Tag Archives: fair debt collection practices

Who is a Debt Collector after Santander Case

Debt collectors are governed by the Fair Debt Collection Practices Act (FDCPA). If you are able to make a counterclaim under that Act, you will improve your defense. Thus the questions are, who is a debt collector, and how do you show that the person suing you is one.

The Supreme Court  issued rulings in 2017 that will make it more difficult for debt defendants to obtain legal representation and will cause debt collectors to engage in more deceptive, dishonest and abusive behavior. Nevertheless, most people will still be able to sue debt collectors. We discuss how after our discussion of the Santander case.

Fair Debt Collection Practices Act

When Congress passed the FDCPA, debt collectors were such a problem that they were a threat to the American way of life. The FDCPA was therefore designed to prevent fraud, deception and unfairness in general in the collection of debts. Congress named numerous specific actions as “per se” violations of the Act and also included the more general description of “unfair” debt collection practices.

It wanted to prevent debt collectors from changing the forms their actions took without changing what they were basically doing.

The Supreme Court has just reduced that Congressional intent to a farce, applying just half of the statutory definition of “debt collector” to a case and finding that, under that half of the definition, junk debt buyers were not debt collectors.

Real-Life Debt Collection

In most debt cases, creditors sell charged-off debt to debt buyers who exist to collect that money by hook or crook. They used to hire debt collectors to collect on debts and paid them from the proceeds, Creditors now get their money first and let the debt collectors take theirs from the debtors. All that has happened is that nominal ownership of the debt has changed. In other words, debt collectors have assumed a different form to pursue the very same activities.

Henson et al. v. Santander Consumer USA, Inc.

The Supreme Court has repeatedly said that it would not allow parties to elevate form over substance to evade the impact of laws . Santander does exactly that.

One could also characterize the Court’s ruling as dishonest. It only analyzed half of the definition of “debt collectors.” In looking at Section 1692a(6), the court examined the defining language as “any person… who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.” The court’s decision then repeatedly referred to and emphasized the words “due another,” arguing that companies were only debt collectors if they fit that traditional form of collectors.

How the FDCPA Defines “Debt Collector”

Look at the part of the definition preceding the language in question to get a truer view of the statute’s clear intention.

The term “debt collector” means any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.

Section 1692a(6) (underlined portion is the part ignored by the Supreme Court in Santander, italicized word “any” is for emphasis)

Doesn’t it seem reasonable to read “any debts” literally, so that if the principal purpose of a business is to collect debts, they’re a debt collector? Of course it does, and that would obviously include businesses that exist to purchase debts and collect on them.

Supreme Court is AGAINST Debt Defendants

The Court opinion glibly slides over that, saying that “the parties haven’t much litigated that alternative definition of debt collector and in granting certiorari we didn’t agree to consider it, either.” Santander, Slip Op. at 5. In other words, the Supreme Court agreed to hear only so much of the case as allowed them to shove a dagger into the apparent heart of the FDCPA – not enough of the case to show what the FDCPA actually intended or to do justice.

In theory, the decision in Santander leaves open the possibility that this “alternative” definition would extend the meaning of “debt collector” to junk debt buyers. On the other hand, the decision looks like a court in search of a justification for a desired outcome, and is a negative indication for the Court’s integrity. Particularly in the context of its decision in Midland Funding, LLC v. Johnson, No. 16-348 (Slip Op. 5-15-17) (see my article, “Opening the Floodgates of Bad Claims”), it shows actual hostility to the laws that protect consumers from debt collectors and a willingness to engage in intellectually dishonest games to destroy them. As a practical matter, it will likely be several years before the Supreme Court revisits the definition of “debt collector.”

Pleading that a Junk Debt Buyer is a “Debt Collector”

The Supreme Court limited its decision to the “regularly collected” language. Why? Probably because debt defendants have normally found it easy to prove a company “regularly collected” debts. In the Eighth Circuit, law firms representing collectors in three to five cases per year are“regularly collecting” debts.

