What to Do When Your Debt Collector Misreports Your Information to Credit Bureaus

What to Do When Your Debt Collector Misreports Your Information to Credit Bureaus

by | Aug 23, 2021

The Consumer Financial Protection Bureau (CFPB) recently filed a proposed settlement to resolve a lawsuit against a debt collection enterprise and its owner. The lawsuit alleges that Fair Collections & Outsourcing (FCO) violated federal law by inaccurately reporting information it furnished to credit reporting agencies and failed to respond to debt verification requests, resulting in inaccurate information remaining on consumers’ credit reports.

“As we recover from the economic devastation caused by COVID-19, credit reports play a huge role in consumers’ financial lives. Inaccurate information, such as information related to tenant debt, can be devastating for someone who’s applying for a loan, seeking a new place to live, or trying to get a new job,” said CFPB Acting Director Dave Uejio in a statement on the proposed settlement.

Not only can such action be devastating, but it can also cause long-term damage to your credit. For example, charged-off accounts and collections can stay on your credit report for up to seven and a half years after the date of the last reported activity.

How to Avoid Becoming the Victim of Unfair Debt Collection Practices

First, know your rights.

The Fair Debt Collection Practices Act (FDCPA) is very specific about what a debt collector can and can’t do.

Find out who you’re dealing with.

Ask for the collector’s name, the company’s name, and its address and phone number. Legitimate debt collectors provide this information.

Don’t give additional personal information.

The collector might ask you to confirm personal information. If the collector has the wrong information, like an address or phone number you’ve never used, don’t correct the mistake with the right information. And don’t give any other personal information. If it’s not your debt, but the collector now has the right personal information for you, it could be harder for you to dispute the debt later.

Refuse to discuss the debt until you get a “validation notice.”

Collectors must send you written notice. It tells you how much money you owe, the name of the creditor and what to do if you don’t think you owe the money. This notice might help you figure out if you owe the debt.

Monitor your credit report.

Check your credit report after you hear from the collector – if a debt isn’t listed, that may be a sign of a scam. Monitoring your credit report and scores is important, especially if you see accounts you don’t recognize.

Dispute the debt in writing.

If you think you don’t owe some – or all – of the debt, or you just don’t recognize it, send the collector a letter disputing it. Be as specific as possible about why you think the debt is wrong but give as little personal information as possible. Once you get the validation notice, you have 30 days to send this letter.

You can report illegal debt collection practices to the CFPB and your state attorney general’s office. Many states have their own debt collection laws, so contacting state authorities can be a good idea. Document any violation of the law on the part of the debt collector. While it won’t make legitimate debts go away, it can help prevent further misconduct.

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