CreditFactors

Category: Proposed Legislative Changes

  • FCRA Section 623(a) violations do NOT result in legal claims for consumers

    A CreditFactors subscriber had been disputing with HSBC directly after reading about the “623 method” on the web. It took a while to get the point across that many provisions of the FCRA are totally useless.

    Unfortunately, there is lots of misinformation on the web about NEW RIGHTS under the 2003 FCRA amendment (FACT Act) and many credit sites recommend disputing with creditors directly.

    Many credit repair companies also send frivolous disputes directly to CREDITORS. Of course the credit repair mills don’t send disputes with the intent to sue because the disputes are frivolous and they try to delay corrections so that their clients continue to pay longer.

    However, if you are a credit professional, you are NOT sending frivolous disputes and you should know the basics about establishing legal claims for your clients.

    From the FCRA:

    § 623. Responsibilities of furnishers of information to consumer reporting agencies [15 U.S.C. § 1681s-2]

    (c) Limitation on liability. Except as provided in section 621(c)(1)(B), sections 616 and 617 do not apply to any violation of–

    (1) subsection (a) of this section, including any regulations issued thereunder;

    Section 623 (a) contains the touted new requirements for data furnishers, section 621 is “Administrative enforcement” and sections 616 and 617 are the sections giving consumers the right to sue.

    Data furnishers have absolutely NO liability to consumers for failing to comply with section 623(a) requirements.

    And that explains why creditors couldn’t possibly care less about compliance.

    ONLY regulators can enforce section 623 (a) compliance.

    Have the client mail disputes to a creditor directly if also disputing with the CRAs and the client is going to sue if the reporting is not corrected. In other words, dispute with the creditor directly if it’s important.  Since the CRAs often don’t provide the actual disputes submitted by consumers to the creditors, COMPLETE and FACTUAL disputes with creditors IN ADDITION to the CRA disputes might result in larger punitive damages or settlements. 

    Do NOT send letters to creditors because of “rights” under FCRA 623(a) as consumers have NO legal rights after violations. 

    It especially unprofessional to demand “validation” of debts from creditors and makes the client look bad.

    If it’s NOT the client’s account, have him/her send a notarized fraud affidavit.  Demanding validation indicates that the client is a liar.

    The 2003 FACT Act weakened the FCRA and added countless pages of ludicrous and bizarre requirements to confuse consumers and even lawyers.

    It makes it easy for credit bureaus and creditors to get lawsuits dismissed because consumers don’t have the right to sue for most violations.

    While the regulators COULD enforce consumer legislation, they refuse to do so.  So let’s just get rid of all that harmful fluff and stick to laws that mean something.

  • Consumer statements on credit reports are IGNORED by most creditors

    The FCRA allows consumers to add an up to 100-word statement after the credit bureaus refused to correct / delete accounts as per the consumers disputes. 

    The credit bureaus encourage consumers to submit these statements in their investigation results, but they do NOT disclose that just about no creditor reviews the credit reports because they are using credit scores and the “magic number” determines decline, approval and terms of credit offered.

    FICO scores IGNORE consumer statements.

    Since credit scores do NOT rate these statements and almost all creditors use credit scores, adding a consumer statement to the credit report is a complete waste of time.

    It’s a lot like demonstrating at a political convention.  The protesters have to remain in a “free speech” zone where nobody hears and sees them.  Similarly, these “statements” are your right to free speech on your credit report, cleverly designed to be ignored.  You’re wasting your time and resources.

    Additionally, there can be negative side effects.

    The late payments you’re apologizing for might drop off and the statement remains.  It could be embarrassing and/or could cost you an apartment or job. 

    Now if we could only get Congress to get a clue and realize that credit scores don’t rate statements and REMOVE this fake and completely useless consumer “right”.