In 1975, the Fair Credit Billing Act was passed through Congress. The purpose of the legislation was to create guidelines for resolution of disputes that resulted from consumers disagreeing with information that was reflected on their credit card statement. On the reverse side of a credit card statement, an address is provided to which the consumer can write and dispute information on their statement that they feel is incorrect. The cardholder must submit a letter within 60 days of receiving the billing statement that they believe to be incorrect. The following information must be included in the letter:

• The name of the cardholder.
• The cardholder's address.
• The cardholder's account number.
• A summary of the reason for the dispute with information specific to the date and the amount of the transaction being disputed.

        The credit issuer has 30 days in which to acknowledge receipt of the dispute letter. The consumer does not have to pay the portion of the bill that is in dispute while it is being investigated. During the investigation, the credit issuer may not report derogatory information to credit agencies concerning information that is relative to the disputed item. After investigating the dispute, if the credit card issuer determines that the information, as originally reflected on the statement is correct, they must send a letter to the cardholder explaining that they found no error in the information as it was recorded on the statement. If requested by the cardholder, the creditor must provide copies of information that they used to support that the information as originally reported was correct. The credit issuer must advise the cardholder of the amount due on their account and the due date by which they need to remit payment. If the cardholder does not pay by the due date, information may be reported to the credit bureau.

        If the credit card issuer determines that information, as found on the original statement, was reported in error, they must correct the error by crediting the account. In addition, they must provide a letter that confirms their error and summarizes the corrections that will be made to repair it.

        Unfortunately, credit problems are not only limited to our immediate ability to manage our finances and make payments on time. If you were past due on credit obligations and brought your account(s) back to a current status, the damage that was done while you were behind may follow you for a while. Being current on credit obligations bodes well for you in that it demonstrates your ability to afford to meet immediate obligations, but the creditors are also interested in your "past track record" because they fear that there may be a correlation between past history and future expectancy. To remove derogatory information from your credit, your credit often has to stand the test of time. You can improve your credit by bringing your accounts current and remaining current on your obligations. Staying current on your obligations demonstrates that your finances are more stable and that you can effectively manage your finances and your debt. To understand the rules that govern how long information can stay on your credit report you need to understand the Fair Credit Reporting Act.

        The Fair Credit Reporting Act created rules that govern reporting of information as it appears on credit reports. Initially, the parameters of reporting guidelines in the Fair Debt Collection Practices Act were vague. Most information could remain on a consumer's credit report for approximately 7 years (Bankruptcy could be reported for up to 10 years) but the limits of when the seven-year period began and ended were not clearly defined. In 1996 the Consumer Credit Reporting Reform Act was created to clarify the credit reporting guidelines that are set forth in the Fair Credit Reporting Act.

In accordance with the Fair Credit Reporting Act, the following information that was reported to a credit bureau on or after January 1, 1998 is not permitted to appear on a consumer's credit report. Information that was reported to a credit bureau earlier than January 1, 1998 may not be subject to the same requirements.

Bankruptcies that date back more than 10 years from the date of entry of the order of relief from or the date of adjudication.

Any other derogatory information other than records of conviction for crimes that date back more than 7 years from the date of the report.

The above referenced guidelines are not applicable for any consumer report to be used in connection with any of the following:

A credit transaction involving or expected to involve a principal amount of $150,000 or more.

Pre-screening for employment of any individual at a salary of $75,000 or more.

Other consumer reporting guidelines:

        For the protection of the consumer, consumer reports are required to meet other guidelines. If the source that provides information regarding a bankruptcy indicates what chapter was filed, the reporting agency must include the chapter on the credit report. Additionally, if a bankruptcy is withdrawn before "final judgment" and the agency has received information confirming that it was withdrawn, the agency must indicate it on the consumer report.

Accounts that are voluntarily closed by the consumer

        When including information that is relative to a consumers account on a report, if an agency receives verification that the consumer voluntarily closed the account, they are responsible for indicating on the report, that the consumer voluntarily closed the account.

