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Disputing a listing with the Original Creditor
Note: When you write the Original Creditor to dispute a listing, you are asking for an INVESTIGATION, not verification. Under the laws, the OC's are not required to verify an account.
Did you know that some of the most powerful tools for credit repair for you to use in your fight to clean up your credit are unknown? A big one is the ability of you to dispute negative listings with the information furnisher, typically the Original Creditor (OC). An information furnisher is any entity reporting information to the credit bureaus about you. This one was passed in the FACT Act in 2003.
Why is this a big deal? You think to yourself that "Hey, the Original Creditor must have great records, they will be able to show me proof in a heartbeat, right? Wrong. There are a few O.C.'s who keep decent records, but most credit card companies only keep records for 13-18 months. And if that's the case...and if you have lates on your credit report prior to this period...they won't be able to prove you were late...and they need to remove negative information if they can't prove it, per the law.
With all of the bank consolidations that have happened in recent years, many of the credit card and some other mortgage lending companies haven't been good about keeping their acquisition's records in the best of shape. As an information technologist who specializes in databases, I know it costs LOTS of money to import data from one system to another. Apparently, there are many companies who didn't spend the money.
This is not speculation. I've talked to many clients who have placed calls to their OC's, and the companies have NO RECORDS at all for them, let alone records of specific late payments, yet these OC's continue to report negative information on my client's credit reports. This is illegal!
While case law has established for the past few years that the Original Creditor (OC) can be held liable for reporting inaccurate information (Richardson vs. Fleet, Nelson vs. Chase Manhattan ), the FACTA legislation passed recently allows the consumer to go directly to the original creditor and dispute information which the original creditor (called the information furnisher) in the FCRA, has supplied to the credit bureaus. However before disputing with the original creditor, the CONSUMER MUST HAVE DISPUTED WITH THE CREDIT BUREAUS first. We'll see why later.
Again, when you write the Original creditor, you are asking for an INVESTIGATION, not verification. Under the laws, the OC's are not required to verify an account, only to conduct an investigation. I agree that these are legal fine hairs, but if you want them to act, you have to invoke the right laws. O.C.'s are NOT required by law to "verify" anything.
The Verbiage in the Law
Here is the exact statute in the FCRA:
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§ 623. (a)(8) ABILITY OF CONSUMER TO DISPUTE INFORMATION
DIRECTLY WITH FURNISHER
(A) IN GENERAL The Federal banking agencies,
the National Credit Union Administration, and the Commission shall jointly prescribe regulations that shall identify the circumstances under which a furnisher shall be required to reinvestigate a dispute concerning the accuracy
of information contained in a consumer report on the consumer, based on a direct request of a consumer.
(B) CONSIDERATIONS - In prescribing regulations
under subparagraph (A), the agencies shall weigh--
(i) the benefits to
consumers with the costs on furnishers and the credit reporting system;
(ii) the impact on the overall accuracy and
integrity of consumer reports of any such requirements;
(iii) whether direct contact by the consumer with the furnisher would likely result in the most expeditious resolution of any such dispute; and
(iv) the potential impact on the credit reporting process if credit repair organizations, as defined in section 403(3), including entities that would be a credit repair organization, but for section 403(3)(B)(i), are able to circumvent
the prohibition in subparagraph (G).
(C) APPLICABILITY- Subparagraphs (D) through (G) shall apply in any circumstance identified under the regulations promulgated under subparagraph (A).
(D) SUBMITTING A NOTICE OF DISPUTE- A consumer who seeks to dispute the accuracy of information shall provide a dispute notice directly to such person at the address specified by the person for such
notices that--
(i) identifies the
specific information that is being disputed;
(ii) explains the basis for the dispute; and
(iii) includes all supporting documentation required by the furnisher to substantiate the basis of the dispute.
(E) DUTY OF PERSON AFTER RECEIVING NOTICE OF DISPUTE- After receiving a notice of dispute from a consumer pursuant to subparagraph (D), the person that provided the information in dispute to a consumer reporting agency shall--
(i) conduct an
investigation with respect to the disputed information;
(ii) review all relevant information provided
by the consumer with the notice;
(iii) complete such person's investigation of the dispute and report the results of the investigation to the consumer before the expiration of the period under section 611(a)(1) within which a
consumer reporting agency would be required to complete its action if the consumer had elected to dispute the information under that section; and
(iv) if the investigation finds that the information reported was inaccurate, promptly notify each consumer reporting agency to which the person furnished the inaccurate information of that determination and provide to the agency any correction to that information that is necessary to make the information provided by the person accurate.
(F) FRIVOLOUS OR IRRELEVANT DISPUTE-
(i) IN GENERAL- This
paragraph shall not apply if the person receiving a notice of a dispute from a consumer reasonably determines that the dispute is frivolous or irrelevant, including--
(I) by reason of the failure of a consumer to
provide sufficient information to investigate the disputed information; or
(II) the submission by a consumer of a dispute that is substantially the same as a dispute previously submitted by or for the consumer, either directly to the person or through a consumer reporting agency under subsection (b), with respect to which the person has already performed the person's duties under this paragraph or subsection (b), as applicable.
(ii) NOTICE OF DETERMINATION- Upon making any determination under clause (i) that a dispute is frivolous or irrelevant, the person shall notify the consumer of such determination not later than 5 business days after making such determination, by mail or, if authorized by the consumer for that purpose, by any other means available to the person.
