Consumers have the right to dispute a debt in collection, and both FTC and CFPB get a lot of complaints that collectors have the wrong debtor or are trying to collect more than what's owed.
But CFPB is looking for better information on how many disputes there are and what they are about:
- Are there good numbers on what percent of consumer debts are disputed? (Maybe these numbers depend on what counts as a “dispute.” See the next subtopic).
- Does the type of debt (for example credit card vs. student loan) make a difference?
- What are the most common things consumers dispute? (For example, someone else owes this debt; debt was already paid; past payments weren’t properly credited; interest or fees are wrong; identify theft) Are consumers usually specific about the problem, or do they just say generally that they dispute the debt?
Comments41
Commenting is now closed.
JOULES
November 6, 2013 - 10:26am
As per state and federal laws; 'Collectors cannot pursue a debt once you've proven that it's not yours. So if you don't owe it, you need to act. Ask your bank or creditors to give you written proof, then send a copy of that proof to the collection agency.'
I received a bill from an attorneys office regarding a bill I did not think that was mine. I sent a certified return receipt request for validation but never received a response. So I sent a 2nd certified return receipt - request for validation and again never received a response. The attorneys office filed a civil suit and took me to court. I explained this to the judge and gave proof. The proof I submitted into the court file were copies of request of validation, the USPS certified letter statement's and request verification receipt statement's. This was all ignored by the judge because I was pro se and did not know Washington state law. I had made the request prior to this case being filed. Later it was explained to me by an attorney that the local county civil courts do not enforce federal laws, only state laws and in state court a request for validation is not recognized.
Please note: I also requested proof of licensing which I did not receive because the plaintiff was and currently is not a licensed in Washington state as a debt collection agency - they are attorneys.
The plaintiff won their case and I owed a debt that was not mine.
I ask you, where is the fairness in this?
What needs to occur is the laws need to be made clear for both the lay person and the judicial system.
Moderator
November 6, 2013 - 12:11pm
Thank you for sharing your story, JOULES. CFPB is considering rules to make sure that debt collectors and buyers have more information about the debt (such as who the borrower is). Do you think that giving more information about the debt to the attorneys' office could have helped in your case? You can read more about that proposal and comment on it, here.
JOULES
November 6, 2013 - 11:25pm
Moderator, I do not believe that it would have mattered. It seemed that the Attorney/debt collector was not looking for the actual debtor - I believe that all that they were trying to do was to make a quick buck. They did a couple of shady things with this case.
For a solution; the laws should be written so the common lay person can understand. If I had known that a validation request would not be considered I would not have wasted my time and paid even though it was NOT my debt.
Please note - I am NOT an attorney.
CG
November 8, 2013 - 2:05am
You may want to see an attorney specializing in FDCPA cases and take that collector to court. Federal law might be in your favor with all the validation requests ignored.
JOULES
November 8, 2013 - 9:42am
I have already spoken with an attorney. This is how I found out about the separation of state and federal law. Because I was sued in state civil court is why my validation requests were ignored by the plaintiffs as well as the seating judge. What I should have done (in state court) was sent a 'discovery' request AFTER the case had been filed rather then a validation request. Please note - the 'collection agency' was a large legal firm. They knew the laws well and whereas I was a lay person and not versed in law , I was like a sitting duck just waiting for the slaughter. If I did take them to court I would receive hundreds but it would cost me thousands....and I just do not have that type of money.
What really touched my heart was sitting in that court room and seeing others that also thought that the law would be fair if they represented themselves. Needless to say, we all lost and lost big time. I asked the judge why would he allow this when the plaintiff was a unlicensed collection agency and he stated ' they look like attorneys to me'.
I knew that at that point I had lost my case.
tjl
November 6, 2013 - 12:55pm
I had a particularly lousy experience with an abusive debt collector called Miracle Financial, working on behalf of Verizon Wireless to collect a debt I wasn't aware I had incurred and didn't believe I owed. The full account -- and dozens more from people leaving comments on my blog over the years -- is available at the supplied link.