Under fact pleading rules, one must plead facts constituting a basis for your legal conclusion. So debt defendants routinely allege something like the following:

Heartless, Ruthless and Merciless, represent debt collectors in dozens of lawsuits attempting to collect debts per year. They are, therefore, debt collectors, and

Heartless Debt Collector, Inc., regularly sues persons for debts purchased after default…

Use of “Regularly Collects” Debts Language

Debt defendants have typically used “regularly collected” because it is easy to demonstrate as a matter of public record. Establishing a business’s “principal purpose” will now be much more difficult. My attempts to find an authoritative definition for “principal purpose” of a business turned up zero cases. No doubt there are some cases that address the issue, but certainly not many.

Many court decisions include the term “principal purpose.”  But they use it generically, as a synonym for “main” or “major.”

I found no cases quantifying the term in any way. So it isn’t clear how much of any other purpose would be enough.

Debt buyers who purchase billions of dollars of debt for no other purpose than to collect it. But they will argue that their “principal purpose” is to “service” that debt. In their lexicon that really means extort payment in as many ways, over as long a period, as possible. But they will claim all manner of beneficial purposes for their activities.

This will alter the nature of the proof required to establish that the company is a debt collector. Information regarding a business’s “principal purpose” will be in the possession of the debt collector. Thus parties attempting to obtain that information will encounter the usual tricks when they try to get it. Expect the same series of stone walls, delays and unethical and oppressive litigation strategies debt collectors usually use. (Fortunately, this can be a double-edged sword. We train our members at Your Legal Leg Up to use this to their advantage.)

Debt defendants must now allege and attempt to prove the debt collector’s main business is to collect debts.

What Debt Defendants Should Do

Debt defendants have all the same defenses to debt lawsuits they ever did – or almost all of them. Santander applies very little to the defense of debt suits.

To state claims under the FDCPA, you need to allege the company’s principle business is the collection of debts. You should probably allege they buy debts from others for the purposes of collection. And that they provide no significant service to the debtors.

Excuses in Debt Defense Will Lose Your Case

Making excuses will lose your case
Making excuses will lose your case

Sincerity vs. Integrity

Making excuses in debt law cases is a good way to lose your case.

The “iron law of cause and effect” applies to everything. What this means is that, for every action, something happens as a result. No matter why it happened, if it does happen, there are consequences. There are no free lunches. Ever.

You know that. But it’s easy to forget when things get tough.

We pretend the iron law of cause and effect does not apply to us all the time. If we’re late, we apologize, and that’s usually enough to get past the other person’s anger or hurt feelings. If we apologize sincerely enough or give enough good reasons, it seems like we get away with it. But it isn’t called the “iron law” for nothing. Even if the other person excuses us, he thinks we are less dependable. And if the other person doesn’t, we think of it ourselves. Consequences.

Sincerity means not intending to do harm. Integrity means not doing it. Know the difference.

Substantive Law of Debt

If a debt collector can prove you borrowed money and didn’t pay it back, it should get a judgment against you. And if you don’t make them prove their case, they will get their judgment. Simple as that. They call that “strict liability,” which means that WHY you didn’t pay does not matter.

On the other hand, there are events that can destroy a debt. Showing payment, that it was based on fraud, or settlement to name a few, will attack the debt. But if the debt isn’t destroyed, no amount of sincerity will get you off the hook. It doesn’t matter how much you wanted to pay. It doesn’t matter how much you tried to pay. Or whether you tried at all.

It’s surprising how often people get mad at debt collectors for trying to collect debts they (the people involved) can’t afford to pay. Just because the debt collector has a ton of money doesn’t mean they won’t or shouldn’t get a judgment against you. Don’t think that way.

Instead, fight and make them prove their case if they can. Require them to prove the debt and their right to it. Luckily, they aren’t so good at that.

