If you are in a situation where you have collections on your credit report this may be a familiar situation: ever look at your credit report and notice that there are lots of inquiries on it from collection agencies? There shouldn’t be, or at least that’s what the 9th circuit court has ruled. In my opinion, many people get overly concerned with inquires on their credit report, but the fact is that excessive inquiries hurt you.
The 9th Circuit Court of Appeals recently decided Pintos v Pacific Creditors Association in January of 2007. In the facts of the case, the Plaintiff’s (Ms. Pintos) car was towed. She failed or refused to pay the towing company so they sold her car at auction. Apparently, the car did not fetch enough money to pay her towing bill. (I wonder what kind of car she owned that would not fetch the price of the towing bills?!)
The towing company turned the remaining debt (the difference between the auction price and the towing bill) over to Pacific Creditors Association (”PCA”). During collection activities, PCA pulled Ms. Pintos’ credit report. The 9th Circuit held that this was a mistake. Under the Fair and Accurate Credit Credit Transactions Act (”FACTA”) the newest revision of the Fair Credit Reporting Act, a collector may only pull a credit report in connection with a “credit transaction.” Ms Pintos did not ask or apply to the towing company for credit, an important legal distinction. Ms. Pintos lost her claim at the trial court but not in the 9th Court of Appeals.
This case could be important as a defense if a collection agency is suing you. It could get you some money as well should you decide to sue over the FCRA violation. In my opinion, the information that a collection agency has pulled your credit report is just another tool in dealing with them and possibly getting rid of the collection on your report all together, rather than a method of cleaning up inquires.
Who else has had excessive inquiries on their credit report from collection agencies? Leave a comment!
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So what’s the bottom line here? How do we get these removed if they are not legally allowed?
Derek – You can try suing them for violations of the FCRA. If you’re in the 9th district, you can cite the case. If you’re not, you can use the same arguments and hope the court ruled in your favor.
So reporting the violations to the CRA won’t do anything?
So technically they can’t, but they do cause they get away with it.
No, because the CRAs are complicit in this as well. The case above also named Experian in the suit and won against them.
side note: It could have been an expensive car. The towing charge is only 250, but then they charge you 25 to 50 per day for 30 days before they auction it, and auctions usually go for half the value of the car because they can’t tell if it’s salvaged and sometimes haven’t even changed the keys so they can’t start it to see if it runs.
I bought a car at an auction for $800.00, the car had what appeared to be current tags that turned out to be stolen. I was parked one day shortly after buying the car and came back to find the police towing the car. I was searched and made to sit on the curb for an hour while they searched the car (the previous owner had a felony arrest warrant). Turns out the car was not worth the $600.00 registration fee (three years past due with penalties) plus the $500.00 for police release, towing, and impound fees (after only 3 or 4 days) so I let the towing company keep it (same place I bought it from at auction). Turns out the towing company sells it again at another auction for $900.00 dollars which was $280.00 short of the impound fees, billed me for it and sent it to collections when I refused to pay it. What a racket! The owner of the towing company (official police impound) is an ex-police officer from the same city, they are charging storage fees which rival some hotels daily rate.
Is the law applied the same if the “collection agency” is a law firm (i.e. Legal Recovery Law Offices)???
Law firms that solicit business as collection agencies are bound by the same rules as collection agencies.
To stop collection agency calls, turn the tables on them. Call their offices a million times a day. Talk to their employees. Waste their time. Tell them falso information, phone numbers, SS#’s, employment information, etc.. Cuss them out! Keep in mind that you are usually calling a toll free number which they have to pay for. Call so much that their phone bill is more than the debt they are trying to collect. What are they going to do, change their phone number? How much will that costs. They have the attitude that they can ruin your life and you can’t do anything about it. But you can. You have a lot of power to shut down their ability to do business. Post this on web sites. Send an email to your friends telling them to do the same.
I have an old auto loan from over 7 years ago. Lost my job and the vehicle was reposessed. It is past my states (PA) statute of limitations and has been removed from my credit report. The collection agency that the debt was sold to is still pulling a hard inquiry from my credit report every 6 months. Is this legal and if so, for how long
I have a collection agency, ICSystem, that is opening new accounts, not inquiries every month on my CR. Is this legal?
