Taking on FedLoan Servicing with FCRA 623(a)(2) dispute

[Anonymous]

Like quite a few folks, I've had issues with my student loans in the past, particularly a nasty stretch in 2013 when I was laid off. Had a string of lates on my student loans and later was able to get a retroactive forbearance to cover that time period, bringing my account back to good standing. However, the lates are still on the credit report and the 3 or 4 times I've disputed the lates as being in a period of forbearance, FedLoan Servicing has refused to make any adjustments.

I've got time and patience on my side, and am willing to take this as far as it goes, so I sent them this letter two weeks ago.

This correspondence is in response to the February 16, 2016 letter I sent regarding my goodwill request to have late payments removed from my credit score report. By failing to update previously reported information, FedLoan Servicing is in violation of Section 623(a)(2) of the FCRA.

I have attached an FTC advisory opinion which interprets Section 623(a)(2) of the FCRA. The issue posed in the advisory opinion is how a lender is to handle a situation when subsequent information updates a report that was allegedly accurate when it was made but no longer is accurate in the present time (i.e., the identical situation I am currently in).

The advisory opinion states that Section 623(a)(2) of the FCRA addresses the duty to correct and update information by “furnishers,” or persons who furnish information to consumer reporting agencies (“CRA”) such as credit bureaus. In particular, this section requires a person that “has furnished to a consumer reporting agency information that the person determines is not complete or accurate” to “promptly notify the consumer reporting agency of that determination” and provide any information needed to make it complete and accurate. Thus, on its face, this provision requires a furnisher to provide corrected or updated information to the consumer reporting agency that it had reported to originally. This duty extends to all student loan accounts reported to CRAs, regardless of whether they were accurate at one point, because the section requires the furnisher both to “update” accounts as well as to “correct.”
FedLoan Servicing communication regarding retroactive forbearances states “If the forbearance was applied retroactively to cover a period of delinquency, any information previously reported to each nationwide consumer reporting agency will remain.” However, Section 623(a)(2) clearly shows that the reports must be updated/corrected regardless of whether they were accurate at one point.

All of my FedLoan accounts that were part of the July-December 2013 late payments show forbearance status from from 02/28/2013 through 01/27/2014. Therefore, my credit reports do not currently accurately reflect previous payment statuses as FedLoan Servicing has recorded them. I am thus requesting that in compliance with Section 623(a)(2) of the FCRA that the accounts showing late payments in July-December 2013 be updated and/or corrected and removed.

In the event that these reports are not immediately updated to accurately reflect my current payment status during July-December 2013, I intend to file official complaints with the FTC, CFPB, and pursue other legal routes if necessary.

Please respond within 14 days of the date of this letter with an update to this matter.

Very Truly Yours,

habu987

(Here's the FTC advisory opinion I cited in the letter)

I haven't heard anything back from FedLoan yet, so I'll give them another week before escalating and filing complaints with the FTC and CFPB. If those don't go anywhere, I'm perfectly comfortable with getting a lawyer and suing.

Figured I'd post this here so others could follow along with my progress if they're interested. 

Stay tuned!

[RonM21]

I hope it works out for you. I'm not very much in the know when it starts getting this deep, but it seems as if you.are on top of it. There are a few others on here that do know more when it comes to the FCRA stuff, that will probably give extra advice though. Best of luck!!

[RobertEG]

My concern is not with the substance of your letter, but rather with its lack of filing as a formal dispute via a CRA.

It references a prior "goodwill request," which is not a dispute, and proceeds to argue that compliance with your prior request is a requirment of law, not a request for good will.

Is it a renewed good will rquest, or a formal dispute?

It fails to explcitly state that it is a formal dispute under the FCRA.

If a formal dispute, since it was sent to the furnisher, it would be a direct dispute under FCRA 623(a)(8), and not  a dispute via a CRA under FCRA 611(a).

However, it does not state that it is a direct dispute, and thus it does not clearly invoke the required nvestigation period for a direct dispute.

They may treat it as a renewed good will request, which they could choose to ignore.  Reference to a 14 day response period is not based on any requriment of statute, and thus implies that it is an informal communication, not a direct dispute.

Whether or not it is a formal dispute under section 611(a) is critical to any subsequent action, and thus is important.

Under FCRA 623(c) and (d), a consumer cannot bring their own private civil action for violation of FCRA 623(a).

Only a federal agency, such as the FTC or CFPB, can do so.

A consumer can only bring their own private action for lack of a reasonable investigation of a prior formal dispute filed under the FCRA.611(a).

See FCRA 623(c)(2).

While you can file a complaint with the CFPB requesting they take civil action, they rarely bring their own civil action based on a single complaint by a single consumer.

Your right to civil action is for violation of the reasonable investigation requirment under FCRA 611(a), and not for violation of FCRA 623(a)(2).

Your communication should have, in my opinion,  been sent to a CRA as a formal dispute under FCRA 611(a) in order to bring into play any subsequent right to civil action.

