Reply
Regular Contributor
Downto0
Posts: 111
Registered: ‎11-01-2011
0

Are inquiries collection activities?

I have been unable to find case law, FTC opinion, or any reference to establish that inquiries are continued collection activities after sending for dv and the collector not returning dv.  I was able to find case law and FTC opinion for credit reporting being continued collection activities.

 

First, the LeFevre - Cass opinion letter states:

 

II. "Is it permissible under the FDCPA for a debt collector to report, or continue to report, a consumer's charged-off debt to a consumer reporting agency after the debt collector has received, but not responded to, a consumer's written dispute during the 30-day validation period detailed in § 1692g?" As you know, Section 1692g(b) requires the debt collector to cease collection of the debt at issue if a written dispute is received within the 30-day validation period until verification is obtained. Because we believe that reporting a charged-off debt to a consumer reporting agency, particularly at this stage of the collection process, constitutes "collection activity" on the part of the collector, our answer to your question is No. Although the FDCPA is unclear on this point, we believe the reality is that debt collectors use the reporting mechanism as a tool to persuade consumers to pay, just like dunning letters and telephone calls. Of course, if a dispute is received after a debt has been reported to a consumer reporting agency, the debt collector is obligated by Section 1692e(8) to inform the consumer reporting agency of the dispute.

 

 

http://www.ftc.gov/os/statutes/fdcpa/letters/cass.htm

 

Then in Edeh V Midland the court said:

 

An informal opinion letter from a regulatory agency is not entitled to Chevron deference, but it is nevertheless “‘entitled to respect’” to the extent that it has the “‘power to persuade.’” Christensen v. Harris Cnty., 529 U.S. 576, 587 (2000) (quoting Skidmore v. Swift & Co., 323U.S. 134, 140 (1944)). This Court finds the FTC’s reasoning persuasive. The Court has learned, through its work on countless FDCPA cases, that threatening to report and reporting debts to CRAs is one of the most commonly-used arrows in the debt collector’s quiver. Consistent with the views of the FTC — and consistent with the views expressed in Purnell, Quale, and Semper — the Court finds that Midland was engaged in “collection of the debt” in violation of § 1692g(b) when it reported Edeh’s disputed debt to the CRAs before sending verification of that debt to Edeh.

 

 

http://buckleysandler.com/uploads/36/doc/Edeh_v_Midland_Credit_Management_Inc_.pdf

 

I see inquiries the same as credit reporting for the purpose of continued collection activities.  The difference is that credit reporting is sending information to the CRAs and inquiries are sending for information from the CRAs.  It's all part of what collectors do to collect a debt.

 

Does anyone know of any case law or other reference where inquiries have been defined as collection activities?

Moderator Emeritus
webhopper
Posts: 7,225
Registered: ‎09-16-2011
0

Re: Are inquiries collection activities?

According to the Permissible Purpose section of FCRA...

 

(a) In general

Subject to subsection (c) of this section, any consumer reporting agency may furnish a consumer report under the following circumstances and no other:
 
(3) To a person which it has reason to believe—
(A) intends to use the information in connection with a credit transaction involving the consumer on whom the information is to be furnished and involving the extension of credit to, or review or collection of an account of, the consumer; or
 
 
The collection agency can do a hard pull to review the collection of an account.  Based on this definition, the act of pulling the report is not the "collection activity" itself.

Starting Score: 08/29/2011 TU 671 EQ 674
Current Score: TU 754 EQ 694 EX 697
Wallet: NFCU Visa Sig 25k, Amex Lowes 22k, NavCheck 15k, Amex PRG, Amex Zync, Discover It 13.5k, Amazon Visa 5k
Platinum Spade Garden Club Member: App Free since 1/1/13. No more apps til who knows when?
MyFICO Fitness Goal: 800s Club!



Take the myFICO Fitness Challenge
Regular Contributor
Downto0
Posts: 111
Registered: ‎11-01-2011
0

Re: Are inquiries collection activities?

Right, credit reporting or credit pulling is a permissible purpose under the FCRA.  However, continued collection activities when not returning dv is a violation of the FDCPA.  Two different statutes.  In short the collector does not violate the FCRA when they report on their tl but they do violate the FDCPA if they have not yet returned dv.

 

There's plenty of case law and the FTC opinion letter which establish that credit reporting is collection activities but I cannot find anything about inquiries being collection activities.  My idea is that they are because inquires are the reverse of credit reporting and what the collectors do as part of the collection process.  In fact, the collectors generally do pull a cr as their first step in their collection process.  The inquiry is usually a hard pull (which degrades the credit score) and it is usually listed as collections. 

