Credit Blog Article ? ?When Credit Disputing Doesn't Work ? Take ...

Recently, a victim of identity theft contacted me regarding his frustration in trying to correct his credit reports. The consumer was attempting to purchase a home when his mortgage lender informed him of a significant collection account listed on his credit reports. As a result, his loan approval was in jeopardy pending resolution of the collection account.

The consumer immediately contacted the collection company that furnished the negative credit information to the credit bureaus, to inquire about the collection account listed on his credit reports. The collection company told him they were attempting to collect a $20,000 debt on behalf of a creditor for a defaulted lease agreement for a restaurant he had supposedly owned while living in California. The problem is this consumer never actually owned a restaurant before and never lived or worked in California at any time in his life. He had never even been to California.

He frantically tried to explain to the collection company representative that the information reported was fraudulent and pleaded with them to have the inaccurate information removed from his credit reports.

He was certain they would be understanding of this mistake and quickly fix his credit reports. After all, he had seen all of the Federal Trade Commission public announcements that stated consumers don?t need professional help to fix their credit. He had read about how consumers can easily resolve inaccurate credit items themselves by simply notifying the creditors of the errors and/or file disputes online with the credit bureaus and they would be accommodating and readily fix their credit problem.

However, to his surprise the collection company representative refused to have the fraudulent collection account removed from his credit reports. They also refused to provide him with any documentation regarding the debt they were attempting to collect. In fact, their sole purpose in speaking with him was to gather as much information as possible to aid in their debt collection efforts.

He then proceeded to contact his local police department to file a police report regarding the identity theft. He thought surely this would be a simple task to help get the matter resolved. Unfortunately, he was again mistaken. He was told he could not file a police report because he needed to first prove that he was a victim of identity theft. He was sent from station to station and repeatedly denied the opportunity to file a police report. One officer even told him that he would have to travel to California to file an identity theft report!

And to make matters worse, his mortgage loan officer cautioned him not to file formal credit disputes with the credit bureaus because a disputed collection account could possibly impair a consumer?s ability to qualify for automated underwriting of an FHA mortgage loan.

So at this point the poor consumer was completely stumped. He didn?t know what to do. Fortunately for this particular consumer, his Realtor referred him to our company for help. We guided him thru the maze of filing an identity theft police report and helped him properly document that he was the victim of identity theft.

Armed with the proper documentation, we then contacted the collection company on his behalf and reminded them of their duties regarding compliance with the consumer protection laws. As a result, they agreed to have the fraudulent collection account immediately deleted from his credit reports.

Unfortunately, this is only one of many such tragic stories experienced all too often by consumers everyday. However, considering the fact that identity theft and abuse of credit information have now reached epidemic levels, it?s not surprising. Contrary to popular belief, creditors, collection companies, and the credit bureaus are not necessarily as eager to respond to consumer disputes, regarding identity theft, as one might think. As I have stated on several occasions, the financial interests of the credit bureaus are not necessarily aligned with your interests as a consumer.

However, all is not lost. If you encounter a situation where a creditor, collection company, or credit bureau refuses to correct inaccurate or incomplete credit information listed on your credit reports, you may be able to take legal action. The Fair Credit Reporting Act is one of many laws that protect consumers dealing with inaccurate credit information.

How the FCRA Protects You

There are two basic ways in which the FCRA protects consumers.

1. The FCRA provides federal and state law enforcement agencies (e.g. the Federal Trade Commission and state attorney general offices) the right to take legal action against any furnisher who provides incomplete or inaccurate information to a credit bureau. This right is provided by 15 U.S.C. Section 1581s-2(a). Under this section, furnishers are obligated to regularly correct and update credit information about consumers and must also notify credit bureaus if a consumer disputes any credit information reported. However, individual consumers cannot use this section of the code in a private action against a furnisher or against a credit bureau.
2. However, 15 U.S.C. Section 1581s-2(b) provides consumers with a private right of action against both furnishers and credit bureaus. This section basically sites what is supposed to happen once a credit bureau receives a consumer?s notice of dispute regarding the completeness or accuracy of information provided by any person (i.e. any furnisher) to a credit bureau.

How the Credit Dispute Process is supposed to work?

When a credit bureau receives a dispute from a consumer regarding inaccurate credit information, the credit bureau is supposed to send ?all relevant? information regarding the dispute to the creditor that originally provided the credit information to the credit bureau.

For example, if a consumer files a dispute regarding inaccurate information about a Capital One Bank Visa account, the credit bureau is supposed to send the consumer?s dispute and any relevant information provided by the consumer to Capital One Bank.

At this point, Capital One Bank (the furnisher) has 4 duties regarding the dispute:

1. Conduct an investigation regarding the disputed information;
2. review all relevant information provided by the credit bureaus;
3. report the results of its investigation to the credit bureaus;
4. and if the investigation reveals the information is incomplete or inaccurate, report the results to all of the credit bureaus to which the furnisher furnished the information.

This is all supposed to happen within 30 to 45 days after the consumer notifies the credit bureaus in writing of the dispute.

Now here?s the most important part to note. If the furnisher fails to perform any of these 4 duties, the consumer has a right to take legal action against the furnisher and/or the credit bureaus for causing incomplete or inaccurate information to be reported concerning the consumer, and for allowing such false information to remain on the consumer?s credit reports.

However, in order to take legal action against the furnisher or credit bureaus, it?s important to properly document their failure to comply with the duties imposed by the FCRA.

So when disputing inaccurate, incomplete, or outdated items listed on your credit reports, there are some steps you need to keep in mind.

Steps to Take Regarding False or Inaccurate Credit Information on Your Credit Report

1. It cannot be overstated or over emphasized that whenever dealing with the credit bureaus or furnishers put everything in writing. Never use the credit bureaus? online dispute process. Send each dispute letter by certified mail. Phone calls will not protect your rights. Although it?s less convenient, take the time to write your dispute letters and send them via certified mail. This will create a document trail for possible litigation later.
2. Send your dispute letters to all three credit bureaus first. Then send direct dispute letters to the furnishers. Your dispute letters should begin and end with a respectful request to investigate and correct inaccurate, incomplete, or outdated credit information listed on your credit reports. Include any additional documentation necessary to support your dispute. Again, make sure you send all correspondence by certified mail and keep a copy of all documentation for your records.
3. ?It?s not necessary to be nasty in your correspondence with the credit bureaus or with the furnishers. Always be professional. Keep in mind that every letter you write may eventually be shown to a jury. You and your lawyer may be asking that same jury for a verdict and damages. The language in your letters may be a reflection of who you are. So you want to present your best image in court. If the language is unprofessional, you may be less likely to receive adequate and just compensation for your credit injuries. Conversely, if the judge and the jury believe that you are professional and acted reasonably, you are much more likely to receive an adequate judgment.

Remember, if a credit bureau or furnisher (i.e. creditors or collection companies) fails to properly correct inaccurate, incomplete, or outdated credit information listed on your credit reports, you can take legal action against them. But first make sure you properly document your case. Either do it yourself, or seek professional help to legally improve your credit.

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