United States of America v. Credit Bureau Collection Services

Technorati Tags: FCRA litigation,unfair and deceptive practices,collection agencies

A nationwide debt collector has agreed to pay a civil fine of more than $1 million to settle Federal Trade Commission charges that it violated federal law by inaccurately reporting credit information and pressing consumers to pay debts they often did not owe.
According to the FTC’s complaint, the company and two of its officers illegally tried to collect invalid debts and reported them to the credit reporting agencies without noting that consumers disputed them. In addition, even after receiving information from consumers that a debt was paid off or did not belong to the consumer, the company continued to assert, no longer with a reasonable basis, that the consumer owed the debt, without trying to confirm or dispute the consumer’s information, in violation of the FTC Act.
The FTC charged that the company, Credit Bureau Collection Services, and two of its officers, Larry Ebert and Brian Striker, violated the FTC Act and the Fair Debt Collection Practices Act. The company also is charged with violating the Fair Credit Reporting Act by reporting information to credit agencies that consumers had proved was inaccurate, failing to inform the credit agencies that consumers had disputed the debts, and failing to investigate after receiving a notice of dispute from a credit reporting agency.
In addition to imposing the $1.1 million civil penalty on the company, the settlement order:

• Bars the defendants from further violations;
• Prohibits them from making unsupported statements to collect a debt or obtain information about a consumer;
• Bars them from making claims that a debt is owed or about the amount, without a reasonable basis;
• Requires the defendants, when a debt is questionable or a consumer questions it, to either close the account and end collection efforts or investigate the dispute. If they cannot show that the consumer owes a debt, they cannot sell the debt or provide it to any business other than the original client; and
• Bars the company from re-reporting information to credit reporting agencies that it had voluntarily deleted from credit reporting before December 2008.

The Commission vote to authorize staff to refer the complaint and consent decree to the Department of Justice for filing was 4-0. The documents were filed in the U.S. District Court for the Southern District of Ohio, Eastern Division.
The Commission recently released a video for consumers who are facing debt collection. The video is at www.ftc.gov/MoneyMatters, a site that includes information for consumers on managing credit, dealing with debt, and a variety of other financial topics. Here are some of the allegations contained in the Complaint issued by the FTC:

• Customers notified CBCS that address, name, or social security number information was being incorrectly reported to credit reporting agencies(CRA’s)
• CBCS did not conduct meaningful investigations when requested by consumers
• CBCS did not make a notation of consumer dispute and report it to CRA’s when consumer disputed information in their file
• CBCS directly or indirectly used false representations concerning the character, amount or legal status of a customers debt.
• CBCS in the course of collecting debts from consumers, defendants directly and indirectly have represented to consumers, expressly or by implication that the debts were valid and that consumers had an obligation to pay the debts

One would think that the CBCS is one of a small amount of collection agencies who are doing business this way, but that couldn’t be further from the truth. Most collection agencies engage in these types of unfair and deceptive practices as a rule, the exception to the rule are the few agencies that do not engage in those practices! CBCS just happened to get caught. As a credit repair specialist for several years, I have dealt with many collection agencies who are very dishonest and not reputable. The reason they get away with being so dishonest is because most people who have to deal with them are not savvy enough, or organized enough, or patient enough to actually file a lawsuit against them. Moreover, most people who have to deal with them are stressed out, low-income, and too tired to invest the time it would take to actually take a collection agency to court. Collection agencies that engage in unfair and deceptive practices count on people being too stressed out and busy to make them accountable for their actions.
When dealing with a collection agency, it is always a good idea to know your rights under the Fair Credit Reporting Act. Familiarizing yourself with the law is the only way to compel dishonest companies to abide by it. So before you attempt to restore your credit or dispute erroneous information in your credit file, make sure you are ready to take your case to court if necessary.