Miracle said I had to speak to Verizon. Verizon said I had to speak to miracle. Short of going to court over a $50 debt, I had no options for resolving the situation. Meanwhile, Miracle's demeanor on the phone was abusive, and they promised to call every day for years unless I paid up. So I did.
It was an upsetting episode that left me feeling powerless--as if the whims (or mistakes) of corporate America dictated my financial liabilities, with no chance for appeal and potentially dire consequences for my credit rating. I'm very pleased to see the CFPB addressing these practices.
Verizon Wireless and Miracle Financial
Debt Neutrality Petition
November 7, 2013 - 5:19pm
Yes, one of the biggest scams that consumers get put through is the collection agency saying discussions about the debt have to be made with the parent company, and the parent company saying they cannot talk about the debt because it has been assigned to a debt collection agency, Please FIX THIS.
linalex61
November 6, 2013 - 4:51pm
When I have a dispute thru FTC, credit bureau changes anything they can on my credit report.
quino1974
November 6, 2013 - 5:53pm
The problem with disputes is the process is weakened by e-oscar. This process sees tons of paper work and faces road blocks. The solution is simply checks and balance and accesses to e-Oscars manual to see procedures for disputing errors on credit reporting. All the major bureaus do it and something must be done to empower the consumer not the credit reporting agency.
Moderator
November 6, 2013 - 9:09pm
Hello quino1974, thanks for your input. In a December 2012 report, the CFPB highlighted the fact that the “e-OSCAR” system did not provide a means for credit reporting companies to forward to furnishers any documents submitted by consumers. “Since then, the CFPB has been working to ensure that the dispute system was improved. The “e-OSCAR” system has been upgraded so that the three companies can now send furnishers any relevant dispute documents mailed in by consumers” (see CFPB bulletin announcement.) Since CFPB is asking what new federal rules they could propose on how creditors and debt collectors can act to get consumers to pay overdue debts, what sort of checks and balances do you suggest for e-OSCAR?
puterbug
November 7, 2013 - 7:12pm
Consumers should be able to review all encoding and information in e-OSCAR and there should be a comprehensive means to submit corrections and evidence to a dispute.
quino1974
November 7, 2013 - 8:12pm
To start e-oscar should take internet complaints the same a shad written letters. They do not do that. They take internet disputes differently then they do hand written letter. That is in regards to disputed debts and it is important that the credit bureaus be consistent about the dispute process and the statues of limitations based on state laws. They should also have limits on how many collection agencies they sell the account of too including their shady practice of selling accounts of to collection agencies in different states. Their should be a cap on debts owed and the power that the agencies have on consumers. I think ultimatel it is about the collection agencies not abusing the consumer and helping consumers find ways to keep their accounts out default. A good start to offer consumers to get their accounts out of default would be based on charging consumers a small percentage of % coupled with a promissory note with a date to begin making payments to the debt collector. They abuse the consumers and they should stop it. Overall, the communication process between consumers and debt collectors is flawed with mis communications and a lack of options to pay back what they owe.
quino1974
November 7, 2013 - 8:02pm
Thanks for the endorsement.
quino1974
November 7, 2013 - 8:04pm
Thanks for the endorsement.
DLin
November 18, 2013 - 3:33pm
E-Oscar was created by the credit reporting agencies due to a requirement that is outlined in the Fair Credit Reporting Act. This process is fully electronic save for the consumer's ability to upload paper correspondence or documents for the debt collector/creditor to review. Additionally, the CFPB has published clarification as to the requirements surrounding a "reasonable investigation" when a dispute is issued, requiring debt collectors/creditors to go one step further. The underlying issue is this system is abused by many individuals who mass submit disputes repeatedly that have no validity. Agencies and creditors are forced to sift through all of those frivolous disputes in order to actually address legitimate disputes.
jfearon
November 6, 2013 - 6:04pm
I have disputed debts with the credit bureaus but they do not even try to resolve the issues. You get a standard response from them. It is in their interest not to resolve issues. Furthermore, you cannot get them on the phone and if you mail your disputes to them you never get a response. They are part of the rip-off system to prey on consumers.
