gorillacredit

Reporting to a bureau without notification IS a violation

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I have seen this discussed on the board, and even read a letter on CI about whether or not the FACT Act requires a collector to notify you of reporting negative information.

But here is something I recently noticed in the FDCPA, and saw in a complaint that was settled for $500 before trial.

In the FDCPA

(2) The term "communication" means the conveying of information regarding a debt directly or indirectly to any person through any medium.

What this means is that, according to Section 809, once they place an item on your file that constitutes, by definition, the initial contact with the person whose file is dinged (you) and they have five days to dun the address on the file.

Failure to do so constitutes a violation. PERIOD.

While FACTA may not require a collection agency to notify you of their reporting to a credit bureau, it doesn't need to. The FDCPA already makes it a requirement that they do within five days of placing it there.

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Read the law again, they don't have to notify you, only SEND the notice. All they have to do is send it, not prove you got it. Also, you may or may not be able to prove that credit reporting is communication.

If it were, then a C&D would mean they can't report.

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Read the law again, they don't have to notify you, only SEND the notice. All they have to do is send it, not prove you got it. Also, you may or may not be able to prove that credit reporting is communication.

If it were, then a C&D would mean they can't report.

I am aware of the case that says that, but an incorrect ruling can be challenged. And that was certainly an incorrect ruling I am sure the judge was well paid for. I don't believe it is productive or neccessary for everyone to accept that and it should be challenged in every case filed.

As far as proving credit reporting is communication, the law does that for me in its wording and stated intent by Congress.

A cease and desist means they cannot contact YOU. Reporting to a bureau is an indirect communication.

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Gorillacredit,

A complaint setteled before trial is rather meaningless as far as clearing up the issue. Until there is a major court decision, I would submit that it is, at best, undecided.

Given how long the FCRA/FDCPA has been around and how frequently CAs ding credit reports without any other communication (and getting away with it), I seriously doubt that your position that it is a violation is on thin ice at best. :)

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Gorillacredit,

Given how long the FCRA/FDCPA has been around and how frequently CAs ding credit reports without any other communication (and getting away with it), I seriously doubt that your position that it is a violation is on thin ice at best. :)

If everyone just accepts that and doesn't pursue it, they will be able to continue unabated with an action the word of the law and intent of Congress specifically prohibits.

Each judge is allowed to make his own ruling in every case. If he goes against the precedent the CAs have purchased, the worst that could happen is an appeal to a higher court that could resolve the matter.

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809 talks about what happens once the CA communicates with the debtor. I do not think you can construe a CR ding as an indirect communication to a debtor.

Why not? I wouldn't even call it construing. The wording and intent of the law makes it obvious what was meant. Directly or indirectly to any person through any medium? There are no exclusions.

By placing an item on your file they are using that medium to communicate with the person they alledge owes the debt.

809 says very specifically

(a) Within five days after the initial communication with a consumer in connection with the collection of any debt

Communication is defined as

2) The term "communication" means the conveying of information regarding a debt directly or indirectly to any person through any medium

Consumer is defined as

(3) The term "consumer" means any natural person obligated or allegedly obligated to pay any debt.

I just don't see the ambiguity. By dinging a credit report, a CA is communicating indirectly with the consumer who they alledge owes the debt through that medium. The CA is quite aware that only YOU (or a creditor) will be able to see this information once they place it there. In fact, that is exactly why they do it. To gain leverage over you when you apply for credit.

By dinging your report, the CA is alleging YOU owe the debt and communicating this allegation indirectly to you, through another person, ie. the CRA.

Feel free to roll over and play dead if you want to, but I am getting ready to file suit and this violation will be included in the complaint. Along with several other documented ones.

No matter how many times you read it, you have to reach the same conclusion. Just because one judge was paid off doesn't mean that this violation shouldn't be vigorously pursued in every action against any collector who practices this. That is the only way to stop it.

