The 9th Circuit US Court of Appeals recently found that “a literally true statement can still be misleading” and therefore a violation of the Fair Debt Collection Practices Act. Arrow Financial Services (a Sallie Mae Company) sent a consumer a letter stating that if Arrow were reporting the debt to a credit reporting agency, it might submit negative information to that credit agency. However, Arrow could not have submitted the underlying debt to any credit reporting agency.
Gonzales, the consumer in this case, sued because Arrow implied a threat of negative credit reporting when it did not have the right to report the debt in the first place. The 9th Circuit agreed.
This decision (PDF) suggests that debt collectors cannot simply use a form that says if and leave it up to consumers to determine whether they are subject to the negative side of the if. In the 9th Circuit, at least, debt collectors may not threaten—even conditionally—unless they actually do have the right to do what they are threatening to do.
(Thanks for the tip, Randall!)
Minnesota debt collection defense attorney John Rossman wrote this breathless warning for debt collectors for InsideARM:
An army of Debtors — fully equipped with scripts drafted by consumer attorneys and recording devices — are using their telephones as weapons to wage war on unsuspecting Debt Collectors across our nation.
Rossman warns debt collectors that consumers are trying to “entrap” collectors and “trick” them into violating the Fair Debt Collection Practices Act by asking the following questions:
FreeCreditReport.com is sort of an “honest” scam. “Hey, we’re FreeCreditReport.com! Nah, you have to pay for your free credit report. Yeah, but the name is FREECreditReport.com!!! But you totally have to pay. For your FREE FREE FREE credit report.”
Under the new credit card reform legislation, outfits like FreeCreditReport.com that offer free* services will have to (1) inform consumers that the only place for a free credit report is AnnualCreditReport.com; and (2) include the statement “this is not the free credit report provided for by federal law.”
This is not the free credit report you are looking for.
A while back I promised more analysis of this article. This gist of the article is that those debts discharged by a bankruptcy court are not being honored as discharged. There are some powerful reasons for this
First, those debt collectors who we collecting on the debt prior to the discharge will continue to collect on these debts in violation of the discharge order. Second, the owners of the discharged debt will continue to sell these debts on the secondary market.
So why is this? The answer is simple – Money.
Under federal law, consumers can challenge inaccurate information on credit reports and other consumer reports (such as tenant screening reports). It is free, usually quick, and relatively painless. Plus, there are a lot of great how-to guides on the web.
I have mentioned the FTC guides before. The excellent Building a Better Credit Report manual is a great starting point.
Dawn of Queercents points to the Credit Infocenter another good repository of information, guides, and forms. I especially like the long list of forms and the flowchart explaining the debt validation process.
Credit repair is absolutely something consumers can and should do themselves, and there is no time like the present. Get going!
How to Write Letters to Fix Your Credit Report | Queercents
Last October, I posted about CenterPoint Energy’s plan to report delinquent accounts to the credit reporting bureaus. Last Friday, CenterPoint announced a change of plan, saying it will hold off on reporting indefinitely. Consumer groups and advocates for low-income families apparently made the difference:
They said it would damage credit records — now used for everything from employment background checks to mortgages to car insurance rates — of Minnesotans who don’t pay their bills because they don’t have the money. A new threat won’t change that, the groups protested. The group threatened to seek legislation to ban the practice.
Another reason to check your credit report regularly. From the article:
According to Shirin Sinnar from the San Francisco branch of the Lawyers’ Committee for Civil Rights, credit bureaus are listing the names of known terrorists on the credit reports of unsuspecting everyday, average citizens across the country. Sinnar indicated the names are harvested from the U.S. Treasury Watchlist by credit bureaus and other financial institutions.
“The credit reporting agencies are now scanning this list and putting watchlist information on the reports even if it’s a partial match,” said Sinnar.
Even partial matches? Sheesh. Given all the problems with the various terrorist watchlists out there, I’m not sure this is remotely a good idea. Consumers, beware!