questions about FACTA 312 ammendment(July 1st, 2010)

[eknight@003]

I have a few questions about this new ruling which requires "furnishers" of information to respond to a consumer dispute: (I'm prohibited from posting links at this time)

1.Does the term "furnishers" apply to both original creditors and collection agencies?

2.I was told that debt collectors were not required to respond to debt validation letters after the initial 30 day grace period. I have a two year old $60 hospital bill in collections. I would like to send the collector a debt validation letter. Does this new ruling mean that debt collectors are now required to respond?

3. Did the FTC amend the FCRA and FDCPA as a result of this ruling? If so, I would appreciate if someone could provide me with the correct section #'s so that I can review the revisions in greater detail.

this is my first post. I searched the database in order to avoid redundant questions but I was unable to locate anything about this new law. If I missed something, I do apologize.

thanks!

[Lian]

The term "furnisher of information" applies to any party who has reported information to a CRA. It includes original creditors, subsequent creditors, debt collectors, and potentially other parties, such as one who has obtained a tax lien or judgment.

The term "furnisher" is specifically defined in the implementing rules for the new direct dispute process, and can be found at 16 CFR 660.2(c). Discussion can be found in the implementing rule package at 74 Fed Reg 31484 (7/1/09).

Debt collectors, under the FDCPA, have no requirement to respond to a DV letter at any time. FDCPA 809(b) prevents them from conducting collection activities once the consumer has sent them a DV request and they have not provided validation, but it does not compel validation. Texas does have a compulsory response provision under their own version of the FDCPA, but other states do not. The rules implementing section 623(a)(8) of the FCRA, published 7/1/09 and effective 7/1/10, are provisions for disputes under the FCRA, and dont apply to the debt validation process under the FDCPA. Apples and oranges.

There was no "amendment" to the FCRA by the FTC. Only congress can amend the statute. The peculiarity with respect to the enactment of the new direct dispute process was that the enabling legislation became part of the FCRA back in 2004. FCRA 623(a)(8). However, it had an express provision, set forth at FCRA 623(a)(8)(A), that it would not become effective until implementing regulations were published by the designate federal agencies.

Those regulations were published at Fed Reg Vol 74, 31484, on 7/1/09, with an effective date of 7/1/10. They have now been codified into the code of federal regulations at 16 CFR 660.4, and have the weight of statute. That is your source for the actual rules governing the direct dispute process.

With respect to your issue with the debt collector, you can choose to send both a debt validation letter under the FDCPA and a direct dispute under the FCRA. They are separate. One is for validation of the debt, and to compel cessation of collection activities, and the other is to dispute the accuracy of credit reporting. Either or both may apply to your situation.

I highly recommend use of the new direct dispute process as an alternative to disputing through the CRA, as it was implemented to cure the many and serious defects in the CRA dispute process, not the least of which is the use by the CRA of their automated e-Oscar process to sanitize your supporting documentation.. Use of the direct dispute process ensure all supporting documentation and arguments are provided directly to the furnisher of the information subject to the dispute.

[eknight@003]

Lian, I appreciate your response. Now I need to expand on your response with a few more questions particularly concerning the FDCPA and the debt validation process:

I read 809(a) and (b). One concern I have is in reference to the "First Communication". Suppose I never received a first communication and never knew about this debt until I reviewed my credit report. Would the first communication then be considered after I initiate the contact by sending a debt validation request thus activating my rights under the FDCPA?

Let's say that the answer to the aforementioned question is true. Yes, there is no law under the FDCPA requiring the collector to respond. However, it would be in their best interest to respond. Otherwise under 809(b) they would have to cease debt collection which includes CRA reporting. Additionally, if the collector does not respond within 30 days(or 5 days, not sure which would apply), they would be in violation of the FDCPA. Is that right?

One more question...you seem to favor the direct dispute process. So in your opinion, what is the advantage of the direct dispute process over the so called "1,2 punch?"

I'm asking you all of these annoying questions because my wife and I are thinking about fixing a few discrepancies on her credit report. We are slow and methodical and trying to figure out the best way to approach it without the aid of a credit repair company. I believe that we can do it. We just want to make sure that we understand the laws and how to use them effectively.

thanks for your help...

Eric

[Lian]

My comments....

Both the FTC and the courts have established that the act of posting to your CR is considered to be an "initial communication with the consumer," and thus triggers the requirement of section 809(a) for providing dunning notice within 5 days of that posting/initial communication. Your sending of a DV is never an act that triggers the determination of an "initial communication" by them. It is their initial communication that triggers their obligation. Your rights to request debt validation with compulsory cessation of their collection activity begins the moment they are assigned collection authority from the OC. If they have never posted to your CR or had any initial communication with you, you still can DV them and trigger the cease collection bar. Obviously, the hitch is that if they have had no form of initial communication with you, then you normally dont know they have collection authority. But if you determine that a debt collector is lingering out there, and can find their address, then you can DV them without ANY initial communication from them. What section 809(b) sets is the LAST date that your DV letter can trigger the cease collection bar. They only set a period running against you by first sending a collection (dunning) notice. No dunning notice, no period running against you.

The 30-day period under FDCPA 809(b) applies to the consumer, and NOT to the debt collector. The only way that section 809(b) interjects the debt collector into this 30-day period is by the clarifying provision that the debt collector can still continue collection activities during that period (i.e., from date of dunning notice until date they receive a DV letter). The cease collection bar only begins when you DV, and not when they send you dunning notice.