Excuses in Litigation

We’ve been talking about the substantive law of debt, which is almost absolute,. It’s a little murkier when you talk about procedures such as responding to motions and the like. There, excuses CAN make a difference – sometimes. If you make a mistake in doing something, this can sometimes be excused. Likewise, if you make a mistake, you should certainly try to get it excused. The sincerity of your excuse will matter then, so make it good and say it with feeling. And you might get away with it.

But even if you do get away with it, every mistake has consequences. As a pro se defendant, you work mighty hard to get the judge to take you and your words seriously. You want the judge to apply the law fairly and consistently – that’s really all you need in most debt cases to win.

Follow the Rules – Don’t Ask for Breaks

Any time you ask the judge for something special or make some kind of excuse, you will hurt your chances of the court taking you seriously and holding the debt collector to the rules. And all too often, the court will not give you the break it probably should. Thus you should always work your hardest and do your very best to understand the law and rules of your court. As much as possible, you NEVER want to ask the judge for anything she isn’t supposed to do.

And to get your best, you must give your best. Never make excuses for yourself, and never accept them from yourself. It’s impossible to be perfect, but try not to make any mistakes you don’t have to make. That isn’t a cliche or boring old saying – it’s encouragement to you to work your @ss off. The only way to avoid making mistakes is by figuring out things ahead of time and always going the extra mile. You can get away with doing less in some parts of your life, but you often cannot in litigation.

 

 Get Help

If you would like us to take a look at your case and give you a sort of road map to what you need to do and how, take a look at our Personalized Evaluation product. If a debt collector is suing you and you already know you want to defend yourself without spending a lot of money on lawyers, then get our Debt Defense System.

Protect Your Rights

Even if you are reading this article late in the game, shortly before trial, and you are not already a member, you should consider doing so. We have materials helpful to last minute defense and trial preparation even if you are facing this rule.

If it’s a little earlier in the lawsuit, or if no has filed suit yet, you have many other options. Membership can present you many benefits and help you win your case. Or you could check out some of our e-courses.

 

Gold Debt Defense System
Gold Debt Defense System

Gold Debt Defense

 

Platinum Debt Defense System

Platinum Debt Defense System

 

Diamond Debt Defense System

Diamond Debt Defense

Pro Se Debt Defense – Easier than you Might Think

Pro Se Representation is easier than you think
Pro Se Representation is easier than you think

Should You Represent Yourself in Debt Law?


Hiring a lawyer might be the “gold standard” of defense, but lawyers are expensive. If you’re being sued by a debt collector and can’t afford a lawyer, all is not lost. You CAN represent yourself. This is not complicated law, debt collectors are not innovative or particularly energetic. And the debt collection system is a “factory” approach not designed to work against people who defend themselves intelligently. You can do it.

Okay – maybe debt defense isn’t always very fun. In fact, most of the time it isn’t exactly fun, but it is easier than you expect, And winning is great. Going from worrying about having to pay from $1,000 to $50,000 to some debt collector, to having them drop the case – or to settling with you for pennies on the dollar IS fun. It changes the way you look at debt and debt law forever.

Pro se legal means representing yourself rather than hiring a lawyer to do it for you. You have the right to do that in essentially any court proceeding, whether as defendant or plaintiff.

Pro se is a Latin phrase meaning “for oneself.” You will sometimes see it called propria persona (abbreviated to “pro per”). In England and Wales, the comparable status is called “litigant in person.” Not that it matters, right?

Some Think It’s Scary

Although many people fear the thought of representing themselves in court, pro se representation is not rare. According to National Center on State Courts in 1991-92 71% of domestic relations (family law) cases had at least one unrepresented party. In 18% of the cases both parties were pro se.  It is a growing trend in debt collection law as well .

