Friday, August 6, 2010

Why Credit Bureau Collection Disputes Rarely Work

Credit bureau collection disputes may seem like a good idea, but more often than not, they simply don't work. The first thing just about everyone says regarding collection accounts mucking up an otherwise decent credit history is "Dispute them with the credit bureaus! If the collection agency can't prove it the credit bureaus have to remove it!"

Uh-huh. And I'm Elvis, back from the dead. 

Don't get me wrong, that's supposed to be exactly the way the system works. The only flaw here is that the system doesn't work anymore

Disputing Credit Report Information

The Fair Credit Reporting Act explicitly states that you not only have the right to contest the validity of any information on your credit report, once you file a dispute the credit bureau you file the complaint with is bound by law to investigate whether or not the error is, in fact, an error. This is performed in much the same manner regardless of whether the dispute is over a tax lien or a collection account. Collection accounts take special precedence here and I'll explain why in just a minute. For now, lets examine how credit disputes work.

Investigation Method A: The Telephone Call

Collection Representative: Hello, this is John at ABC Collections, may I please have your account number?

Credit Bureau: Hi John, this is Mary from Experian/Equifax/TransUnion. I need to speak with a supervisor concerning a consumer credit dispute.

Collection Supervisor: Hi Mary, what can I do for you today?

Credit Bureau: I have a customer dispute here of a credit account from your company. I'm calling to verify that the credit information you reported is, in fact, correct. 

Collection Supervisor: Ok, sure, what's the name? I'll look it up. 

Credit Bureau: Joe Blow Schmo

Collection Supervisor: Oh yes, Joe Blow. Yes, yes, that debt is valid and I can assure you we are reporting it correctly. 

Credit Bureau Thank you.

Now, do you really believe that the collection supervisor took the time to look up Mr. Schmo's account to verify his information? Probably not. Even so, there is absolutely no guarantee whatsoever that the Mr. Schmo being doggedly pursued by the collection agency is the correct Mr. Schmo. Hence, the credit dispute.

Some credit bureau representatives are thorough (stifle your laughter) enough to ask for a date of birth or some other piece of identifying information to verify that the collection agency is telling the truth. The problem here is that the credit bureau is merely verifying the fact that the collection agency owns the account and is reporting the account – not investigating whether or not the individual in question actually owes the debt being reported. 

A simple phone call constitutes a credit bureau "investigation."

Ok, now that we've seen how investigation method A works, lets take a look at Investigation Method B.

Investigation Method B


Collection Representative: Sir, there's a fax coming in from the credit bureau

Collection Supervisor: Hmmm...Hand me a pen. I need to sign this to verify that the information the credit bureau wants us to check is correct.

Collection Representative: But sir, you haven't checked the information!

Collection Supervisor: Of course not. It's just deadbeat debtors trying to clear up their credit reports. I'm not letting them get rid of us that easy. (signs the paper) Ok, now fax that back to the credit bureau. 

Collection Representative: Yes, sir. 

In this scenario, the credit bureau literally handed the collection agency the information it would have needed to validate the debt if it actually intended to do so, which, of course it didn't need to. Why? The credit bureau essentially self-validated the derogatory credit information. 

Now, imagine how treacherous this gets if the validation form contained information about the debtor that the collection agency didn't have, such as his Social Security number?  

Why Credit Bureau Collection Disputes Don't Work

An actual "investigation" on the part of the credit bureau would require both time and manpower. Because the credit bureaus are private, for-profit companies, they aren't the slightest bit interested in devoting resources to doing anything other than the bare minimum, as this cuts into their profit margins. 

It's all about the money for the credit bureaus.
Lucky for the credit bureaus, the FCRA doesn't stipulate just what constitutes an "investigation" following a credit dispute. Are you starting to sense a theme here? No clear definition of "debt validation" in the FDCPA, no clear definition of "investigation" in the FCRA....Hmmm...Do you smell...lobbyists? I do. 