 

The question would be, if inquiries are not collection activities then what are they?

Senior Contributor
john398
Posts: 3,526
Registered: ‎01-19-2009
0

Re: Are inquiries collection activities?

I also do not think its fair a collector can make a hard inquiry post when reviewing a report, let  us know what you find out and how they can be deleted

Mega Contributor
RobertEG
Posts: 18,434
Registered: ‎03-19-2007
0

Re: Are inquiries collection activities?

[ Edited ]

I had the same question in the past, and arrived at the same brick wall.  No case law or FTC advisory opinions.

 

Thus, I believe it remains an unaswered question, at least as to legal precedent, as to whether making inquiry for a consumer credit report violates their requirement under FDCPA 809(b) to "cease collection on the debt."  It is not really a credit reporting issue under the FCRA, but rather a debt collection practices issue confined to the FDCPA

In my personal opinion, it does violate their bar, as its purpose is to evaluate the consumer's credit standing as part of their collection activity. 

 

The closest parallel I could find that had formal discussion of the relevancy of inquiries is the issue of disputes over credit inquiries.  While at first appearing unrelated, during the rulemaking process for the final rules governing direct disputes, the discussion centered around the fact that inquirees are not furnishers of information related to a consumer, but just the opposite.  They are requests to view what others have reported.  As such, the final rules governing the direct dispute process (16 CFR 660.4) exempted disputes relating to credit inquiries from the direct dispute process.

 

Disputes made via a CRA are a bit different, in that FCRA 611(a) permits disputes directed to a CRA that relate to the accuracy of any information in a consumer's credit file, not simply the accuracy of a furnisher's credit reporting.  Thus, disputes relating to credit inquiries are confined to the CRAs.

 

I would suppose that a challenge of an inquiry as a prohibited collection practice could be answered by a debt collector as merely being a benign view through a window, and not an active collection actitity.  If I were sitting in black robes, I wouldn't buy that argument.

 

I also see a parallel argument with respect to debt collector inquiries made after their collection itself has become excluded from the consumer's credit report based on passage of 7 yrs plus 180 days from DOFD.  The CRA is required to exclude any adverse information pertaining to a collection after expiration of the CR exclusion period.

Posting of an inquiry from a debt collector in a consumer's credit report provided to others is tantamount to informing anyone reading the credit report that the debt is under collection by that debt collector, or else they would have no permissible purpose to make the inquiry.  Thus, I would argue that inqiries after CR exclusion of a collection, while permissible, could not be shown in any credit report the CRA provides to others....i.e., it would have to be coded as a soft inquiry.

 

It appears ripe for someone to get the issue before a court.

 

 

Regular Contributor
Downto0
Posts: 111
Registered: ‎11-01-2011
0

Re: Are inquiries collection activities?

[ Edited ]

Glad to see you chime in Robert. 

 

I found a couple of cases dealing with inquiries but they do not define inquiries as either collection activities or not collection activities.

 

In Robinson v TSYS total debt Robinson tried to say that an inquiry was initial contact, that she sent a dispute to TSYS and that TSYS should have removed the inquiry and, because they did not, TSYS was continuing their collection activities.  Kind of a bizarre claim by Robinson.  However, the case does nothing to define inquiries as collection activities:

 

http://scholar.google.com/scholar_case?case=9633012285258900604&q=Robinson+v+TSYS+total+debt&hl=en&a...

 

And in Robinson v Greystone, Greystone came up with a return of validation letter which Robinson could not refute.  It kind of sucks because the debtor must come up with the green card to show that they sent for dv but the collector does not need a green card to show that the debtor received dv.  However, this case also does not define inquiries as collection activities or not collection activities.  There is an interesting part where the court says that the statute of limitations starts when the debtor finds out about the violation.

 

http://scholar.google.com/scholar_case?case=1117541676327900207&q=Robinson+v+Graystone&hl=en&as_sdt=...

 

To me, inquiries could only be collection activities.  I would be willing to go into court with the FTC letter I originally posted and ask the court to consider inquiries the same as credit reporting for the purpose of defining inquiries as collection activities.  As I said, instead of sending information to CRAs, the collector is asking for information from the CRAs.  If reporting is collection activities then so are inquiries.

Moderator
guiness56
Posts: 22,406
Registered: ‎01-17-2008
0

Re: Are inquiries collection activities?


Downto0 wrote:

Glad to see you chime in Robert. 

 

I found a couple of cases dealing with inquiries but they do not define inquiries as either collection activities or not collection activities.