People have long had the right to self-representation in the United States. That right predates even the ratification of the Constitution. Section 35 of the Judiciary Act of 1789—enacted by the first Congress and signed by President Washington, states that, “in all the courts of the United States, the parties may plead and manage their own causes personally or by the assistance of counsel.” Most states have a similar constitutional provision.

Will the Courts Protect You from Mistakes?

The California rules of Civil Procedure explicitly prefer resolving every case on the merits. This applies even if doing it requires excusing a mistake by a pro se litigant that would otherwise result in a dismissal. The Judicial Council says that “Judges are charged with ascertaining the truth, not just playing referee.” And the Council suggests “the court should take whatever measures may be reasonable and necessary to insure a fair trial.”

Most states and the federal courts officially share this bias in favor of hearing courts on “their merits,” (based on what is actually fair). Pro se litigants cannot rely on any special treatment, however. Some courts explicitly will not extend favorable treatment to non-professional litigants. Our position has always been that you should know the rules. Knowing the rules means you can use them. And one secret of debt law is that it is the debt collectors who rely on leniency. You need to prevent that if possible.

Pro Se Litigants Often Do Very Well

Pro se litigants usually do not need extra help. According to Erica J. Hashimoto, an assistant professor at the Georgia School of Law, criminal defendants are “not necessarily ill-served” by the decision to represent themselves. In state court, pro se defendants charged with felonies probably fared much better than represented defendants.

Of the 234 pro se defendants studied by Ms. Hashimoto, “just under 50 percent of them were convicted on any charge….for represented state court defendants, by contrast, a total of 75 percent were convicted of some charge.” And just 26 percent of the pro se defendants ended up with felony convictions, whereas 63 percent of represented defendants in Ms. Hashimoto’s study did. In federal court…the acquittal rate for pro se defendants is virtually identical to the acquittal rate for represented defendants.

Of course there could well be other important variables that the Hashimoto study did not include, but it seems clear that there is not an “automatic penalty” for daring to represent yourself.

There are certain types of cases and situations where pro se representation may actually be an advantage. In debt collection cases, for example, the economic factors often outweigh legal issues. A vigorous pro se defendant can gain a significant advantage by taking energetic steps that a lawyer—always on the clock—would pragmatically be unable to take.

Courts are not always favorable to self-represented people for various reasons. But even with that bias, pro se plaintiffs have recorded some significant victories in civil courts.

Pro Se Representation in Debt Collection Cases

Defendants in debt collection cases have some significant economic advantages in conducting their cases. They also have fewer of the disadvantages that many other types of cases have. Debt collection cases tend to be document-intensive rather than witness-intensive. In the unusual case which actually goes to trial, there are not many things to prove or disprove, and the evidentiary issues are basic. Pro se defendants can argue whether the debt collector produces enough evidence. And whether that evidence is “admissible” in court for the court’s consideration. You won’t need much finesse.

This basic legal simplicity, and the fact that debt collectors drag defendants before the court against their wishes often seem to create a favorable impression on the judges.

Get Help

If you would like us to take a look at your case and give you a sort of road map to what you need to do and how, take a look at our Personalized Evaluation product. If you’re in a lawsuit and already know you want to defend yourself without spending a lot of money on lawyers, then get out Debt Defense System.

Protect Your Rights

Even if you are reading this article late in the game, shortly before trial, and you are not already a member, you should consider doing so. We have materials helpful to last minute defense and trial preparation even if you are facing this rule.

If it’s a little earlier in the lawsuit, or if the debt collector has not filed suit, you have many other options. Membership can present you many benefits and help you win your case. Or you could check out some of our e-courses.

 

Gold Debt Defense System
Gold Debt Defense System

Gold Debt Defense

 

Platinum Debt Defense System

Platinum Debt Defense System

 

Diamond Debt Defense System

Diamond Debt Defense

 

Never Make Partial Payments on Old Debts

Partial payments are almost always a bad idea on old debts. They (almost) never accomplish anything good for your relationship with the creditor or for your credit report. And they can cause massive problems for you because they revive the debt.