My mom had an american express card. She got an extra card for me. Since the downturn in the economy the card was shut down by AMEX and sent to a collection agency. The account belongs to her, but they are calling me? Do I have any rights if this shows up on my credit report?
i have about 7 hard inquiries from collection companies and one company is a repeater .so i want to know should i sue because i did not apply for credit!one company has four hard inquiries so far and the purpose is to destroy my credit as i believe!
yes i have about 4 or 5 hard inquiries from the same collection agency “rubin & rothman” collection attorneys and the time is from august 08 up until now and i believe that its hurting my score .well it is .when i pull my credit ,the scoring says one of the things that brings my score down is to many inquiries gives the impression to creditors that im trying to over extend myself by trying to get to much credit
I am so glad that you wrote this section. I have heard a lot of stuff on video, which appears to be mistated…. Yours comes across with some authenticity…
I am currently in the same situation as Ms. Pinto, but the facts are different… this is where my insurance company was bought out by a bigger one at probably the same time I decided to not renew my insurance policy with this company…. and I let it intentionally lapse, but now this company that is nationwide, and WONT let you call them continuously files against my credit report… once every 6 months.. so we are now at 3 times.
My feeling was if they were not going to disclose who they were…. and their number… it was lawsuit here I come, but instead of going into small claims court, I thought I would use them as an example and bravely I am going into federal court….. hoping I dont mess up too much on the very very strick rules…
I am going to use the Pinto case, as it is right on point. the attorney has already contacted me about taken the matter off the report in exchange for a dismissal….. NOPE!
So now with everyone’s help here, and additional research, I am preparing my request for production ( and I bet it comes back that there is nothing) and I am going to run the chain of command, demanding a list of every person who has been on this matter from the time the alledged bill was created……. keep in mind it was NEVER owed!!!!
Then the judge has requested all documents be to him now 21 one days in advance with the joint letter by counsel… well this should LOADS of fun!!!
I feel Like Pinto, I am going to make a statement, if anything if this matter gets pushed, and I am ready for opening day….. with a jury no less.
Keep in mind, Federal Court is the toughest of all courts to work in because they are VERY precise.. no excuses…. so small claims might be a very fair place to play….
I just want to make a statement…… and the attorney is arguing venue, and while historically I always thought that you file where the defendent is.. that is not always true. you can go to the US Federal Court.. and I think it is 1341… it is under venues… (b) (2) is what you want which states, that you can also file where the wrong doing occurred……. and for that reason I might be able to make it so it is the defendent who must foot the expense to travel to my neck of the woods…
We will see how this comes out… but note Pinto vs. Pacific Creditors.
One more thing….. in small claims try to get a JUDGE on your case… Pro Tems are attorneys who may or may not be familiar with Federal Laws… they volunteer their time to help the courts out. Remember in any court you go into… especially small claims it is YOUR job to educate the judge on your matter, and you have 3-5 minutes to do the whole thing…. have you ducks in line and stick to the issues.
I have read this site over again…… and I want to make one comment Kristy made…. it does not matter where you are in the US….. the Pinto case can be used in ALL courts…. you are basically saying to the court… look…. here is a case that is similar to mine and it was held in the 9th circuit of the US courts that this the way the court saw it, so you need to take it into consideration.
Go to any law library and ask someone how you SHEPARDIZE a case… this is a method used to find all the cases that may or may not be similar to yours so you can use it in your points and authorities.
Thank God Kristy has prepared this site, because while I listen to many on what their take is on this whole gig….. you really have to verify that what they are saying is correct. Many of these people think the collection companies represent the client… the truth is more and more that they are buying the bills and then collecting.
A side note: If you file in Federal Court again a collection agency….. yeah, it cost $350. to file, but it is immediately removed from your credit report….. I think in small claims you file the complaint with the credit bureau and see if they take it off once the lawsuit is filed. they may do this in fear of being joined as a party defendent if they dont!
Thanks. I try very hard to keep the collection agencies honest, if saying that isn’t an oxymoron.
This article is a great resource for people looking to sue collection agencies for entering inquiries on their report!
I have a question though – Ms Pintos sued due to the fact that she did not have a contract with the towing company or the collection agency. Would this work if someone defaulted on a credit card as well? If a collection agency put an inquiry on a credit report in this situation, they might argue that because the consumer had an agreement with the original creditor, the collection agency had the right to pull the credit report. It would be excellent if someone could tell us how to fight the collection agency if they came up with this argument. Thoughts anyone?
I was turned down for a car loan and when I asked for threason for the denial the letter said “unable to verify personal information”. What the heck does that mean?