices for goods, medical services, credit cards, etc.); 5 years for a promissory note; and/or 10 years for contracts.   The prescription period begins to run from the day a cause of action arises and its judicial enforcement is possible.   Due to the sheer quantity of accounts, debt collection law firms do not always confirm the date of the account before filing a lawsuit.  It is not uncommon to find lawsuits on debt as old as 4-5 years (and sometimes even 15 years), and therefore barred by the applicable prescriptive period.
It is the collection law firm’s burden to show the consumer owes the amount of money alleged to the original creditor.  According to one court, “a plaintiff presents prima facie proof sufficient to support a judgment when they submit a statement or invoice of the account and an affidavit attesting to the correctness thereof.” Midland Funding, LLC v. Trahan, La.App. 5 Cir.2/21/13 (2013).
Further, confirm the collection law firm filed the lawsuit in the proper venue.  Collection law firms may try to file lawsuits in courts more favorable or accessible to them.  Pursuant to the Fair Debt Collection Practices Act, a debt collector can only bring a legal action in the jurisdiction in which the consumer signed the contract sued upon or the jurisdiction in which the consumer resides at the commencement of the action.  To enforce an interest in real property (e.g. land), the action must be brought in the jurisdiction in which the real property is located.
When sued, it is important to confirm the information alleged in the complaint.  Do you really owe a debt to the creditor identified in the petition?  Do you owe the amount alleged in the petition?  Finally, is the debt within the applicable statute of limitations/prescription period?

Your Rights Under the FDCPA

Did you know:

1. The Fair Debt Collection Practices Act (“FDCPA”) was enacted because congress found “abundant evidence of the use of abusive, deceptive, and unfair debt collection practices by many debt collectors,” and wanted to institute an act to help disadvantaged consumers. 15 USC 1692.

2. Within 5 days of their initial communication with you, a debt collector must send you a written notice notifying you of your right to dispute the debt or request documentation validating the existence of the “alleged” debt (unless already contained in the initial communication or you paid the debt). 15 USC 1692g.  More specifically, the notice must contain:
    A. the amount of the debt;
    B. the name of the creditor to whom the debt is owed (this does not have to be your original creditor (e.g. Chase or Bank of America) but the company to whom the original creditor sold your debt);
    C. a statement notifying you, you have 30 days after receipt of the notice to dispute the debt or it will be assumed valid by the debt collector;
    D. a statement notifying you that if you dispute the debt within the 30 day period, the debt collector must obtain and mail you verification of the debt;
    E. a statement notifying you that the debt collector will provide you with the name and address of the original creditor, if different from the current creditor, if you request it during the 30 day period.
3.  If you dispute the debt to the debt collector, in writing, within 30 days of receiving that notice, the debt collector must stop all collection activities until it mails you a copy of the validation.
4. A debt collector cannot try to embarrass you by discussing your debt with a third party without your consent.  The only person a debt collector can actually discuss your debt with is: you, your spouse, your parent (if you’re a minor), your guardian, your executor or administrator, your attorney, your creditor, or the debt collector’s attorney. 15 USC 1692c.  Communications with anyone else (other than to obtain your contact information) is a violation of the FDCPA.
5. A debt collector cannot contact you before 8 am or after 9 pm without your consent. 15 USC 1692(c)(a)(1).
6.  A debt collector cannot contact you directly if it knows you are represented by an attorney with respect to that debt and has your attorney’s name and address. 15 USC 1692(c)(a)(2).
7. A debt collector cannot contact you at work if it knows your employer (e.g. you tell them your employer) prohibits you from receiving calls at work. 15 USC 1692(c)(a)(3). 
8.  A debt collector cannot harass you in connection with the collection of a debt.  In other words, a debt collector cannot threaten to harm you, use obscene or profane language, or call you repeatedly or continuously with the intent of annoying you (intent can be inferred by the debt collectors’ actions, including number and pattern of calls in a day, the number of messages left, interactions with the collector, etc.). 15 USC 1692d.  In Louisiana, conduct that could be harassing includes calling between 3 and 6 times a day.
9.  A debt collector cannot use false, misleading or deceptive means in connection with the collection of your debt.  Some common examples of false and misleading means include:
    A. misrepresenting the amount of money owed; 15 USC 1692e(2)
    B. claiming to be an attorney or that a communication is from an attorney when it is not; 15 USC 1692e(3)
    C.  representing that nonpayment of a debt will result in arrest, imprisonment, garnishment, attachment, or sale of any property or wages unless that action is lawful and they really intend to take that action; 15 USC 1692e(4)
    D. threatening to take legal action that cannot be taken or is not really intended to be taken; 15 USC 1692e(5)
    E. communicating or threatening to communicate information which is known or should be known to be false, including failing to communicate that you disputed the debt (e.g. credit reporting your account without notifying the credit reporting agency(ies) the debt is disputed); 15 USC 1692e(8)
    F. failing to provide a “mini-miranda” and notify you, in your intial written or oral communication that “the debt collector is attempting to collect a debt and that any information obtained will be used for that purpose” and failing “to disclose in subsequent communications that the communication is from a debt collector.” 15 USC 1692e(11).
10.  A debt collector cannot use unfair or unconscionable means to collect a debt.  Examples include:
    A.  collecting interest, fees, charges or expense that are not authorized by law or your contract with the original creditor; 15 USC 1692f(1)
    B. communicating with you regarding your debt by post card; 15 USC 1692f(7).
For more information go to http://www.ftc.gov/os/statutes/fdcpa/fdcpact.shtm for the full text.