A bill you already paid, a balance your insurer was supposed to cover, an account that was never yours: when a debt like that is sent to a collection agency, the damage usually shows up first on your credit report. The law gives you ways to fight it, and in some cases to sue, but which law applies depends on who is reporting the debt and what you do next.
This is how to tell whether a collection on your credit report is wrongful, what the collector and the original company are required to do, and when the error turns into a claim.
When a collection is “wrongful”
A collection account is wrongful, in the sense that matters here, when the information being reported about you is inaccurate or incomplete. Common examples:
- the bill was paid, settled or discharged in bankruptcy, but the collection shows a balance;
- an insurer should have paid the bill, and the balance exists only because of a billing or coding error;
- the charge was for equipment you returned or a service you canceled;
- the account belongs to someone else, or was opened by an identity thief; or
- the amount, the dates or the original creditor are wrong.
Being contacted by a collector is not, by itself, a credit reporting problem. If your concern is calls or letters about a debt, our article on suing a debt collection agency covers that. This article is about collections that end up on your credit report.
Two laws, two kinds of companies
Two federal statutes usually apply, and they reach different companies.
- The Fair Credit Reporting Act governs the credit bureaus and every company that reports information to them, including the original creditor and the collection agency.
- The Fair Debt Collection Practices Act governs “debt collectors,” which the Act defines to include companies that regularly collect debts “owed or due or asserted to be owed or due another.” It generally does not cover an original creditor collecting its own account.
So a hospital or phone company that reports its own account answers under the Fair Credit Reporting Act. A collection agency that reports the account can answer under both.
What a debt collector may not do when it reports
The Fair Debt Collection Practices Act lists false or misleading practices that collectors may not use. One applies directly to credit reporting. Section 1692e(8) prohibits “communicating or threatening to communicate to any person credit information which is known or which should be known to be false, including the failure to communicate that a disputed debt is disputed.”
That gives you two separate protections. A collector may not report information it knows, or should know, is false. And once you have disputed the debt with the collector, it may not keep reporting the account without saying that it is disputed.
The federal regulation that implements the Act, Regulation F, adds a rule about timing. Under 12 C.F.R. § 1006.30(a), a debt collector “must not furnish to a consumer reporting agency” information about a debt until it has either spoken to you about the debt, in person or by phone, or sent you a letter or electronic message about it and waited a reasonable period for a notice that it could not be delivered. A collection that appears on your report before the collector ever contacted you may break that rule.
Dispute the debt with the collector
A collector must send you a written notice about the debt within five days of its first communication with you, unless its first communication already contained that information. If you dispute the debt in writing within the 30-day period described in that notice, the Act requires the collector to “cease collection of the debt, or any disputed portion thereof, until the debt collector obtains verification of the debt” and mails it to you.
A written dispute does two things. It starts the verification requirement, and it puts the collector on notice that the debt is disputed, which matters for how the collector may report it. Our debt validation letter guide explains what to send.
Dispute the collection with the credit bureaus
A dispute sent only to the collector does not give you a claim under the Fair Credit Reporting Act. That claim depends on disputing with the credit bureau, which must then notify the company that reported the account. Once notified, the collector or original creditor must investigate and correct, delete or block information that is inaccurate, incomplete or cannot be verified. If it does not, you may be able to sue.
Our article on suing a creditor for false credit reporting explains why the dispute has to go through a credit bureau, and our dispute letter guide shows how to send one. In most cases the right approach is to dispute with both the collector and every bureau that shows the collection.
Examples from cases I have filed
In matters I filed in 2021 and 2022, a patient’s emergency-room visit was covered by insurance, but the provider miscoded the claim and never resubmitted it in time. The unpaid balance went to a collector that reported it, and disputes to the collector did not remove it.
In a case I filed in 2021, a consumer was billed for equipment she had returned and an upgrade she had canceled. The phone company and two credit bureaus kept reporting the “debt” after her disputes, and a collector pursued it. More examples are on the cases I have filed.
What you can recover
Under the Fair Debt Collection Practices Act, a debt collector that violates the Act is liable for any actual damages it caused and, in an individual case, “such additional damages as the court may allow, but not exceeding $1,000,” plus the costs of the action and a reasonable attorney’s fee (15 U.S.C. § 1692k(a)).
Under the Fair Credit Reporting Act, the recovery depends on whether the violation was negligent or willful. A negligent violation allows actual damages, costs and attorney’s fees. A willful violation allows actual damages or statutory damages of $100 to $1,000, punitive damages as the court may allow, and costs and fees. Our article on willful violations explains the difference.
Because both statutes shift attorney’s fees to the company when you win, these cases are generally handled on contingency.
The deadlines are different
The deadlines are short, and they are not the same.
- Fair Debt Collection Practices Act: a claim must be brought “within one year from the date on which the violation occurs” (15 U.S.C. § 1692k(d)).
- Fair Credit Reporting Act: a claim must be brought by the earlier of two years after you discover the violation or five years after it occurs (15 U.S.C. § 1681p). Our article on the FCRA statute of limitations explains how the dates are counted.
If a collector reported a debt you dispute more than several months ago, the one-year deadline may already be close.
What to do now
- Get all three credit reports and note exactly how the collection appears on each.
- Gather your proof, such as payment confirmations, insurance explanations of benefits, return receipts or cancellation confirmations.
- Dispute in writing with the collector, within 30 days of its notice if you can, and keep a copy.
- Dispute in writing with each credit bureau that shows the collection, attaching the same proof, and keep proof of mailing.
- Save every response, along with any denial letter or rate quote that mentions your credit report.
- Talk to a lawyer before the deadlines, especially if a dispute came back “verified” when you have proof the debt is wrong.
We handle credit reporting errors under the Fair Credit Reporting Act, including collections reported by debt collectors and original creditors. You pay nothing unless we win.
Admitted in Pennsylvania and New Jersey; available to appear pro hac vice in other federal courts.
Related reading: a collection that is not yours · removing collections from your credit report · a paid-off account still reporting a balance · medical debt and the FCRA
Sources
- 15 U.S.C. § 1692a(6), § 1692e(8), § 1692g(a)–(b), § 1692k(a), (d)
- 12 C.F.R. § 1006.30(a) (Regulation F)
- 15 U.S.C. § 1681s-2(b), § 1681n, § 1681o, § 1681p
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