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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10 responses so far ↓
1 Derek // Aug 6, 2008 at 9:05 am
So what’s the bottom line here? How do we get these removed if they are not legally allowed?
2 Kristy // Aug 6, 2008 at 7:00 pm
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.
3 Derek // Aug 6, 2008 at 10:23 pm
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.
4 Kristy // Aug 7, 2008 at 8:28 am
No, because the CRAs are complicit in this as well. The case above also named Experian in the suit and won against them.
5 daniel // Aug 15, 2008 at 6:53 am
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.
6 Ken // Sep 11, 2008 at 6:56 pm
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.
7 Camille // Sep 25, 2008 at 2:03 pm
Is the law applied the same if the “collection agency” is a law firm (i.e. Legal Recovery Law Offices)???
8 Bob // Oct 1, 2008 at 9:17 am
Law firms that solicit business as collection agencies are bound by the same rules as collection agencies.
9 tinker bell // Oct 1, 2008 at 2:18 pm
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.
10 Robert // Nov 25, 2008 at 6:36 pm
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
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