Creditor Responsibilities before Sending to Collections

[Barb150]

I received a collections notice from an agency for a supposed

debit that I have never received a bill for. Doesn't the

creditor have an obligation to bill someone for what they

believe is owed them prior to getting a collections agency

involved? I was given no chance to talk to the creditor or

even know about the bill before they decided to ruin my

credit. How is this fair or even legal?

[Coltfan1972]

Technically they can sue you a day after the payment is due. Never heard of one case where that has happened.

Unless the contract lays out specific requirements that the creditor must follow prior to turning over to collections there are no rules.

The general rule of thumb is that if you buy something on credit or owe an obligation the fact you don't get a bill does not mean you no longer don't owe the money or don't owe for that month.

Generally speaking a creditor does not get a collection agency involved until at least 90 days late.

But to answer your original question, federal law requires that the information being reported on your credit report be accurate, not fair. If what is being reported is accurate then there is no violation.

For example if you are 60 days late on a bill and that is what is being reported you have no defense or valid dispute if you argue you did not get the bill or did not know about the bill. If it's your bill and it's 60 days late is all the CRA cares about.

[Torden]

I'd still go ahead and argue that they should have given you the opportunity to avoid having your credit harmed needlessly by doing proper billing. That means they need to agree to remove the tradeline as part of the settlement because it is they who made the decision to cause you harm. If they won't agree, sue.

[Barb150]

Thank you both. Let me give you more information about this situation which is my own fault but I want to get some opinions on whether I am liable. I replied to an ad for a job with a temp agency. The temp agency rep offered me the job asap at a medical facility but said I was required to complete a drug test and provide my immunization history by the next day and start the job the day after. I verbally agreed to try to accomplish this the next day but then found out that I would not be able to provide my immunization history as it would take more than a couple of days to get it from the doctor's office because my records were archived. Not having had any experience dealing with a temp agency before I unfortunately had given them my social security number because I believed I was going to start this job and the rep high pressured me over the phone to hurry up so she could get things going in order for me to start in two days. She then emailed me a contract for the temp job. After reading the contract I had way too many questions and doubts about my obligations to this temp agency. I felt like I had no time to read anything or make decisions but the rep's main concern was filling this position asap and I don't even think she checked to see if I was qualified. Anyway, the next day I decided I was not going to be bullied into this contract and I didn't follow through with this job. Well, apparently this rep said she already authorized a background check on me with my ss # because we had a verbal agreement. She said via email I am liable for the cost of this background check but never showed me the report or told me how much she paid. This email/phone contact happened at the end of September and I just today received the collections notice yesterday. What do you think? Thanks.

[WhoCares1000]

I would call the temp agency and inform them that since you did not sign the contract, they had no right or grounds to do a background check and hence, they should eat the cost. If the agency refuses to budge, then you have to consider if it is worth suing them or not.

I do think however that in most states, you have to have something signed by the prospective employee offering a background check before doing so and most of the time, they require up front payment or pay the costs themselves before doing such check. At least that is how I remember things were done when I was training to be a school bus driver (even had to get my fingerprints sent to the FBI because I had not been in MN for 5 years).

[DonqIII]

I would call the temp agency and inform them that since you did not sign the contract, they had no right or grounds to do a background check and hence, they should eat the cost. If the agency refuses to budge, then you have to consider if it is worth suing them or not.

I do think however that in most states, you have to have something signed by the prospective employee offering a background check before doing so and most of the time, they require up front payment or pay the costs themselves before doing such check. At least that is how I remember things were done when I was training to be a school bus driver (even had to get my fingerprints sent to the FBI because I had not been in MN for 5 years).

I agree with this in theory.

But rather then calling the agency for myself, I would email... ( a viable record and quicker then mail sent CMRRR) and state that I had never signed a contract with them. They had no right, without a signed contract to run a background check on me. And if they do not remove the collections effort I will see them in court with my own complaint.

[1stStep]

Since it does not appear you gave consent, the temp agency violated the FCRA. I worked as a BG investigator for a temp agency and a BG check cannot be initiated without a signed consent.

[mevsbank]

I agree with the above advice regarding pursuing the fact they ran a background check without a signed consent. My state requires a signed FCRA form. It may be the quickest, cheapest, easiest way to resolve it.

[Barb150]

Thank you all. I am waiting for a call back from the collections agency asking them for an explanation of exactly what this supposed debt is. If they verify that the creditor said it was for background check cost then I will then inform them that it was done without consent and without notification. I can't imagine what else this creditor thinks she can bill me for -- at any rate I would like to see what backup they have to prove anything.

[1stStep]

You should send a DV letter to the collection agency - that way, it's in writing in case you have to take this thing to court...

[Flyingifr]

I would immediately (a) notify the CA that the entire claim is unauthorizd and disputed and ( they will be getting sued imemdiately for misrepresenting the nature of the debt. YOU did not authorize nor request a background check, the temp agency did. They are the debtor, not you. File immediate suit against the CA. Maybe next time they will communicate with alleged debtors about teh claim before trashing their credit.

[Coltfan1972]

Sue the temp service and if the collection agency does not back off within 10 days and clear your report, join them as a Defendant.

