Debt collection abuses and claims for damages to credit reputation are the topic of this blog post. This post is the first of a series of guest blog posts written by Georg Finder, an Orange County, CA, Credit Damage Evaluator (CDE).
The issue of debt collection abuses is a very important one. The law recognizes that legitimate debts should be collected to ensure the efficient functioning of the economic system. At the same time however the law also recognizes that abuses by debt collectors are a reality. And some of those abuses, negligent or malicious, can give rise to claims for damage to credit reputation.
Some debt collectors and collection agencies are just doing a difficult job as best as they can. Others however have little or no regard for any abuses that they may inflict/impose on a consumer while collecting on a debt. Still others have little or no regard for adhering to ethical practices, as defined by state or federal laws.
Common debt collection abuses that could give rise to a claim for damage to credit reputation include but are not necessarily limited to:
- Reporting of information known to be inaccurate such as an inflated balance due or where the debt has already been paid in full or otherwise satisfied.
- Balance Collections – common in medical billing. The medical treatment provider accepts what the insurance company has paid settled-in-full, and then turns what it considers the unpaid amount by the insurance company as a balance due. Sometimes they do not even bill the patient, and when the unsent bill is not paid, send it over to the collection agency,
- False or negligent reporting of late payments when no late payments were made.
- The sale or other transfer of an alleged debt between various debt collectors that results in multiple derogatory items appearing on a credit report for a single account.
- The intentional and fraudulent practice of “re-aging” a delinquent account that is more than seven years old so it can continue to be reported in credit reports.
- The negligent reporting of a derogatory item that is more than seven years old on credit reports.
- Intentional or negligent reporting of a debt that is in fact owed by another person or is the result of identity theft.
Serving a consumer with legal process at an address where they have never lived, or where they have moved from several years before the alleged service in order to obtain a default judgment that is void for lack of valid service is another common example of debt collection abuses.
The knowing or unknowing use of unethical process servers who fraudulently claim that a consumer has been served with legal process when in fact the consumer was never served in order to obtain a default judgment that is void for lack of valid service.
The law generally provides that consumers are generally barred from bringing certain actions for defamation against consumer reporting agencies, credit report users and informants. An action may be maintained, however, as to false information furnished with malice or willful intent to injure the consumer. See California Civil Code §§ 1785.31, 1785.32; see also 15 USC § 1681h(e).
Section 1681m of the Fair Credit Reporting Act regulates the use of consumer reports. It prohibits a creditor from selling, transferring for consideration or placing for collection a debt where a consumer reporting agency has notified the creditor that the debt has resulted from identity theft. 15 USC § 1681m(f).
Section 1681m of the Fair Credit Reporting Act also states that if a debt collector acting on behalf of a third party is notified that information relating to a debt to be collected may be fraudulent or the result of identity theft, the debt collector must (1) notify the third party that the information may be fraudulent or the result of identity theft; and (2) upon request by the consumer, provide the consumer with all information to which he or she would otherwise be entitled if the consumer were not a victim of identity theft but wished to dispute the debt. 15 USC § 1681m(g).
This blog post is an excerpt from the book, 5 Steps to Successfully Recover Credit Reputation Damage.
If you would like to receive more information on credit damage measurement click here: www.creditdamageexpert.com
Copyright Georg Finder, all rights reserved. Posted with the express permission of the author.
Georg Finder, an Orange County, CA, Credit Damage Evaluator (CDE), is an expert on credit reporting violations and credit damage measurement. He has more than 15 years experience evaluating credit reports and appearing for both plaintiff and defense. Mr. Finder has authored numerous articles, including his upcoming book, Divorce credit smarter, not credit out-smarted. He is a. MCLE provider on credit report issues and credit reputation damage compensation. Learn more about Georg Finder and his services at www.creditdamageexpert.com
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