Inaccurate Credit Reporting by Debt Collectors on the Rise

As a Sacramento Bankruptcy Attorney I take notice of business practices by debt collection companies that may have an impact on my clients. Today, The Washington Post reported a story that highlights the problem of some debt collectors who report inaccurate information to a person’s credit report. This practice has been called “debt tagging” and has been reported by more and more consumers as the economic downturn continues to affect millions of Americans and numerous Sacramento metropolitan area residents alike. Often times “debt tagging” is a result of sloppy research by the debt collector or mistaken identity from people with similar or the same names. Consumers need to take specific measures to protect themselves against inaccuracies on their credit reports these days.

In 2009, the FTC – responsible for enforcing the Fair Debt Collection Practices Act (FDCPA) – received almost 120,000 complaints from consumers about unfair or unethical debt collection practices by in-house or third-party debt collectors. That number exceeded the complaints received in 2008 by approximately 15,000 complaints.

Debt collection companies defend these practices by pointing out the difficulty in tracking a debt back to the original debtor. Often times a creditor will sell their debt onto other companies. Debt collection companies buy the debt for pennies on the dollar with the prospect that they can collect a hefty portion of the debt owed thus making a profit. Unfortunately, the debt collection agencies who buy the debts do not always receive the correct information and this creates the problem especially since the debt may have changed hands many times.

When a consumer finds an inaccuracy in his or her credit file they can dispute them. Credit reporting agencies like Equifax, Experian, and Trans Union have developed specific practices and procedures for dealing with individuals who report inaccuracies on their credit report. When a consumer disputes items found on the credit report it takes the agency approximately 30 days, sometimes less, to correct the mistake. “The original creditor has the burden of proving the debt exists” according to Susan Henson, a spokeswoman for Experian.

In today’s economic environment an individual’s credit score has become an increasingly valuable commodity. Therefore, it remains extremely important for a consumer to document all contacts with the debt collector, especially the instances where the consumer informs the debt collector that they have made a mistake. If the debt collector still refuses to correct the mistake the consumer needs to contact an attorney.

The Law Offices of Matthew D. Roy assists people who find themselves in this predicament. Our offices serve a clientele who have been victims of harassment, deception, and high pressure tactics performed by debt collectors that are illegal. If you believe you have been a victim of “debt tagging” and the debt collector refuses to correct the inaccuracy you should contact a local attorney who can file a lawsuit against the offending party to stop this inappropriate behavior.