623 Dispute Method

[chane]

623 Dispute Method

When the conventional method of disputing an inaccuracy on your credit report fails to yield results, the 623 dispute method may be a viable alternative to getting erroneous or unconfirmed information removed from your report. The 623 dispute method allows you to dispute any inaccurate information on your credit report directly with the original creditor. A 623 dispute does not work in the same way as a traditional dispute through the credit bureaus because you are not asking for verification of the debt, but for an investigation as to the accuracy of the records on that debt. If you creditor does not have accurate records pertaining to that debt, then they must remove the negative information on your credit report. The process usually follows these steps:

1. File a 623 Dispute notice with the original creditor, asking for an investigation into the debt or delinquency.

2. If the original creditor does not have proof of the debt or delinquency, the negative information must be removed from your credit report.

3. If the original creditor does not comply, you will have to file suit in order to have it removed.

How It Works

Under the laws governing the 623 dispute method, creditors must conduct an investigation when requested. In addition, when investigating, they must review the information that you provide relating to that dispute, and they must respond within 30 days to your original investigation request. The new laws governing fair credit reporting explicitly require the original creditors to investigate when requested, and will take effect on July 1, 2010.

This method will only work to remove entries on your credit report that are inaccurate, or entries in which the creditor no longer has to verifiable information. While you might think that the credit card agencies will have up-to-the-minute information about your past debts, this is often not the case. In fact most credit card companies will only keep your records for 13 to 18 months. Any late fees, charge-offs, or other information prior to this time they will not be able to verify through their records. The 623 dispute method works because anything that is inaccurate, or not in the records will have to be corrected on your credit report. What this means is, if the credit card company does not have any records on your account at all they must contact the credit bureaus to have the negative information removed.

If you have disputed the information through the credit bureau before initiating the 623 dispute process, and the creditor refuses to remove erroneous information, you will have grounds to sue. Otherwise, your only legal recourse will be to have the state or federal authorities pursue the case, and it is solely at their discretion to do so.

Warning: This dispute method probably will not work for a debt that is fairly recent. It is also unlikely to work for those companies who do keep detailed records spanning several years. In addition, you will need to be somewhat specific about the information you wish to be investigated and any records that you have that can prove that there is an error will be helpful. At the very minimum, you must identify the account by the actual account number and provide a reason to the original creditor explaining why you are disputing the accuracy of their records. If you do not provide this information as a part of your investigation request, the original creditor may determine that your request is frivolous and deny the investigation. Overall, the 623 dispute method works best for past delinquencies and charge-offs that may no longer be listed appropriately in the records.

[Game Plan]

I have one question on this. If the negative entries on my report are from a CA and not the OC, should I send a dispute letter to the CRB and verification letter CA initially? Or should I just ignore the CA throughout this process?

I do understand the importance for holding off on sending the 623 investigation letter to the OC until the dispute letter has been answered.

[mely83]

Under the laws governing the 623 dispute method, creditors must conduct an investigation when requested. In addition, when investigating, they must review the information that you provide relating to that dispute, and they must respond within 30 days to your original investigation request. The new laws governing fair credit reporting explicitly require the original creditors to investigate when requested, and will take effect on July 1, 2010.

I have a question about this...If I send a dispute to experian on 1-20-10 and they verify it then, I send a letter to the original creditor a few days later do they have to respond 30 from 1-20-10 or when I send the original creditor the letter?

[Lian]

The direct dispute process is not limited to creditors. It applies to any "furnisher of information" to a credit reporting agency, including original creditors and debt collectors. A prior dispute through a CRA is not required, and in fact, under the provisions of 16 CFR 660.4(f), a direct dispute can be rejected without investigation if it relates to the same information previously disputed through a CRA.

The basic provisions of 16 CFR 660.4:

Direct disputes under FCRA 623(a)(8) relate, as specified in 16 CFR 660.4(a), to:
(1) The consumer’s liability for a credit account or other debt with the furnisher, such as direct disputes relating to whether there is identity theft or fraud, whether there is individual or joint liability on the account, or whether the consumer is an authorized user.

(2) The terms of a credit account or other debt with the furnisher, such as the type of account, principal balance, scheduled payment amount on the account, or the amount of credit limit on an open-end account.

(3) The consumer’s performance or other conduct concerning an account or other relationship with the furnisher, such as payment status, high balance, date a payment was made, the amount of a payment made, or the date an account was opened or closed.