What You Should Do If You Get Called on an Old Debt

What you should do is find out who, exactly, is calling you. Find out the company and the individual. Then listen to what they say. If it is convenient, record the conversation. If not, take notes. Ask questions.

What You Should NOT Do

A 20 year old debt, not paid for 20 years, is beyond all statutes of limitations in all jurisdictions of which I am aware. However, you still “owe” the debt in some theoretical way. It remains a “debt,” and that turns out to be important. That’s because it can still be “revived” by any kind of payment.

You should know that they can’t sue you for such an old debt unless you revive it.  They can’t hurt your credit report if you don’t pay it. And they can’t do anything good for you if you do pay it.

In my opinion, you should never pay such a debt. Unless you have a particular reason. A good reason might be that you need to do business with them and they have a policy of not doing so if you owe them money (utility companies are like this).  So those situations might be different, but you still need to be careful.

Fair Debt Collection Practices Act

Just listen to what the debt collector says.

Let’s say he threatens to sue or tells you anything contrary to the above about hurting or repairing your credit. That would violate the Fair Debt Collection Practices Act (FDCPA). It is illegal for a debt collector to threaten you with action that he either does not intend to do or could not legally do. It is also illegal to deceive you about what he might do FOR you.

Suppose, however, he tells you that they can’t sue you, but that you still owe the money, and “wouldn’t it feel better” to pay it? Some people might say they have no money, and so the debt collector tells them, “No problem, you can just make a partial payment. Then, if you ever get any more money, you can pay some more…”

That also violates the FDCPA in my opinion because it is deceiving you and trying to take advantage of something most people don’t know. If you give someone a gift and say you’ll give them more later, that creates no obligation to pay. If you make a partial payment on a “debt,” you revive the debt and can be sued on it again. Even one that is many years past the statute of limitations and beyond causing you any harm,

Suggesting Partial Payments is Sneaky

Debt collectors are often trained to take advantage of people’s ignorance and to suggest partial payments on debts that are beyond the statute of limitations. If they try to get you to do that without telling you that you will revive the debt by doing so, they are misleading you. And that violates the FDCPA.

Partial Payments Revive Old Debts

By making the partial payment, you will revive the debt against you in its entirety, allowing the company to harass and sue you, and possibly even to damage your credit report again. Never, ever do it. Instead, take careful notes, and then go find an FDCPA lawyer to sue them.

If they get it all right and tell you that a partial payment would revive the right to sue you, tell them to go away and never call again. If they do, get a lawyer and sue them for that.

Other things to know

Partial payments will not just revive a statute of limitations after it has passed – it will extend it if it has not passed. Thus if the debt is five years old and getting close to the statute of limitations, your part payment will start the clock ticking again all over.

If you are being harassed or sued for a debt and need more information, be sure to check out our products and materials at Your Legal Leg Up. We have everything you need to protect  your rights.

Help Evaluating Your Situation

Get Some Help Dealing with Debt Collectors
Get Some Help Dealing with Debt Collectors

Many visitors to our site are facing dramatic new situations:

  1. You may have just found out you’re being sued; or
  2. You have either received a debt collection letter or some other “threat.”

We can help. We can take a look at your situation and the material you were sent – whether it’s a letter or a lawsuit – and give you a roadmap of what to do. It isn’t legal advice, but think of it as a sort of “guided tour” of where you need to go and what you need to do. It will save you a lot of time, wasted energy, and anxiety. And you’ll come out of it with a good idea of what you’ll need to do to set things straight.

Being Sued?

If you are being sued, we can help you get oriented to the case. People ask us all the time whether they should file a motion to dismiss or Answer, and whether or not there are any potential counterclaims to the lawsuit. If those are the sorts of questions YOU have, this is a way to get a head start on figuring out the answers.

