Debt Validations Letters
The Fair Debt Collection Practices Act (FDCPA) gives consumers the right to request that a debt be validated which can be requested with a debt validation letter. Debt validation is different from the verification process that can be done through the credit reporting agencies.
A request to verify a debt simple means the credit reporting agency requests that the creditor verify their records for accurate information. A debt validation requires that the collection agency prove the debt is the consumer’s responsibility and that they have the legal right to collect this debt.
Under the FDCPA, consumers have the right to ask for validity of the debt that the collection agency says is owed. Section 809 of the Fair debt Collection Practices Act gives the consumer the right to ask for debt validation to be sure whether you actually owe the debt to the creditor or not. To request the proof, a debt validation letter needs to be sent to challenge the validity of the alleged debt.
The right to request the debt validation applies to collection agencies not the original creditor. When a collection agency is assigned, or has purchased, the debt, they are not the creditor, they are collection agency and their actions are governed by the FDCPA.
The collection agency needs to present documentation proving the consumer does owe the money. Documentation from the collection agency should include items such as; proof that the collection agency has been assigned the debt from the original creditor or that the collection agency actually owns the debt and account statements from the original creditor that verify the credit agreement between the consumer and the original creditor as well as a payment history if the amount owed is in dispute. Generally, a simple list of the services or products sold that resulted in the debt is insufficient evidence to validate a debt.
The collection agency has to stop the process of debt collection until they are able to validate the debt within the first 30 days of notifying someone of the debt. If the debt collector does not verify the debt within 30 days, it is not allowed to continue collecting the debt. If the creditor or collection agency is not able to provide debt validation, they have to remove the item from the credit report.
Of course, the key for the consumer is that so many collection accounts and records are sloppy and inaccurate and therefore they cannot be properly verified. The validation process can definitely help remove collection accounts that are inaccurate and also remove collection accounts that may be valid but cannot be properly supported or validated by the collection agency.
To get the ball rolling, the consumer needs to send a request letter or debt validation letter to the collection agency asking them to validate the debt. The request for debt validation must be submitted in writing. If the debt is properly validated, send the credit reporting agencies a copy of the debt validation letter along with the return receipts to get the account removed from the credit report and ultimately improve the credit score.
Debt Collection News - Debt Collection Supervisors Settle FTC Charges
The Federal Trade Commission administer a wide variety of consumer protection laws, engages in law enforcement, and develops policy and research tools to prohibit unfair and deceptive acts or practices against consumers including actions that involve credit reporting agencies, credit repair services and debt collection activities.
The FTC produces press releases on action taken against businesses and individuals that fall under the jurisdiction of the FTC.
This is a recent press release on action taken by the FTC regarding unfair and deceptive practices regarding debt collections.
Concluding a case that drew the largest civil penalty ever imposed on a debt collection business, the Federal Trade Commission settled with the two remaining individual defendants who allegedly misled, threatened, and harassed consumers; disclosed their debts to third parties; and deposited postdated checks early, in violation of federal law. The settlement order requires each of these senior managers to pay a civil penalty and bars them from future violations.
“The FTC wants to remind debt collectors of their responsibilities and obligations under the law. Abusive collection actions are illegal, and if debt collectors use abusive tactics they could face legal action,” said David Vladeck, Director of the FTC’s Bureau of Consumer Protection. “At the same time, we want consumers to understand their rights if their debts go into collection. Money matters, and the more people know about managing their debt and dealing with debt collectors, the better off they will be.”
According to the FTC’s complaint, filed by the Department of Justice on the FTC’s behalf, the defendants participated in, or controlled, the actions of debt collectors whose unlawful practices included false or deceptive threats of garnishment, arrest, and legal action; improper calls to consumers; frequent, harassing, threatening, and abusive calls; and unfair and unauthorized withdrawals from consumers’ bank accounts. The complaint also alleged that the defendants failed to adequately investigate consumer complaints or discipline collectors, and collectors who were terminated for violating the Fair Debt Collection Practices Act (FDCPA) often were rehired within a few months.
In 2008, Academy Collection Service, Inc. and its owner, Keith Dickstein, paid $2.25 million to settle FTC charges that Academy collectors violated the FTC Act and the FDCPA while collecting debts, and that Dickstein failed to stop the violations. The settlement order announced today, negotiated by DOJ and the FTC, imposed civil penalties of $375,000 and $300,000, respectively, on Albert S. Bastian and Edward Hurt, who oversaw Academy’s Las Vegas collection center. The judgments were suspended upon payment of $7,500 each, based on their ability to pay. The full judgments will become due immediately if the defendants are found to have misrepresented their financial condition.
The order bars Bastian and Hurt from making false, deceptive, or misleading representations in debt collection efforts, such as that nonpayment will result in garnishment of wages, seizure of property, or lawsuits, or that they or their agents are attorneys. They also are prohibited from withdrawing money from consumers’ bank accounts without their express informed consent, and from depositing or threatening to deposit postdated checks before the date on the check. In addition, the pair are barred from improperly communicating with third parties about a debt; communicating with a consumer at any unusual time or place; and harassing, oppressing, or abusing any person in connection with debt collection.
The Commission vote to authorize DOJ to file the consent decree was 4-0. The consent decree was entered in the U.S. District Court for the District of Nevada. This consent decree is for settlement purposes only and does not constitute an admission by these defendants of a law violation. A consent decree is subject to court approval and has the force of law when signed by a judge.