Banks, Debt Collection, and Credit Reporting
If you’re being hounded by a debt collector who’s working on behalf of a bank, you may think that you aren’t protected by the Fair Debt Collection Practices Act. Think again.
The Fair Debt Collection Practices Act (FDCPA) makes the distinction between an original creditor and a third-party debt collector. The FDCPA applies only to third-party debt collectors, and not to original creditors. However, financial institutions sometimes try to pull the wool over consumers’ eyes, leading consumers to believe that a third-party debt collector is calling rather than a bank employee. In all likelihood, they do this to separate the bank’s “brand” from the debt collection activity. However, if an original creditor makes it appear as though a third party is collecting a debt when, in fact, employees of the creditor or its subsidiary are doing the debt collecting, then the original creditor becomes a debt collector in the eyes of the law. In other words, you may be protected under the Fair Debt Collection Practices Act even if the debt collector is calling from a major bank.
Banks and Fair Credit Reporting
If you’ve fallen behind on your credit card bills, there’s a good chance that the financial institution has reported that to the three major consumer reporting agencies (Experian, Equifax, and TransUnion). It’s important to review your credit report regularly to check for inaccuracies. Mistakes in your credit report can cost you money – literally. You’ll likely pay higher interest fees, and mistakes may negatively impact your ability to rent an apartment, buy a home, or obtain a job or promotion.
If you find that the bank has reported erroneous information, you have rights under the Fair Credit Reporting Act. For example, you have the right to dispute items on your credit report. To do so, you need to notify the consumer reporting agency (also known as a credit bureau) and the bank. Under the FCRA, the credit bureau has to investigate your claim, typically within 30 days. The bank also has to substantiate your claim, and if they find a mistake, have to notify the three major consumer reporting agencies.
Sometimes, creditors won’t correct the disputed information. When that happens, you must ask the credit reporting agency to include your statement of dispute in your credit report.
Every day, consumers are harmed by misinformation on their credit reports. If that has happened to you, you’re entitled to file a lawsuit against the creditor in federal court. If the creditor is found to be at fault, you may be entitled to receive actual damages, or between $100 and $1,000 – whichever is more. In addition, you may be entitled to receive punitive damages and attorney fees.
The 411 on Banks
Click on the name of the bank that’s been nipping at your heels to learn more about their history, operations, and their approach to debt.
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