Section 809(a) sets NO period within which any debt validation must be provided. Period.
It just establishes a date when their cease communication bar begins. They can choose never to respond, which inflicts upon them a bar against conducting collection activities until they choose to provide validation.

Violations of section 809(b) occur only when, while under a cease collection bar, the debt collector takes some action related to collection of the debt. It is that later action that is the violation of section 809(b), and not any inaction on their part.

Regarding use of the so-called 1-2 punch process, you are probably asking the wrong person to provide any advantages of that process. It is my firm opinion that that entire process is flawed, and inconsistent with the statute. In a nutshell, it is my opinion that a cease collection bar under FDCPA 809(b) does NOT prevent a debt collector from complying with their statutory obligation to investigate a dispute, and provide their results to the CRA. It is not a collection practice they initiate, it is a statutory investigation requested by the consumer.
Communication with a CRA regarding their statutorily mandated requirement to report the results of a dispute investigation is not a reporting of consumer activity to a consumer's credit file. It is not akin to the reporting, for example, of an adverse item of information, such as a collection or delinquency.

Thus, I don't support the game that is based on the unsupported premise that sending a DV letter prevents the debt collector from complying with their statutory obligation to investigate and respond to disputes related to credit reporting. Others disagree, but the interpretation of the statutes upon which the 1-2 punch process is predicated has never been affirmed by any administrative agency charged with enforcement of either the FDCPA or the FCRA (i.e., the FTC), and certainly not by the courts.

The absurdity, at least to me, of the 1-2 punch process is brought home even more so when a direct dispute is involved. The consumer directly contacts the debt collector and requests investigation and reply to a dispute over their credit reporting. Then, in the next breath, they argue that response to their own request is barred by another request (i.e., debt validation). When the consumer specifically communicates with the debt collector and requests that they provide something, that is a specific request, and not any initiation of barred collection activity.

[eknight@003]

okay Lian here is another concern that I have:

Does the new law (July 1, 2010) under 623(a)(8) involving direct disputes with "furnishers" override the fact that collection agencies(which are also considered to be "furnishers) don't have to validate a debt after the inital communication and 30 days?

these two laws seem to conflict each other. Since collection agencies are considered to be furnishers. are they bound by the FCRA in this situation? Does the 623 law override the FDCPA laws under section 809?

If you have already answered this in the previous post then i apologize for being redundant.

thanks!

[eknight@003]

never mind i think i got it. It looks like the collection agency would be subject to the 623 rule which means that section 809 of the fdcpa would become irrelevant.

I've learned that this is the correct process to consider:

-dispute debt with CRA
-debt more than likely will come back confirmed
-request MOV from CRA.
-or/and submit 623 letter to furnisher requesting an investigation and or request of information that they provided to the CRA that supposedly verified the debt.

It seems that this method is extremely effective because CRA's rarely conduct a thorough investigation as required. And CA's don't usually have documents readily available other than computer generated printouts that are also not sufficient. At least that's what I've learned.

Off topic but same principle....
recently I disputed 6 credit inquiries on line with Equifax. They verified all 6 inquiries in less than 24 hours by stating "Inquiries are a factual record of file access" what???

Ok, my first thought was that doesn't mean that the inquiries were authorized. So immediately I requested verification of all inquiries to include a request for documentation, names and addresses. I will also follow up with 623 letters to all OC's if it comes to that.

So far I think I'm on the right track.

[Lian]

Not really irrelevant or duplicative. They are for different reasons.

FDCPA 809(a)/(b) relates to the validation of debt, and the resultant affect on debt collection activities. FDCPA 809 is not a process directed at disputing the inaccuracy of items reported to ones CR. One can DV, for example, when a debt collector has not even reported to a CRA. A timely DV results in a bar against further collection activities until debt validation is presented.

The two dispute processes under the FCRA are directed specifically at the accurateness and completeness of items of information reported to a consumer's credit file. They are directed at the verification of specific items of reported information, and not usually to the validation of the debt itself.

In a situation where debt validation is sought AND items related to the reporting of any information by the debt collector is also at issue, both processes can occur simultaneously.

[Lian]

You cannot dispute credit inquiries under the direct dispute process. The implementing rules for the direct dispute process, set forth at 16 CFR 660.4, specifically excludes the dispute of inquiries from the use of direct disputes. They must be disputed through the CRA.

[eknight@003]

Originally Posted by Lian

You cannot dispute credit inquiries under the direct dispute process. The implementing rules for the direct dispute process, set forth at 16 CFR 660.4, specifically excludes the dispute of inquiries from the use of direct disputes. They must be disputed through the CRA.

Geese Man... where in the heck do you find all of these laws?...I thought that I was on to something until you hit me with that 16 code of fed regs @660.4!

there has to be a way to dispute with the furnishers about credit inquiries that would obligate them to respond. After all, they are placing info on my cred report that was unauthorized. If the CRA's respond back unfavorably to my MOV letter, you mean to tell me that there is nothing else I can do??

[Lian]

They are obligated to respond back to the CRA if you dispute through a CRA.

However, using the FCRA dispute process interjects them into the decision-making process through their reinvestigation rights. It makes it a bit tougher. The CRA has possession of the statement of permissible purpose under FCRA 604(f) provided by the inquirer, and that is the only FCRA issue.

The implementing rules for the direct dispute process included the exclusion of inquiries based on complaints from the creditors that it would bog them down, and that credit inquiries disputes are usually not related to the actual legality of their permissible pull authority. The rule makers bought that argument, and decided not to clog up the direct dispute process.

Your alternatives are to dispute through the CRA, or initiate your own civil action.