(iii) CONTENTS OF NOTICE- A notice under clause
(ii) shall include--
(I) the reasons for the determination under clause (i); and
(II) identification of any information required to investigate the disputed information, which may consist of a standardized
form describing the general nature of such information.
and
§ 623. (b) Duties of furnishers of information upon notice of dispute.
(1) In general. After receiving notice pursuant to section 611(a)(2) [§ 1681i] of a dispute with regard to the completeness or accuracy of any information provided by a person to a consumer reporting agency, the person shall
(A) conduct an investigation with respect to the disputed information;
(B) review all relevant information provided by the consumer reporting agency pursuant to section 611(a)(2) [§ 1681i];
(C) report the results of the investigation to the consumer reporting agency;
(D) if the investigation finds that the information is incomplete or inaccurate, report those results to all other consumer reporting agencies to which the person furnished the information and that compile and maintain files on consumers on a nationwide basis; and
(E)
if an item of information disputed by a consumer is found to be inaccurate or incomplete or cannot be verified after any reinvestigation under paragraph (1), for purposes of reporting to a consumer reporting agency only, as appropriate, based on the results of the reinvestigation promptly--
(i) modify that item of information;
(ii) delete that item of information; or
(iii) permanently block the reporting of that item of information.
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What this all means
Now that your head is spinning with all that law, I'll tell you what it means!
Basically, you can dispute information placed on your credit report by an O.C. in the same way as you would with a credit bureau. An original creditor must:
- Conduct an investigation of the dispute
- review all information provided by the consumer relating to the dispute
- Respond within 30 days to the investigation
- If the information is inaccurate, they must notify the credit bureaus of the mistake and tell the credit bureau to correct it.
However, the O.C. also can determine that the dispute is frivolous just like a credit bureau can. Reasons an O.C. can determine a dispute is frivolous:
- You just disputed the same thing without changing the reason for the dispute
- You haven't provided enough information for the O.C. to conduct an investigation. At the minimum, you need to identify the account by account number and provide a reason why you are disputing.
If O.C. DOES determine the dispute is frivolous they MUST notify you in writing by any other means available to the person within 5 days.
If the O.C. fails to comply
If the O.C. fails to comply with your dispute, they are in violation of the FCRA, but you can't sue them unless you have disputed with the Credit Bureaus FIRST.
Disputing with the credit bureau FIRST is not something you can shortcut or forget. In order to place the liability of reporting accurately squarely on the shoulders of the O.C., you must have disputed the listing with the credit bureaus. This means you have either online, via the telephone or in writing, disputed a listing with the credit bureaus and then WAITED FOR THE RESULTS OF THE INVESTIGATION.
Here is the law which enforces the fact that you must dispute with the credit bureau first:
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§ 623. (c) LIMITATION ON LIABILITY- Except as provided in section 621(c)(1)(B), sections 616 and 617 do not apply to any violation of--
(1) subsection (a) of this section, including any regulations issued thereunder;
(2) subsection (e) of this section, except that nothing in this paragraph shall limit, expand, or otherwise affect liability under section 616 or 617, as applicable, for violations of subsection (b) of this section; |
Sections 616 and 617 of the FCRA talk about how much the fines are for violations of the FCRA (the willful and negligent non compliance), typically $1000.
What the above section of the FCRA § 623. (c) means is that if you dispute with the original creditors first, without having disputing through the credit bureaus, and they refuse to answer you, or provide you with proof, yes, they are in violation of the FCRA, but you as a private citizen cannot take them to court and sue them; only your state authorities (like your state attorney general) or federal authorities (like the FTC) can sue them.
However, if you have disputed the information with the credit bureaus FIRST, they are supposed to have talked to the original creditor, even though we know that doesn't happen, and the original creditor is supposed to have at that time conducted an investigation, under FCRA § 623 (b), under which you, as a private citizen CAN sue them. When you go to the original creditor under FCRA § 623 (a)(8), you are just merely asking for the O.C.'s proof that they must have (hear the sarcasm in my voice here) provided to the credit bureaus during the O.C.'s thorough (there's that sarcasm again) investigation. If they have no proof of negative information, but the credit bureau says that the results of the investigation show the negative information is accurate, then you have the O.C. on an actionable, sueable (by you) offense.
Once again, YOU MUST DISPUTE WITH THE CREDIT BUREAUS FIRST!! Have we said this often enough??
All right, now that you've gotten this straight - what is the exact procedure when you want to dispute things with the original creditor (or any other information furnisher)? The steps are:
- Dispute the listing with the credit bureau
- Wait for the results of the investigation.
- If the listing is deleted or modified per your desires, you're done!
- If the listing comes back as "verified" or not cleaned up sufficiently to your tastes, write the Original Creditor (information furnisher) a letter to request an investigation.
If the information furnisher says the results of the investigation is "Verified", then:
- Call up the Credit Card company and ask them what kind of documentation they have to prove the negative mark. Many times they will have nothing.
- If they admit to having nothing, send this letter to their legal department
Dear Legal Deparment:
Re: Acct #XXXXXXXX
This letter is in regards to a phone call I placed to your company regarding the account listed above on <Date >, 2008. I called to inquire about this account that is listed on my Credit Reports. I spoke to a Customer Service Representative named "X" her employee number is 000, as provided by her. She informed me that your company does not have any information on this account that it was all sent to a collection agency. How did you investigate this account with out any documentation? I contacted the collection agency your rep told me about and they could not validate the debt. This collection agency subsequently removed all information regarding this account from my credit reports. If this incorrect information is not removed from my credit reports I will file suit against your company.
Sincerely, Me
One more time: When you write the Original creditor, you are asking for an INVESTIGATION, not verification.
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