Disputes

        An agency is responsible for noting that there is a dispute over information that is reported on a consumer report if the consumer directly notifies the agency. It is the agency's responsibility to investigate and record the status of the disputed information or delete the information from the consumer report. There is a 30-day time frame that begins on the day the agency receives the formal notice of dispute from the consumer, during which the investigation must be completed. If, during the course of the investigation, the agency receives additional "relevant" information pertaining to the dispute, they are responsible for extending the investigation period for an additional 15 days. The agency does not have to provide a 15 day extension if, during the initial 30 day period, it determines that the information that a consumer has supplied to support their dispute is "inaccurate," "incomplete," or unverifiable.

        If, after investigating the dispute, the agency determines that the furnisher of the disputed information (creditor) provided "inaccurate or incomplete," information, the agency must correct the information as it is reported on the file, or delete the incorrect information. If information is deleted as a result of a dispute investigation and it is in excess of three days since receiving notice of dispute from a client, the agency must mail written notice to the consumer of the results of the investigation within 5 business days. The written notice has to include a statement that the investigation is complete and a copy of the consumer report that reflects any changes that resulted from the dispute investigation. It must also include a notice advising that the consumer has the right to add a statement to their file that disputes the "accuracy and completeness of the information"(see consumer statement.) The agency must provide a confirmation of the consumer's right to have the agency provide notification to any person who previously had received a copy of the incorrect report within 5 business days. Specifically, the agency must submit a copy of the corrected report to any person who received the report within two years prior for employment purposes, and to any person who received the incorrect report "for any other purpose" within six months prior to the correction. If the consumer requests, the bureau is responsible for including a description of the procedure that was used to determine the accuracy and completeness of the information within 15 days after receiving the request. If an agency deletes information as the result of the dispute within three business days or less from the day that the agency received a notice of dispute from a client, they may notify the consumer by telephone of the deletion.

        The agency is responsible for reviewing all the "relevant information" that a consumer provides but they can end the investigation if the consumer does not provide enough information to support their investigation. The agency may also terminate the investigation if they "reasonably determine" that the dispute is "frivolous" or "irrelevant" and they must notify the consumer within 5 days. The notification must include the reason for terminating the investigation and it must identify information that is required to investigate the dispute. When an agency provides notification of the results of an investigation to a consumer, they must include a notice that the consumer has the right to request that the agency submit notification to other agencies through an automated system that enables them to share information with other bureaus.

Reinserting previously deleted material

        Information that has previously been deleted from a report file may only be re-added if the creditor who is reporting the information "certifies" that the information to be re-added is "complete and accurate." Within 5 days of the reinsertion of information, the agency must notify the consumer in writing. The agency is responsible for providing information identifying the party that provided the information that lead to the reinsertion of information on a report. The agency must also provide the address and contact information for the party who provided the information, and they must provide notification to the consumer that the consumer has the right "to add a statement disputing the accuracy and completeness of the disputed information." Consumer reporting agencies are responsible for taking "reasonable procedures to prevent the reappearance of information" that has previously been deleted. Agencies that maintain files on a nationwide basis must have an automated system that allows parties who provided the information to the agency (creditor) to be able to report "incomplete or inaccurate information," as determined by the investigation to other reporting agencies.

Your right to include a consumer statement

        If you disputed information that appears on your credit report and the credit bureau determines that you have not provided enough information to warrant changing the report or deleting the information, you are entitled to prepare a statement to be added to your credit report. The statement must be limited to 100 words. Preparing a statement will give you an opportunity to fully explain the reason why you are disputing the information despite the fact that you were unable to provide enough supporting evidence to have the information changed or removed.

Guidelines governing how creditors report information to the credit bureau(s)

They cannot report information that they know is incorrect.
They cannot ignore information that contradicts information that they have on file.
They must notify the credit bureau if a debtor disputes information with them.
They must indicate when a consumer voluntarily closes an account.
They must investigate a consumer dispute within 30 days of receiving notice.

Knowing the rules will help you play the collection game.

