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.