[Anonymous]

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@RobertEG wrote:

My concern is not with the substance of your letter, but rather with its lack of filing as a formal dispute via a CRA.

It references a prior "goodwill request," which is not a dispute, and proceeds to argue that compliance with your prior request is a requirment of law, not a request for good will.

Is it a renewed good will rquest, or a formal dispute?

It fails to explcitly state that it is a formal dispute under the FCRA.

If a formal dispute, since it was sent to the furnisher, it would be a direct dispute under FCRA 623(a)(8), and not  a dispute via a CRA under FCRA 611(a).

However, it does not state that it is a direct dispute, and thus it does not clearly invoke the required nvestigation period for a direct dispute.

They may treat it as a renewed good will request, which they could choose to ignore.  Reference to a 14 day response period is not based on any requriment of statute, and thus implies that it is an informal communication, not a direct dispute.

Whether or not it is a formal dispute under section 611(a) is critical to any subsequent action, and thus is important.

Under FCRA 623(c) and (d), a consumer cannot bring their own private civil action for violation of FCRA 623(a).

Only a federal agency, such as the FTC or CFPB, can do so.

A consumer can only bring their own private action for lack of a reasonable investigation of a prior formal dispute filed under the FCRA.611(a).

See FCRA 623(c)(2).

While you can file a complaint with the CFPB requesting they take civil action, they rarely bring their own civil action based on a single complaint by a single consumer.

Your right to civil action is for violation of the reasonable investigation requirment under FCRA 611(a), and not for violation of FCRA 623(a)(2).

Your communication should have, in my opinion,  been sent to a CRA as a formal dispute under FCRA 611(a) in order to bring into play any subsequent right to civil action.

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I've disputed via the CRAs three times over the past two years with supporting information. Every time, the dispute has been closed with the comment that they are reporting accurately. I've sent a total of either two or three GWs to FLS, too, with the most recent being the one referenced in the letter.

That's why I sent this letter. This whole process of disputing and requesting GWs has taken place since at least late 2014 (I think that's when I first disputed).

[Anonymous]

From what I understand is that since you were late even though you filed a forbearance later that they were kind enough to make retroactive you were still late and it is accurate information on your CR. Same thing happened to my hubby and a few other people and it always goes the same way.

[Anonymous]

I'm in the same boat with them. For pride or whatever the case may be, I didn't call to find out my options until I was three months behind.

They gave me a retroactive forbearance and actually took off two of the three months of delinquency but left the 90 day, so now I go from current to 90 days late and back to current. On 5 separate loans. 4 months ago ... so it's crushing me at the moment.

I disputed and got the same thing and have now been coming at them with 623 (a)(2) but they're not having any of it so far.

[Anonymous]

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@Anonymous wrote:
From what I understand is that since you were late even though you filed a forbearance later that they were kind enough to make retroactive you were still late and it is accurate information on your CR. Same thing happened to my hubby and a few other people and it always goes the same way.

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If the FTC opinion I cited didn't exist, I would agree with you, but the opinion is pretty cut and dried. If there is later information that makes the previously reported information inaccurate (even if the previously reported information was correct at the time it was reported), furnishers are required to update their reporting to display the current correct information.

I'm sure FedLoan will disagree, but I'm going to pursue this as far as I can, even to the point of suing.

[girlonmission]

I agree whole heartedly. If the backdated forbearance is approved the record should reflect accordingly. What's the point of approving a forbearance - just to save $20 in fees? I rather pay the fees than paying higher interest on everyday essentials (homes, car insurance, etc).

I think we all in the forum with students should send a plea to Congress or whoever is in charge of SL.

[Anonymous]

They haven't broken any rules/laws by what they did. Government backed student loans have a whole set of their own rules including how long they stay on credit reports and not easily being included in bankruptcy.

[Anonymous]

Here's the relevant text from the FTC opinion I linked to earlier in this thread, with the emphasis mine.

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Section 623(a)(2) of the FCRA addresses the duty to correct and update information by "furnishers," or persons who furnish information to consumer reporting agencies ("CRA") such as credit bureaus. In particular, this section requires a person that "has furnished to a consumer reporting agency information that the person determines is not complete or accurate" to "promptly notify the consumer reporting agency of that determination" and provide any information needed to make it complete and accurate.(1) Thus, on its face, this provision requires a furnisher to provide corrected or updated information to the consumer reporting agency that it had reported to originally. A furnisher that reports current information to a different CRA has done nothing to "correct and update information" with CRA that possess the information that the furnisher has now determined is incomplete or erroneous. This duty extends to all student loan accounts reported to CRAs, regardless of whether they were accurate at one point, because the section requires the furnisher both to "update" accounts as well as to "correct" those that were erroneous when submitted to the CRA.

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At the time, the payments were late, and FedLoan accurately reported them as late. However, upon later granting a forbearance for that time period, per the cited opinion, FedLoan had the duty to update the accounts to show that there were no late payments given the account status of being in forbearance during the period late payments were originally reported.

That's the crux of my dispute with them.