Being Harassed or Called or “Dunned”

But what if you aren’t being sued and have just received a phone call or two, or letter?  We do have a lot of information on the site to help you evaluate your situation yourself and figure out how to protect your rights, but if you’d like something a little more specific, you can now use this service, too.

Get Help

We have products and information you will need in the earlier stages of debt problems. The most important thing to remember is this: anything you do that makes it easier for them to sue and win also makes it more likely that they WILL sue you. What does that mean? It means that if you admit owing the debt, having made payments or anything like that, and if you tell them where you work or bank, you make it more likely you will be sued. You might think you are being “responsible” and appropriately cooperative, but it works differently in law and debt.

You will find materials on site that will help you navigate this stage of the problem, but if you want some more specific guidance on what to do given the things they are telling and send you, this product is for you.

If You Need Help

If you need one of these services, just click on this link and select the service you need. Note that clicking on the link will take you to our “home” site, Your Legal Leg Up. If you need a “rush” job (service in under 72 hours), be sure to go to the products page and order that as well. You will be given instructions with your receipt on what to send and how to do it – we will need images of the documents you have received as well as answers to certain questions. After you give us that information, we will have an analysis back to you within 72 hours (three days). If you need faster than that, you can order the “rush” service, although we do ask that you NOT do this unless you need it.

Credit Reporting Act: Repairing Credit after Debt Litigation Part 2

Fair Credit Reporting Act

This is the second part of this article. You can get part 1 by clicking here

You may have heard of the Fair Credit Reporting Act, 15 U.S.C. Sec. 1681. Congress intended this law to limit and reduce the abuses of the credit reporting agencies, which were running roughshod over consumer rights. In particular, credit agencies would report false or disputed information. This damaged people in very real ways – and then the agencies ignored requests to correct that information.

The FCRA was therefore an attempt to assert some kind of control over the process of credit reporting.

I will address this issue in greater detail elsewhere, but the law divides the reporting community into two groups: the agencies and “information suppliers.”

Debt Collectors Are Often Information Suppliers

The people who report debts to the credit reporting agencies are “information suppliers.” While they have a legal duty to report that information truthfully, only the government agencies can enforce that duty initially. In plain English – you can’t sue them just for reporting information falsely. You have to follow some steps.

Your Right against Information Suppliers

Your right against information suppliers is located in 15 U.S.C. Sec. 1681s-2(b). What this part of the law says is that:

1. In general

After receiving notice pursuant to section 1681i(a)(2) of this title 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 1681i(a)(2) of this title;

(C) report the results of the investigation to the consumer reporting agency; and

(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.

Your Rights under the FCRA

What this means in a practical sense is that you should consider following up a debt defense with credit repair. That is, if you win at trial or if you force the debt collector to dismiss “with prejudice,” then you can probably repair your credit, too.

If the debt collector has reported you as owing, or if the original creditor has not reported the debt as sold, then you may want to file a dispute. It is the filing of the dispute that allows you to sue the information supplier for providing false information to the credit reporting agencies.

How it Works

Suppose you go through the litigation process and get the case dismissed with prejudice. Your next move might be to request a credit report from all the credit reporting agencies. Debt collectors do not necessarily provide information to all the agencies, and perhaps they provide different information to different agencies. In any event, get your report from each of them.

When you get the reports, you must read them carefully – do they reflect that the debt was sold? Has the debt collector filed reports saying that you still owe? If the answer to either or both of these questions is “yes,” then you can write to the credit reporting agency requesting that it reinvestigate and stating very specifically that you “dispute” the report and the debt. Don’t be coy about this – you get no points for style here – you need to dispute the report and insist on a correction.

This dispute triggers the responsibility of the credit reporting agency to conduct a reasonable “reinvestigation.” As part of this reinvestigation, the agency must ask the information supplier to investigate the information it is supplying. If the information supplier provides false information at this point, you can sue it under the Fair Credit Reporting Act as well as under “common law” (state law) theories like defamation.