Debt Neutrality Petition
November 7, 2013 - 5:21pm
jfearon, I think you have to do it online. I was able to clean up a family member's credit report online.
CG
November 8, 2013 - 2:11am
Many recommendations are dispute credit report in writing since online is more rushed by the people hired to handle this. No requirement to do it online.
Debt Neutrality Petition
November 8, 2013 - 10:48am
I guess I don't exactly understand the response. I suppose getting the credit report on paper is useful, but online one can actually fix multiple errors and then be notified once the changes have been made.
CG
November 8, 2013 - 2:07am
Possibly research FCRA violations if nothing is getting resolved correctly.
jfearon
November 6, 2013 - 6:08pm
There should be only one credit bureau. They all contradict each other and it is a nightmare to get anything resolved. They should be highly regulated. This is an industry making money off making peoples lives miserable and ensuring no-one can get mortgages or loans. They are crippling the economy. They are in the pockets of the banks and big corporations.
Debt Neutrality Petition
November 7, 2013 - 5:24pm
I am concerned that there is some type of rewards system in place that somehow monetizes those who report when a consumer has a potential bad credit scenario. Are there incentives out there to ding consumer's credit? As a conspiracy theory it makes sense since it drives up the cost of a loan.
SJDuPlessis
November 6, 2013 - 9:57pm
Bank of America, my mortgage holder, does NOT even allow a formal dispute to move forward. The past 12 months have been a continues headache with Bank of America. For example, our mortgage account have always been current, and never were we in Foreclosure status, nor even approaching default. However, every single month Bank of America reported to the three major credit bureaus that we were late. I've worked with their Military Liaison Officer on the resolution through phone calls, email messages, and formal letters but without success. Urgent Help/Assistance is needed for consumers to navigate and to resolve the problems that Bank of America is creating over simple and elementary issues of basic accounting procedures. Bank of America has the undue power of making reports to the credit bureaus which adversely affects the consumer. The Consumer lacks tools to challenge and fight back on Bank of America's abuse of power.
Sertas
November 7, 2013 - 2:35pm
my in-laws had the same issue with BoA. They paid their mortgate EARLY every month and still were reported as late every month. This is tragic and ruined their credit. When these things happen it takes years for the credit to br repaired even though a collector reported the information falsely, incurracately, and repeatedly. BoA should be penalized HEAVILY for these infractions otherwise they just ignore consumers.
drose977
November 6, 2013 - 10:31pm
2012 FTC report -Identity Theft Tops List for 13th Consecutive Year in Report of National Consumer Complaints
http://www.ftc.gov/opa/2013/02/sentineltop.shtm
Debt Neutrality Petition
November 7, 2013 - 5:26pm
I am concerned that state and federal agencies are contributing to identity theft, big time. In just the past month I had to make an online payment on what I believe was a federal hobbs act violation by the Los Angeles building and Safety department. A day after making the payment or risk losing my home, that same credit card was being used online by thieves. Then a few weeks later another agency asked for bank documents, I supplied them via fax, and they were lost! And on top of that, there really didn't seem to be a big deal made out of the fact that the documents went missing.
Moderator
November 7, 2013 - 7:54pm
Hi Debt Neutrality Petition, if you have experienced trouble with a local agency, we suggest you consider filing a formal complaint with that particular agency. Thank you for joining the discussion on Regulation Room, and we hope you will continue reading and responding to CFPB's questions and proposals.
Debt Neutrality Petition
November 8, 2013 - 10:53am
The first entity I will probably take to small claims court and possibly file a complaint with Kamala Harris. The second incident I started sending faxes messages in big bold letters to the same fax where my prior faxes had been lost, asking other workers to look to see if they had taken the papers by accident. I also faxed overnight warning those who might have access to that room that taking fax documents could lead to their arrest. I did this for several days in a row. It was the only way I could think of to apply a much needed enema to those who have established a routine and can't shake free from it. Of course this assumes that they care.