        You are protected by The Fair Debt Collection Practices Act, which is federal law that protects consumers from harassment and abusive collection styles. The Fair Debt Collection Practices Act applies to collection efforts that are employed by persons other than the original creditor "that regularly collect debts owed to others." The FDCPA applies to third party collectors who have purchased accounts or been hired by an "original creditor" to collect on a debt. Original credit institutions are not required to abide by the provisions set forth by the act. Understanding the Fair Debt Collection Practices Act and letting the creditors know that you understand your rights is often one of the most effective ways of dealing with collectors and their unsubstantiated threats.

FDCPA When a debt collector calls:

        When a collector contacts you, at some point in the conversation they must advise you that they are calling from a collection agency. They are required to identify the name of the original creditor and the amount of the balance on the account that is being collected upon. This is important because it allows you to determine whether it is a bill on which you feel your are responsible for paying or on which you have a dispute. If the collector was not required to advise you of the balance and original creditor, you might pay on a bill that you are not legally responsible for or you might pay more than you are legally required to. The collector must advise you that the purpose of the call is for collecting a debt and that the information provided by you will be used for the purpose collecting a debt. The collector is also required to advise that you reserve the right to dispute the debt within 30 days.

FDCPA Restrictions governing debt collectors:

Tactics that are not permitted:

• The debt collector cannot repeatedly call you.
• If you request that collectors do not call you at work, they must stop.
• Collectors can not use foul language or threaten a consumer with violence, seizure of assets, or imprisonment. They cannot use language that is insulting, discriminatory or belittling.
• Without obtaining your permission, collectors are not permitted to tell any person other than yourself, a cosigner, your spouse, or your attorney that you owe a debt.
• The debt collector can not publish your name and the nature of the debt. They may not threaten to harm your reputation as a measure to collect a debt.
• A debt collector cannot call you or in any way contact you before 8:00 a.m. or after 9 p.m. in accordance with your local time zone.
• A collection agency cannot deposit a post-dated check prior to the date on the check.
• A collection agency cannot collect any amount greater than your debt, unless allowed by law.

Rules governing false representation:

• A debt collector cannot misrepresent who he/she is. The collector may not pretend that he/she is someone else or that he/she represents a business or agency that he/she does not. A collector cannot falsely imply that he is an attorney or government representative. They cannot indicate that forms or letters that are sent to you are legal forms if they are not.
• The collector cannot falsely imply that you have committed a crime. They cannot threaten that you will be arrested if you do not pay a debt.
• A debt collector may not offer false information to get you to pay a debt. In other words, a collector may not tell you or write to you advising that he/she is going to sue you, garnish your wages, or attach personal property if he does not actually have the intent to do so.
• A collector can not falsely represent that they work for a credit bureau.

What to do if collection activity becomes unbearable:

        In accordance with the FDCPA, if dealing with third party collectors becomes unbearable you may send Cease and Desist Notification to them, which requires them to stop contacting you. Frustrated consumers do this when there is no end in sight to the constant calls and emotional distress that unrelenting collection attempts may be causing. When a debt collection agency receives Cease and Desist Notification, they cannot communicate further with the consumer with respect to the debt:

"except -

1. to advise the consumer that the debt collector's efforts are being terminated
2. to notify the consumer that the debt collector or creditor may invoke specific remedies which are ordinarily invoked by such debt collector or creditor: or
3. where applicable, to notify the consumer that the debt collector or creditor intends to invoke a specific remedy."

        Cease and Desist notification is applicable to third party collectors only. If you send a Cease and Desist letter to an original creditor, they are not required to refrain from calling you and they may respond negatively and heighten their collection efforts. It is important to remember that sending Cease and Desist Notification does not pardon you from repayment of a debt. The fact that your life will be relatively more peaceful does not mean that your obligations have gone away. If you send Cease and Desist notification to your creditors, you should continue to make consistent monthly payments to establish that you are committed to paying back the balance owed. If possible, try to pay about 2% of the balance on a monthly basis. If you do not establish that you are committed to repaying the debt, and the creditors cannot contact you, they may be prompted to try to collect on the debt by suing you.