If they claim you owe the money even though they have dismissed the case with prejudice, they would be “estopped” from arguing they were telling the truth if you sued them for defamation or false reports under the FCRA.

Sue the Credit Reporting Agencies?

I’ve never suggested that nonlawyers try to sue the credit reporting agencies. They’re hard to find and serve. It is hard to figure out who is responsible for what at the agencies. And they almost never give up. If you decide to go after the credit reporting agencies, therefore, you should very strongly consider hiring a lawyer.

Fair Credit Reporting Act: Your Rights under the FCRA

The Fair Credit Reporting Act establishes certain rules for the credit reporting agencies and outlines your rights against them if they fail. You’ve heard about having rights to a fair credit report. Here, in plain English, is a list and explanation of your most important rights under the Fair Credit Reporting Act.

The Importance of Credit Reports

Our country runs on credit and credit information and the credit reporting behind them. Obviously,  people use credit to purchase things, but as more and more people are finding out, credit reports are used for much more than that. They often impact employment decisions, housing decisions and rates. They also affect business equipment lease rates and insurance availability and price, among other things.

Bad credit has a high price in so many ways.

Credit Reporting Network

As important as all the interests affected by it are, the credit reporting network (the businesses which create and publish your credit information) is a vast and largely faceless bureaucracy. Congress intended the federal Fair Credit Reporting Act (FCRA) to create some accountability in this network. The FCRA was designed to safeguard the accuracy, fairness and privacy of information in the files of consumers held by the reporting agencies.

Different Kinds of Credit Reporting Agencies

There are many different kinds of consumer reporting agencies. Almost everybody knows about the credit bureaus, of course, and there are also “specialty agencies” that sell information about check writing histories, medical records and rental history. The FCRA was directed primarily at these agencies, rather than the creditors or companies with which you normally do business.

Here is a partial list of your major rights under the FCRA.

This isn’t a complete, exact replication of your rights under the Fair Credit Reporting Act. As with most important laws, the exact rights and their limits change as courts interpret the laws. But this will give you an accurate overview – a place to start.

Access to Your Credit Report Limited

A consumer reporting agency may provide information about you only to people with a valid need. These include considering an application with a creditor, insurer, employer, landlord, or other business. The FCRA specifies those with a valid need for the information. And in most cases you must give your consent before they get the information.

Rights When Credit Information Used Against You

Anyone who uses a credit report or another type of consumer report to deny an application for credit, insurance, or employment – or to take other adverse actions against you – must tell you. They also must give you the name, address and phone number of the agency that provided the information. You have a right to a free copy of that report.

Right to Find out What Is in Your File.

You can find out all the information about you in the files of a consumer reporting agency. You must be offered a free disclosure if:

  • A person has taken adverse action against you because of information in your credit report;
  • You place a fraud alert in your file as a victim of identity theft;
  • Your file contains inaccurate information as a result of fraud;
  • certain other reasons.

All consumers will be entitled to one free disclosure every 12 months upon request from each nationwide credit bureau and from nationwide specialty consumer reporting agencies.

Right to Dispute and Correct Information

If you identify information in your file that is incomplete or inaccurate and report it to the consumer reporting agency, you have rights. The agency must conduct a “reasonable” investigation, and it must report the information as disputed. If it is unable to verify the information after investigation, the agency must remove or correct the entry.

For practical reasons, this provision may actually provide more important rights against the businesses that report credit events than against the reporting bureaus. Debt collection firms have a hard time providing the required verification.

Time Limits for negative information.

In most cases, a consumer reporting agency may not report negative information that is more than seven years old, or bankruptcies that are more than 10 years old.

Note that is in “most cases.” There are important exceptions to this rule. The exceptions relate to larger transactions. Where a person is seeking a job with a higher salary or insurance with a higher payment amount, the time limit may not apply.

Next Step to Take

Sign up for your free copy of the Fair Credit Reporting Act on this page.