You must have a signed authorization for a background check. It's the temp agency that got in a hurry, not you. You did the smart thing and did not jump into a contract you did not feel comfortable.

Show the temp agency how it feels to get blindsided when you are not expecting it. Nail them with a federal lawsuit with zero warning. I PROMISE that will get their attention.

P.S. stay off the phone with the collection agency. The CA is not going to care about your excuse and will assume you're lying. Do everything in writing so when they violate, which they will, you have them nailed.

Congratulations on your one, and possibly two, lawsuits.

[Flyingifr]

Sue the temp service and if the collection agency does not back off within 10 days and clear your report, join them as a Defendant.

You must have a signed authorization for a background check. It's the temp agency that got in a hurry, not you. You did the smart thing and did not jump into a contract you did not feel comfortable.

Show the temp agency how it feels to get blindsided when you are not expecting it. Nail them with a federal lawsuit with zero warning. I PROMISE that will get their attention.

P.S. stay off the phone with the collection agency. The CA is not going to care about your excuse and will assume you're lying. Do everything in writing so when they violate, which they will, you have them nailed.

Congratulations on your one, and possibly two, lawsuits.

Temp Service is an OC and is not subject to FDCPA nor did mit report to a CRA so it is not subject to FCRA. Sue the CA and let THEM join in the Temp Service under their contractual Hold Harmless agreement.

Without the expense of a lawyer and a very questionable proof of monetary damages I see no theory of law under which the OP suing the Temp Agency would be efficient.

[Coltfan1972]

I'd argue the Temp Agency is vicariously liable. They generated a charge that was 100% their error and then shipped it off to a collector to poison the credit report.

However, I agree the easier way would be as you suggested. Bottom line is, somebody needs to get sued for this b.s.

[1stStep]

Temp service violated. If they did not have a signed a consent to run a BG, then they violated the FCRA. If anything, invite both when filing the FCRA suit.

[Flyingifr]

Temp service violated. If they did not have a signed a consent to run a BG, then they violated the FCRA. If anything, invite both when filing the FCRA suit.

Since the OP never said the Temp Agency actually pulled a CRA report nor reported directly to a CRA I consider this to be bad advice.

[Torden]

If the TA did not furnish information to a CRA, the FCRA most likely does not apply. There still could be some fraud or liability issues with the TA doing the background check at all without the signed contract. I'm unfamiliar with those laws. I do know I went through a BGC with my current employer a few months ago and I did need to sign an authorization form for it. That doesn't say what the law is, but I think it's a reasonable hint. But suing them won't go anywhere unless your legal compliant identifies the violation in the law.

If the CA placed the first CR info, then they are the ones that violated. You could sue immediately (as some CAs themselves do to their marks), or give yourself some leverage against arguments like "we didn't know" by sending them a formal notification of what and why they are in error and "remove all this information immediately to avoid legal action". On law office letterhead will hold even more weight. If you already have specific damages, demand those loses be covered and bill them at the same time.

[WhoCares1000]

I think the issue is who put this on the credit report. That is who violated the FCRA but even there, you have to follow a process first. This includes contacting the CRA and disputing the tradeline and probably sending a 623 letter to whoever put that on your report.

At the same time, you probably have a violation of employment law against the temp agency. However, those laws may not allow for a private right of action which means the OP needs to complain to the employment commission in their state who then needs to investigate all the while the clock is ticking on the FCRA SOL.

My suggestion therefore would be to file the complaint with the employment commission against the temp agency ASAP (unless you have a private right of action, then sue them ASAP for violation of said employment law and the damage it caused). At the same time, start the process for the FCRA violation so that once the court or employment commission is finished, you can then sue the CA (and maybe CRA) in federal court for violation of the FCRA.

[BTO429]

What's included in an employee background check? The Fair Credit Reporting Act (FCRA) sets the standards for screening for employment. The FCRA defines a background check as a consumer report. Before an employer can get a consumer report or run a credit check for employment purposes, they must notify you in writing and get your written authorization.

When conducting an employment background check, employers can check your credit, your criminal record (what can be checked varies from state to state), your work history, and your driving record. When you complete an employment application form, it should give you an idea of what's being checked.

Edited November 28, 2012 by BTO429

[1stStep]

Since the OP never said the Temp Agency actually pulled a CRA report nor reported directly to a CRA I consider this to be bad advice.

There's actually violations of 2 laws - the first is for the background check- background checks for employment purposes are covered under the FCRA. But even more - the background check without consent is a violation of GLB.

[Flyingifr]

There's actually violations of 2 laws - the first is for the background check- background checks for employment purposes are covered under the FCRA. But even more - the background check without consent is a violation of GLB.

FCRA only governs the Credit Report portion of a background check and nothing else. The OP is being billed for a LOT more than a Credit Report, which costs less than $5. I suspect the TA is trying to collect the commission lost when the OP backed out of the deal.

[1stStep]

I agree on the commission part... when I did BG investigations, my cost was about $11 thru Lexis-Nexis. Any special situations incurred a bit more cost (ex. a criminal hit - we had to confirm if it was or wasn't the person). We often billed back the cost of a BG check to the employer/client.

But the one thing my management was adamant about was a wet signature consent form. We didn't have that, we legally could not do a BG check.