(4) Any other information contained in a consumer credit report regarding an account or other relationship with the furnisher that bears on the consumer’s credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living.

Direct disputes under FCRA 623(a)(8) may NOT be made, pursuant to 16 CFR 660.4(b), if the direct dispute relates to:

(1) The consumer’s identifying information, such as name(s), date of birth, Social Security number, telephone number, or address

(2) The identity of past or present employers

(3) Inquiries or requests for a consumer credit report

(4) Information derived from public records, such as judgments, bankruptcies, and other legal matters (unless provided by a furnisher with an account or other relationship with the consumer)

(5) Information relating to fraud alerts or active duty status alerts.

(6) Information provided to a consumer reporting agency by one other than the furnisher to whom the direct dispute is directed.

Under 16 CFR 660.4(f), a furnisher is NOT required to investigate a direct dispute if the furnisher has reasonably determined that the dispute is "frivolous or irrelevant." A dispute is frivolous or irrelevant if

(1) the consumer did not provide sufficient information to investigate the disputed information

(2) the direct dispute is substantially the same as a prior dispute, either directly to the furnisher, or through a consumer reporting agency, with respect to which the furnisher has already satisfied their investigation requirements; however, a direct dispute is not substantially the same as a prior dispute if it contains information that was not previously submitted to the furnisher.

The time period for completion of an investigation is the same as that for disputes through a CRA, namely 30-days from the date of the direct dispute. 16 CFR 660.4(e)(3).

If the investigation finds that the information reported was inaccurate, the furnisher must promptly notify each credit reporting agency to which the furnisher provided inaccurate information of that determination, and provide the credit reporting agency any correction to that information necessary to make the information accurate, or delete the information. 16 CFR 660.4(e)(4).

[improvescore65]

I'm thinking about sending a 623 to a JDB regarding an old credit card debt they bought.

It is out of the SOLC. How is this action different than making them prove the chain of custody? It seems that in this case, the tactics might overlap a bit.

Also would the 623 re-start the statute of limitations? Thanks.

[Lian]

Filing a direct dispute has no effect either on the running of the statute of limitations on the debt itself of on the running of the credit report exclusion period under the FCRA.

"Making them prove chain of custody" is a legal process that is compelled by a court under a pre-trial discovery process. Both dispute processes under the FCRA (through the CRA or by direct dispute with the furnisher) require investigation of assertions of inaccuracy and report the results, either to the CRA or directly to the consumer. The result required to be provided is a finding that the information was either inaccurate, could not be verified as to its accuracy, or was accurate. Neither compel the furnisher to provide evidentiary proof to support their finding. It is not a judicial proceeding.

The finding must be supported by a reasonable investigation on their part, and must be consistent with the results of their investigation. If their investigation finds the information inaccurate, yet they verify its accuracy, they have committed a knowing violation of their obligation. While you cant compel them to support their finding in the administrative dispute process, such actions of their part would, if the issue were ever to go to court, result in their discovery, and lead to verdict against them, and possible criminal prosecution. They lie at their risk.

When a dispute is filed, the consumer must allege an inaccuracy in credit reporting. Perhaps ownership of the debt would be an issue regarding their ability to report the information at all, but that is a factual issue about which I doubt the would knowingly provide a false statement.

So I guess I don't see how you are considering compelling the disclosure of "chain of custody" of the debt as part of inaccuracy in their credit reporting.

[improvescore65]

I'm preparing a 623 right now. Should I send it to the legal depart of the OC?

[Lian]

I would send it to the address of record in your CR.
It is an administrative dispute.
If they wish to consult their legal dept, that is their business, but I would not direct it to legal staff.

[improvescore65]

So far, I've disputed this debt through the CRA. That came back verified. Next, inquired about a PFD. That fell on deaf ears. So now, I'm considering this 623. If this doesn't work, should I consider arbitration?

[Lian]

There is a chance that your direct dispute may simply be dismissed by them without any investigation. They have the authority to do so.

The direct dispute rules specify that a furnisher may dismiss a direct dispute without any need for investigation if it is substantially the same as a prior, resolved dispute, including a prior dispute filed through a CRA.

They may still consider it, but dont be surprised if it is dismissed.

Next steps are kinda up to you. You can file complaints with the FTC, your BBB, or even contact youir state AG. They may or may not agree or take any action.

Your final right is always to bring your own civil action, and get the factual issues before a court, with the advantage of having the legal discovery process at your disposal.