Debt Neutrality Petition
November 7, 2013 - 5:31pm
When I disputed the two years of 30% interest rate charges that Citibank tacked onto a defaulted credit card account of mine, (raising the default debt by OVER 5,000 DOLLARS) the debt collector refused to contact Citibank and said they had no way to lower the amount owed back to what it was at the time of the default. If this is the law, it needs to be changed. I should have been allowed to plead Involuntary Default (I had a perfect credit card payment record for 15 years and only had to default because I became a CareGiver for both of my parents) and simply be allowed to pay down the debt with no more interest rate charges penalties and fees. If you agree, please sign the debt neutrality petitionDebt Neutrality Petition
puterbug
November 7, 2013 - 7:07pm
I have a debt in dispute with the CFPB, and it has not yet been resolved, but during the government shutdown the Original Creditor turned it over to a collection agency. The collection agency has not contacted me in writing at all, but they did a hard pull on my credit report. I legitimately closed the account when it was paid in full, but they continued billing me after I had cancelled the service. Now the matter is simply snowballing. I am very upset about this. If a consumer is in the midst of a dispute with the CFPB, I would think there would be a "time out" on collection actions and especially malicious hard pull of the credit report while the dispute is ongoing.
osamet
November 13, 2013 - 9:54pm
Debtors often respond with "I don't owe anything", which is vague and makes it harder to cater for their needs. If any rule making is needed, it is about the types of disputes a debtor may bring forth and the documentation needed for both the substantiation of that dispute (leaving the option for a dispute to be deemed frivolous) and what constitutes satisfaction of the dispute or proper proof. Otherwise, this is left for negotiation between individual collectors and debtors.
javalaw03
November 18, 2013 - 12:38pm
I think that the CFPB should come up with a regulation that prohibits a creditor, and a debt collector, from sending the debt for collection to another debt collection company AFTER a consumer disputes the debt, or sends a "cease and desist" letter to the debt collection agency. In my cases that I worked on, a "cease and desist" letter was sent to both the debt collector and original creditor requesting that they cease collecting the debt as per the FDCPA. However, all they do is close out one debt collection company and send the account to another one. Then the consumer has to repeat the process. The CFPB should come up with a regulation that states once the debt is disputed or a "cease and desist" letter is sent to the debt collector, THAT debt collector must advise the original creditor that a C&D letter was sent.
DLin
November 18, 2013 - 3:44pm
Keep in mind, a cease and desist letter does not stop a debt collector from attempting to collect a debt, it only stops the debt collector from communicating with the consumer via whatever method the consumer requests the contact to stop. This does not mean a consumer no longer owes a debt. I do agree with the fact that a debt collector must notify the creditor of disputes. As a matter of fact, legitimate debt collectors do this on a regular basis. As a debt collector typically does not own the debt, they're unable to control what a creditor does with that information, all they are currently able to do is implement internal controls that protect the consumer and the agency. In my opinion, a legitimate dispute should be defined as currently, a consumer solely mentioning the word dispute requires action on an account. I believe some sort of requirement should be imposed as to WHY an account is being disputed and some sort of evidence be provided to support the claim.
Moderator
November 22, 2013 - 12:26pm
Hi javalaw03. Welcome to RegulationRoom, and thank you for joining the conversation. You may want to look at CFPB's sample letters for responding to debt collectors, as well as CFPB's website for submitting complaints about individual collectors. In addition, CFPB wants to know if consumers need information about their rights, like how to dispute a debt, in the validation notice. What information would be helpful to you? You can read more about what CFPB is suggesting under our validation notice topic post. CFPB is also asking how information should be transferred from one collector to another. You can read about the agency's questions and share the issues you've raised under the topic post Making sure debt collectors & buyers have info about the debt.