Can you get a collection account off your credit report? YES. Are you going to be successful doing it by the book? Probably not. The worst part of all this is that it comes back to bite those innocent people who genuinely do end up with collection accounts on their credit reports that aren't theirs. They are the true victims in this scenario. 

When Credit Bureau Collection Disputes Work

Every now and then, you'll dispute a collection account on your credit report with the credit bureaus and...lo and will actually vanish because the collection agency failed to validate. In this case, one of the following events occured:

1. The credit bureau representative called the collection agency and couldn't dig her way through the maze of demands for an account number and Social Security number before ever speaking to a live human. Since no direct line was available, she merely deleted the entry to end the hassle. 

2. The faxed "investigation" request made it through on the credit bureau's end, but someone didn't make it through on the collection agency's end. The result is that the agency never responded and the account gets deleted.

3. That collection representative who saw innocent consumers getting the shaft managed to trash a few investigation validation faxes on the sly before quitting. 

And the real kick in the pants? If you dispute the same account more than once for the same reason, the FCRA allows the credit bureau to deem your dispute "frivolous" and verify the collection account automatically rather than conduct a follow-up investigation. Now do you understand a little more clearly why your credit bureau collection dispute didn't work? 


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  2. This blog post is completely false.

    I've been disputing negatives on my report for the past three months and have seen 6 (5 of them Collections) items deleted... TransUnion is the easiest, next is Equifax and then Experian is the hardest to have anything removed but I've removed 2 from Experian.

    Whoever wrote this has no idea what they are talking about... Credit Bureaus and Collection Agencies do not correspond by fax... WHAT IS THIS THE 90s? It's 2013!! No major corporation corresponds by fax machine anymore... it just shows how little the author knows about the industry and challenge process. There is some truth to the emptiness of the FCRA and FCDPA, but your blog post is false for the most part.

    1. Wow, silly me. Here I was thinking that I've been working in this industry for over a decade.

      And as crazy as it may sound, lots of industries communicate by fax like...oh...let's see...Medicare is one major one. I'm not saying that there aren't those that don't, but when you're sending general data to a company you don't email it to an individual.

      But hey, you got some collections deleted, you're the expert here.

    2. I wrote a 1 paragraph letter to all 3 CRA's a month ago.. 7 deletions from Transunion 5 from Equifax and 3 from Experian. I'm not saying you're wrong but I read this before I mailed the letter and almost did't bother. My advice to people is to try and keep trying...ignoring and waiting is not the right answer.

    3. I agree with you that people shouldn't ignore collection accounts. I merely want to make people aware of the risk involved with using a credit bureau dispute as your first stop. If the credit bureaus mark your dispute frivolous, its generally the end of the road. Sometimes it does work, but people need to be aware of the potential risks before they dispute.

  3. Don't the collection agency have to show the bureau proof that the debt is indeed the person who is doing the dispute?

    1. Unfortunately, no. All the collection agency has to do is respond, "Yes, our information is correct." They don't actually have to provide "proof" of any kind.

  4. Who do you write to the Bureau or the collection agency to dispute something off of your report? Please explain? Thank you in advance!

    1. Please copy and paste the FTC link below in your browser. All the info you need to contact the credit bureaus and dispute errors is there.

  5. "Can you get a collection account off your credit report? YES. Are you going to be successful doing it by the book? Probably not."

    So... what is the not so by the book method? I have read a couple forums online mentioning disputing not the debt but a piece of information on the debt like the original date it was opened or closed. Or the Balance.

    With your experience could you provide us with a little insight on what the best method is to getting these off of your credit report? Even if it is not the 'by the book' method.


    1. That's a matter of opinion. Personally, I think the best way is disputing and then requesting the method of verification after the credit bureaus verify the debt's accuracy. You can then use the method of verification to strong-arm the credit bureaus into conducting an actual investigation or simply deleting the entry.

      Lawsuits work pretty well too.

    2. I'm pretty sure that credit agency disputes are handled through e-OSCAR, not fax or by phone.

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