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What if the CA "sends" the letter to an obviously made up address like "1 Main St."? Isn't that deliberately dodging the law?

Obviously, yes.

The thing is this, dinging a credit report without notification IS a violation. It will almost never be the only violation and certainly wouldn't provoke one to sue just because they reported and didn't tell you as long as they delete it when they don't validate.

Nonetheless, if you do get pushed into suing them for repeated violations it should definitely be listed as a violation in the complaint, and damages sought in part because of that violation.

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Read the law again, they don't have to notify you, only SEND the notice. All they have to do is send it, not prove you got it.

Read a bit further. There is an implied requirement that the consumer must receive the notice.

"(3) a statement that unless the consumer, within thirty days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector;"

If the consumer doesn't receive the notice, then the collector fails to comply with this section. Since this section must happen within 5 days of direct or indirect initial communication, it does in fact give rise to a violation. Also since the action of reporting a collection account is done solely for the purpose of pressuring payment, not providing the consumer with the required notice would constitute the use of deceptive and unfair means of collection...another violation.

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Read the law again, they don't have to notify you, only SEND the notice. All they have to do is send it, not prove you got it.

Read a bit further. There is an implied requirement that the consumer must receive the notice.

"(3) a statement that unless the consumer, within thirty days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector;"

If the consumer doesn't receive the notice, then the collector fails to comply with this section. Since this section must happen within 5 days of direct or indirect initial communication, it does in fact give rise to a violation. Also since the action of reporting a collection account is done solely for the purpose of pressuring payment, not providing the consumer with the required notice would constitute the use of deceptive and unfair means of collection...another violation.

The problem seems to be that everyone is relying on a court case that once suggested that a collection agency could just "say" they had a system in place to mail notices and the court would assume you must have gotten it.

I would have to think that the plaintiff was not prepared to argue the point properly. Either that or the judge was paid off to set that precedent.

Either way, their defense of "saying" they mailed a notice so you must have gotten it falls on its face if you inform them in your first certified letter that you have not received anything from them before noticing the account on your file.

It ain't rocket science and there is no ambiguity in the law.

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The problem seems to be that everyone is relying on a court case that once suggested that a collection agency could just "say" they had a system in place to mail notices and the court would assume you must have gotten it.

1) I believe they have to prove they have reasonable procedures in place, not just say it.

2) Regardless, if a ruling isn't from the US Supreme Court, you can make the point in a district that doesn't have that as controlling. The district courts don't always agree with each other and that's one way to get the Supreme Court to look at it.

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1) I believe they have to prove they have reasonable procedures in place, not just say it.

2) Regardless, if a ruling isn't from the US Supreme Court, you can make the point in a district that doesn't have that as controlling. The district courts don't always agree with each other and that's one way to get the Supreme Court to look at it.

While statement one is true, the prevailing attitude on the board seems to be perpetuating the stance that the proof is not required, just the statement. I have heard it said many times (maybe even by an inexperienced me at some point) that that is the way it is.

In reality, I think they would have to go to great lengths to show they contacted you, not merely have a system in place. They would have to furnish the date sent, where it was sent to and from, and furnish postal records that would suggest that your letter was actually, or may have been sent at that time, before a reasonable judge would accept it. And I would certainly make them detail their system and expose its flaws.

As for number two, no judge is actually bound by any precedent set in the district court if he disagrees. It might leave his judgement open to appeal, but if he (or she) feels strongly about something it will influence his decision.

Just because one judge said OK with no proof doesn't mean another one will. And I haven't heard of a second court finding that way. It is always one case that is cited. Besides, it is highly unlikely that the next case will be presented the same way and have the same facts. If only one fact is different the precedent doesn't apply.

My point is this...Everyone who comes to this board must challenge the practice of silently dinging credit reports by scumbag CAs. It is illegal and each time should be complained about to the FTC, the BBB and AG's of the involved states. It should be included in every applicable court case when the one in a thousand of us takes them there. Make them aware of the scope of the problem and maybe they will put a stop to it.