Tfleeman
December 2, 2013 - 3:31pm
As for medical collections, I very, very rarely see a legitimate dispute. Most often people are just trying to get the item removed from their credit or scare the collector with threats of FDCPA action. Many of the disputes we receive are copied directly from the internet and contain all kinds of demands for proof that are not required by any state or federal law OR even the rules of evidence during trial. CFPB really needs to address this issue and set a clear standard for what is (or is not) a legitimate dispute and how the collector should respond.
stopwithspoofedcallerID
December 2, 2013 - 3:57pm
I have a hard time believing that a debt collection company "treat[s] EVERY dispute the same" (see link: http://regulationroom.org/rules/consumer-debt-collection-practices/discu...) when debt collectors seem to blatantly disregard a dispute that has the appearance of being "copied directly from the internet." Consumer advocates are trying to educate consumers, debtors, and alleged debtors with information on how to handle debt collectors or how to handle their particular situation. We are try to give them relevant links to FDCPA, FCRA, HIPPA, and various form letters that can help them communicate with debt collectors. There is nothing wrong with form letters. But there is everything wrong with debt collectors disregaring certain letters just because they don't like that it came from a consumer advocate source. Debt collectors operating legally and with nothing to hide should never treat form letters as something to throw in the trash. You seem to be saying that debt collectors will only want to communicate with consumers who are misinformed and don't know what their rights are, rather than communicate with a consumer who knows the laws and the appropriate ways to address a letter of dispute.
Tfleeman
December 2, 2013 - 4:17pm
The problem is not with a form letter of dispute. The problem is that these websites and unreasonable letters lead unsophisticated debtors to believe that a creditor has to provide extraordinary proof that simply is not required.
'stopwithspoofedcallerID' (if that IS your real name) is correct that no legitimate dispute should be ignored, regardless of the form, but nor should debtors be allowed to abuse the system by repeatedly asking for proofs that are not required.
Waywiser
December 8, 2013 - 2:14pm
When creditor or servicing company doesn't "credit" a payment after receiving it and then getter further proof but still puts the victim in arrears or foreclosure, there should be fines regardless of whether it is a "mistake" or "criminal act."
A grace period can be allowed but after that slap on the fines. and keep them coming every week they don't correct their problem. Basically by not crediting payment they are stealing that payment.
This should apply to any "mistakes" or unethical practices such as deliberately or "mistakenly" changing around escrow, interest, principal, late fees, insurance and so forth to the profit of the collector.
Heavy fines will take away the profit motive and such "mistakes" and unethical practices will greatly decrease.
hdhoward4500
December 11, 2013 - 1:03pm
Disputing an alleged debt if often very difficult because of the lack of information that is provided. This ties into the discussion about what should be required in the initial notice. Sending me a bill from XYZ Labs for a blood test that was done when I gave birth to my child? How am I supposed to know what doctor or facility conducted testing...or even better...you are hospitalized and meet numerous physicians during your stay...next thing you get a bill from XYZ Medical Associates. When you do dispute a bill, the collection agency send you the same infomation over again. Creiditors should be required to list the service date(s) and any and all information that could help the consumer know who they owe a debt to. Agencies should not be able to put something on your credit report without first having attempted to collect the debt.
Moderator
December 12, 2013 - 10:36pm
Hello hdhoward4500, welcome to RegulationRoom and thank you for your comments. Since you mention that disputes can be tied to the information consumers get in an initial notice, you may be interested in reading more about CFPB's proposals on the topic page The "validation notice" sent to consumers. What kinds of information from that list would have been most helpful to you? For medical debts, can you share more details about the specific documents or kinds of information that would have been most helpful to you?
JohnEllis
January 21, 2014 - 12:33am
Collection Calls and Dunning notices (via letter or email) should include a unique Collection ID. This would be listed in credit reports for the purposes of tracking and consumers would be able to enter into a online database provided by the CRPB with the type of violation or issue.
This would also make it easier for the CRPB to look up disputes and determine if there's an actual issue.