EDITOR’S NOTE: This article is part of a series that is sponsored by WebRecon. WebRecon identifies serial plaintiffs lurking in your database BEFORE you contact them and expose yourself to a likely lawsuit. Protect your company from as many as one in three new consumer lawsuits by scrubbing your consumers through WebRecon first. Want to learn more? Call (855) WEB-RECON or email admin@webrecon.net today! Thanks to WebRecon for sponsoring this series.
DISCLAIMER: This article is based on a complaint. The defendant has not responded to the complaint to present its side of the case. The claims mentioned are accusations and should be considered as such until and unless proven otherwise.
A credit card issuer is facing claims it violated the Rosenthal Fair Debt Collection Practices Act and it and the three major credit reporting agencies are facing claims they violated the Fair Credit Reporting Act after continuing to report a balance due on the plaintiff’s account after the plaintiff received a 1099-C notice that the debt had been canceled and discharged.
The background: The plaintiff noticed that a credit card debt was being reported to the three major credit reporting agencies with a late balance and derogatory status of charged off. The credit card lender had issued the plaintiff a 1099-C notification, stating it had discharged the debt.
- The 1099-C noticed used an Identifiable Event Code “G” which is used to identify the cancellation of a debt as a result of a decision or a defined policy of the creditor to discontinue collection activity and cancel the debt, according to the complaint.
- Before issuing the 1099-C, the lender attempted to collect on the debt through letters and phone calls, but that activity stopped after the 1099-C was issued, according to the complaint. The plaintiff also stopped receiving statements about the account.
- The lender, however, continued to report a balance due on the account to the three credit reporting agencies.
- The plaintiff began disputing the debt last July, and the information on the plaintiff’s credit report was not updated or changed. None of the defendants attempted to contact the plaintiff to obtain more information about the dispute.
- Subsequently, the plaintiff was denied credit due to the erroneous information associated with the account.
The claims: The complaint accuses each of the three major credit reporting agencies of violating Section 1682e(b) of the FCRA by failing to establish or follow reasonable procedures to assure maximum possible accuracy in the preparation of the plaintiff’s credit report.
- The agencies are also accused of violating Section 1681i of the FCRA by failing to delete inaccurate information in the plaintiff’s credit files after receiving notice of the inaccuracies, by failing to conduct lawful reinvestigations, and by failing to maintain reasonable procedures with which to filter and verify disputed information.
- The credit card lender is accused of violating Section 1692s-2(b) of the FCRA by failing to investigate the plaintiff’s dispute. The lender is also accused of violating the RFDCPA by failing to comply with Sections 1692e(2)(A) and 1692e(8) of the Fair Debt Collection Practices Act.