If everyone just assumes it is OK and the CA will only have to tell one lie to dismiss the claim, no one will complain and they will just keep on doing it.

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The law does not say the CA must send you the notice per 809 by certified mail or some such method. So if a business, whose job it is to collect money and send letters out to do so, says that it sent a letter in the regualr course of business, it will always trump a consumer who claims, late in the game, that he never got a letter.

It is disreputable that a collection agency dings your CR before contacting you, but I do not see where the law prohibits that. It is really a FCRA problem, rather than an FDCPA problem.

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The law does not say the CA must send you the notice per 809 by certified mail or some such method. So if a business, whose job it is to collect money and send letters out to do so, says that it sent a letter in the regualr course of business, it will always trump a consumer who claims, late in the game, that he never got a letter.

It is disreputable that a collection agency dings your CR before contacting you, but I do not see where the law prohibits that. It is really a FCRA problem, rather than an FDCPA problem.

A collection agency doesn't have to send it certified mail, but they had better be able to say when and where it was sent, how they know it was sent, and it better be within five days of the date they dinged your file. Otherwise, it is a violation.

It is not late in the game if you inform them in your first letter that they have failed in any attempt to contact you. It may be a year or two after they place the entry, but you did not "receive" the communication until the file was pulled and you saw it there.

Therefore, once notified of that failure, they have five days to comply with 809 requirements.

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FACTA DOES indeed say that you must be notified of derogatory information being reported BEFORE it is smeared on your reports. I had posted quite a bit on this a month or so ago, not sure which forum, but it DID include the proper section of FACTA along with excerpts from GLB Privacy Act that puts a CA squarely in the category of those that MUST notify you.

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LadynRed

Read your post yesterday and have searched on this site without success regarding this information. Could you possibly find and post this link or thread. Sounds like this information would be perfect for a sticky. Seems to be a very common practice for the CA's and I think alot of us would benefit from having these laws readily available for resource.

Hope you had a great vacation ... glad you're back as we miss your insightful and informative posts when you're gone. :D

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FACTA DOES indeed say that you must be notified of derogatory information being reported BEFORE it is smeared on your reports. I had posted quite a bit on this a month or so ago, not sure which forum, but it DID include the proper section of FACTA along with excerpts from GLB Privacy Act that puts a CA squarely in the category of those that MUST notify you.

FACTA specifically states where the definition of "Financial Institution" is to come from. The GLB Privacy Act does not apply. Only the Federal Reserve Act. Collection Agencies do not have to notify you because of FACTA. But they are required to by the FDCPA.

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Does this law hold true for city/state agencies, too? I just had a recent child support order place BACK on my credit report after it was removed. Is that a violation, too?

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FACTA specifically states where the definition of "Financial Institution" is to come from. The GLB Privacy Act does not apply. Only the Federal Reserve Act.

I'm sorry, but you're wrong. I specifically tracked this very thing down about a month ago and a collection agency IS defined as a 'financial institution' in the GLB. I will have to find the exact information on this that I posted before and you will see that I'm not having pipe dreams. I know its all in my bookmarks at home, so when I have some time I'll dig it all back up and post it here.

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Ok.. I went out and located what I'd found before.

FCRA (including FACTA revisions)

(7) Negative Information

(A) Notice to Consumer Required

(i) In general. If any financial institution that extends credit and regularly

and in the ordinary course of business furnishes information to a consumer

reporting agency described in section 603(p) furnishes negative

information to such an agency regarding credit extended to a customer,

the financial institution shall provide a notice of such furnishing of

negative information, in writing, to the customer.

(ii) Notice effective for subsequent submissions. After providing such notice, the financial institution may submit additional negative information to a consumer reporting agency described in section 603(p) with respect

to the same transaction, extension of credit, account, or customer

without providing additional notice to the customer.

