As part of an ongoing federal, state, and local initiative known as Operation Collection Protection, which is aimed at exposing debt collectors who use illegal practices, the Federal Trade Commission (FTC) recently brought a complaint against a Texas-based debt collection agency for failing to adhere to the Fair Credit Reporting Act (FCRA). The FCRA is a federal law that regulates how consumer reporting agencies collect and use consumer credit information.

Ultimately, in this case the company decided to settle, agreeing to pay $72,000 in civil penalties and to adopt new procedures that would bring it into compliance with the federal law.

FCRA Violations

According to the FTC’s complaint, the debt collection agency violated the FCRA in a number of ways, including by failing to:

• Put in place policies and procedures concerning consumer disputes about data the company provided to credit reporting agencies;
• Create a policy requiring notice to consumers concerning the outcomes of investigations;
• Inform consumers when disputed information was corrected;
• Train employees on procedures for handling disputes;
• Keep copies of documentation from consumers disputing information provided to reporting agencies;
• Investigate credit reporting disputes;
• Establish consistent procedures for transmitting documentation concerning consumers’ disputes to its clients; and
• Audit or analyze how it handled consumer disputes.

The Furnisher Rule

One of the FTC’s primary charges against the debt collection agency was that it violated the Furnisher Rule. The Furnisher Rule is enforced by the FTC and requires entities that provide consumer information to reporting agencies to adhere to a number of provisions, including:

• The establishment and implementation of reasonable written policies that are appropriate to the nature, size, complexity, and scope of a particular furnisher’s activities concerning the accuracy of information provided to consumer reporting agencies;
• Implementation of specific guidelines in developing policies and procedures; and
• Review and regular updating of policies and procedures on a periodic basis to ensure their effectiveness.

The Furnisher Rule also addresses direct disputes about information included in consumer reports and requires furnishers to conduct a reasonable investigation if the dispute relates to:

• The consumer’s liability for a credit account or other debt;
• The terms of a credit account;
• Current payment status, the date a payment was made, or the date an account was opened or closed; or
• Any information contained in a consumer report related to an account with the furnisher that deals with the consumer’s creditworthiness, credit standing, credit capacity, general reputation, personal characteristics, mode of living, or character.

Direct dispute notices must contain specific information, including:

• Sufficient facts to identify the account;
• The specific information in dispute; and
• All supporting documentation required by the furnisher to substantiate the basis of the dispute.

A failure to adhere to these requirements constitutes a violation of the Furnisher Rule, which could mean the imposition of possible civil penalties.

Credit reports can have a significant impact on important aspects of a person’s life, including the ability to obtain housing, so if you or a loved one are concerned that your credit report information was recorded incorrectly or that a dispute was handled unfairly, it is important to retain the services of an experienced attorney who can help protect your rights. Please contact the Kim Law Firm, LLC by calling 855-996-6342 and a member of our dedicated legal team will help you schedule an initial consultation.