 

In Robinson v TSYS total debt Robinson tried to say that an inquiry was initial contact, that she sent a dispute to TSYS and that TSYS should have removed the inquiry and, because they did not, TSYS was continuing their collection activities.  Kind of a bizarre claim by Robinson.  However, the case does nothing to define inquiries as collection activities:

 

http://scholar.google.com/scholar_case?case=9633012285258900604&q=Robinson+v+TSYS+total+debt&hl=en&a...

 

And in Robinson v Greystone, Greystone came up with a return of validation letter which Robinson could not refute.  It kind of sucks because the debtor must come up with the green card to show that they sent for dv but the collector does not need a green card to show that the debtor received dv.  However, this case also does not define inquiries as collection activities or not collection activities.  There is an interesting part where the court says that the statute of limitations starts when the debtor finds out about the violation.

 

http://scholar.google.com/scholar_case?case=1117541676327900207&q=Robinson+v+Graystone&hl=en&as_sdt=...

 

To me, inquiries could only be collection activities.  I would be willing to go into court with the FTC letter I originally posted and ask the court to consider inquiries the same as credit reporting for the purpose of defining inquiries as collection activities.  As I said, instead of sending information to CRAs, the collector is asking for information from the CRAs.  If reporting is collection activities then so are inquiries.


From what point should the SOL be if not when you find the violation?

Regular Contributor
Downto0
Posts: 111
Registered: ‎11-01-2011
0

Re: Are inquiries collection activities?

[ Edited ]

Right.  Seems simple enough to most of us but collectors try all angles to prevail.  Take a look at the Robinson v Greystone case at what the collector did here:

 

Section 1692k(d) of the FDCPA provides that "[a]n action to enforce any liability created by this subchapter may be brought ... within one year from the date on which the violation occurs." 15 U.S.C. § 1692k(d). Greystone argues that plaintiff's "FDCPA claims are based upon the September 29, 2009 inquiry, and the alleged failure to send an initial § 1692g notice," which Greystone asserts that it mailed to plaintiff on September 29, 2009. (ECF No 15-1 at 7 (citing Frisicaro Aff. ¶ 6).) Since the alleged violations took place more than one year before plaintiff's Complaint was filed,[7] Greystone argues that plaintiff's claims are time-barred under the FDCPA's one year statute of limitations.[8] (Id.)

 

While ordinarily "the statute of limitations begins to run when a communication violating the FDCPA is sent," when the violation involves allegedly unlawful credit agency reporting, the appropriate date for calculating the limitations period is the date on which the consumer should have known of the violation. Akalwadi v. Risk Mgmt. Alternatives, Inc., 336 F. Supp. 2d 492, 501 (D. Md. 2004) (calculating limitations period from date consumer received credit report that inaccurately reflected his indebtedness, not date debt collector reported debt to credit reporting agency). Presumably, plaintiff did not become aware of the alleged violation of § 1692e(8) until he first obtained his credit report listing the Greystone inquiry. Since it is not clear from the pleadings or Greystone's motion when this took place,[9] the court declines to hold that plaintiff's § 1692e(8) claim is time-barred. 

 

Robinson (the Plaintiff) filed his complaint on November 30, 2010 which is more than one year past the inquiry Greystone made on Robinson's cr.  However, Robinson did not get a copy of his cr until later. I could not find the date of the cr but it was obviously within the 1 yr sol of the FDCPA.  I guess that's why the court said "presumably". The Akalwadi case in blue above does have the dates listed of the complaint and the pulling of the cr.

 

Anyway, the point is that collectors will try defenses which should be known by them that cannot prevail but they try them nonetheless.  Here, then, are two cases which would help anyone to establish that violations based on an inquiry start ticking at the time the claimant pulls their cr and then finds the existence of the inquiry, not when the inquiry was made.

Regular Contributor
Downto0
Posts: 111
Registered: ‎11-01-2011
0

Re: Are inquiries collection activities?

[ Edited ]

For some reason the link above for the Akalwadi case does not work.  Here's the same case from a Google Scholar search:

 

http://scholar.google.com/scholar_case?case=7626681900290320837&q=Akalwadi+v+Risk+Mgmt+alternatives&...


myFICO is the consumer division of FICO. Since its introduction 20 years ago, the FICO® Score has become a global standard for measuring credit risk in the banking, mortgage, credit card, auto and retail industries. 90 of the top 100 largest U.S. financial institutions use the FICO Score to make consumer credit decisions.

>> About myFICO
FICO Score - The Score that matters
Click to Verify - This site chose VeriSign SSL for secure e-commerce and confidential communications.
Fair Isaac Corporation is a BBB Accredited Financial Service in San Rafael, CA
FOLLOW US Social Media Facebook Twitter Pinterest Google+
}