(B) Time of Notice

(i) In general. The notice required under subparagraph (A) shall be

provided to the customer prior to, or no later than 30 days after, 71

furnishing the negative information to a consumer reporting agency

described in section 603(p).

(ii) Coordination with new account disclosures. If the notice is provided to

the customer prior to furnishing the negative information to a consumer reporting agency, the notice may not be included in the initial disclosures provided under section 127(a) of the Truth in Lending Act.

(G) Definitions. For purposes of this paragraph, the following definitions shall apply:

(i) The term “negative information” means information concerning a customer's delinquencies, late payments, insolvency, or any form of default. (ii) The terms “customer” and “financial institution” have the same meanings as in section 509 Public Law 106-102.

PUBLIC LAW 106-102 IS the GLB ACT !

Financial Institutions

The GLB Act applies to "financial institutions" - companies that offer financial products or services to individuals, like loans, financial or investment advice, or insurance. The Federal Trade Commission has authority to enforce the law with respect to "financial institutions" that are not covered by the federal banking agencies, the Securities and Exchange Commission, the Commodity Futures Trading Commission, and state insurance authorities. Among the institutions that fall under FTC jurisdiction for purposes of the GLB Act are non-bank mortgage lenders, loan brokers, some financial or investment advisers, tax preparers, providers of real estate settlement services, and debt collectors. At the same time, the FTC's regulation applies only to companies that are "significantly engaged" in such financial activities.

The law requires that financial institutions protect information collected about individuals; it does not apply to information collected in business or commercial activities.

http://www.ftc.gov/bcp/conline/pubs/buspubs/glbshort.htm

From GLBA

Section 509 of GLB

Sec. 6809. Definitions

As used in this subchapter:

(3) Financial institution

(A) In general

The term ''financial institution'' means any institution the business of which is engaging in financial activities as described in section 1843(k) of title 12.

Title 12 says:

TITLE 12--BANKS AND BANKING

CHAPTER II--FEDERAL RESERVE SYSTEM

PART 225--BANK HOLDING COMPANIES AND CHANGE IN BANK CONTROL (REGULATION Y)--Table of Contents

Subpart C--Nonbanking Activities and Acquisitions by Bank Holding Companies

Sec. 225.28 List of permissible nonbanking activities.

(2) Activities related to extending credit. Any activity usual in connection with making, acquiring, brokering or servicing loans or other extensions of credit, as determined by the Board. The Board has determined that the following activities are usual in connection with making, acquiring, brokering or servicing loans or other extensions of credit:

(iv) Collection agency services. Collecting overdue accounts receivable, either retail or commercial.

So, I'll concede the 'financial institutions' are defined under the Federal Reserve, but they most certainly ARE mentioned and governed under GLBA.

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Great job lady,

But what I didn't see is the part of the Federal Reserve act that defines financial institutions refer to any other part of the law and allowing expansion of the definition based on it in that one particular section that FACTA specifies. There was a reason for that limited definition.

Facta is very specific in where the definition has to come from. And CAs are not mentioned in that code and are not defined as "financial institutions" there.

You can look anywhere you wish to find another definition, but it will not hold water in the courts because of the specificity of FACTA. The CAs bought that part of the law to exempt them from getting flooded with FCRA violations. They can tolerate $1,000 per action, but $1,000 per instance would make it far more worthwhile to sue them.

You can bank on a CA violating the FDCPA at least one time when they ding your report without telling you. If FACTA apllied, any action at all after that point would be a violation of the FCRA because the TL would be reported illegally to begin with. Instantly, they would be liable for up to three $1,000 hits, plus $3,000 more for any verifications. $1,000 dollars for each spec of inaccurate information, could be several thousands of more dollars.

No, Lady, FACTA was written specifically to keep CAs from being affected because their leverage arises in most cases by the poor unsuspecting victim applying for a mortgage and having to settle fast.

Our government should be ashamed.

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