Bogus Collection Account Removal...

[KeithW]

What is it that stops, my business for example, from reporting that someone didn't pay a debt even if they did? Does the reporter have to sign a sworn statement or something similar?

My wife has a collection on her CR that was from a US Bank checking account. At the time we had two accounts. One was mine and the other was our joint account, which is the one she has the collection for. We had a health club membership that came out of my account and I went in and signed an authorization for them to take it out of my account. Later I closed my account after shady practices with deposits and "errors". Our joint account was still open, but we had cleaned it out and planned to close it soon. A few weeks later I send the bank a letter stating that I want it closed. At that time they inform me that it is overdrawn by a $63 charge and that it has accrued a daily overlimit charge as well as an overdraft charge. They took the health club payment out of this account because my other account was closed. After talking to a bank manager he tells me that the only way this would happen is if I had authorized one account to draw from the other, which they had no record of, or I had told the health club to use this account. I got a copy of the authorization from the health club and it showed that it was to be drawn from the closed account.

Months go by and a CA starts calling trying to collect what is now an almost $500 debt. I told them what happened and they did a three way call with US Bank while I was on the phone. US Bank told the CA that they would not provide any records or statements to me and that I was no longer a customer. Since I wasn't a customer they wouldn't even discuss it with me. I called my attorney who advised me that banking regulations require the bank to give me copies of my statements. The bank refused my attorneys request and told my attorney that he would have to take them to court to get any type of cooperation in the matter.

Meanwhile it has gone to another CA who is now wanting $900! So what can I do to get this joke off of her CR? Would I need to sue the bank? Sue the CRA?

[GregB]

Since you are asking about reporting to the CRAs, we can assume your business doesn't have a contractual agreement with a CRA. They only accept reporting from their customers who are required to report correct data.

The bank feels that they have a legal right to do what they did. You feel that they did not. That pretty much means that legal action is going to be required to settle this. You might also have a cause for action against the health club but that sounds unlikely. You are unlikely to have any cause for action against a CRA since they are only reporting information provided by others.

I wouldn't expect the bank to turn this over to a collection agency very quickly. Why didn't you resolve this with the bank before it got to that point?

[IOBA]

KeithW - send a DV letter to the latest CA.   Ask for the specifics of the originating debt to include statements.  Don't make the letter to fancy or frightful of legalese.   Just plain, simple, and to the point.

The CA must stop all collection activity and until they can provide the basics.  It's my understanding (some people disagree) that the information that the CA must provide is the name of the OC and the amount of the debt and the date of the debt.  If you ask for bank statements, they should provide it to you.

If it goes to court, then the CA will have to prove to the judge (while at the same time you need to prove to the judge your side) documentation from the bank proving it's a legit collection.

Just curious - did you cancel the gym membership?

Have you asked the bank to waive the overdraft fee?

Do you have a copy of your final statement (from both accounts) from the bank?

[KeithW]

No I didn't cancel the gym membership. I just transfered the payments to our new banks account. This required me signing another authorization.

Yes I asked the bank to waive the fee. I explained to them that it should not have happened. They admitted that it should not have happened unless I authorized it. They admitted that it must have been their fault by stating that there was no other explanation. This was right after I showed them proof that I had not authorized anything be taken out of our joint account.

No I do not have copies of the final statement on the joint account. Only my account which showed a zero balance.

[IOBA]

KeithW - 

1.  Go into a local branch and ask for copies of the joint account.

2.  Once you have all the docs, then go back into the local branch and present your case to the manager - NICELY.   Show the manager the docs (have a copy for the manager) and ask that the situation be resolved.   Resolution looks like...the negative being erased from the credit report and the CA called off and whatever else you think is reasonable.

3.  Ask when you can follow up.   Really,  what you are looking for is an end date to have this resolved.  Two weeks should be enough time.

4.  If at the end of the deadline, it's not resolved, file a complaint with the BBB and send them a copy of all of the paperwork with a cover letter explaining the situation.

Just curious, did the gym double dip for that month? 

Just curious, why don't you have copies of the statement for the joint account?

Anyways, just my suggestions.

[Anonymous]

you should get this resolved. if a bank posts an overdraft fee or closes an account with a negative balance not only do they report it to the cra's but they also post in the banks internal system or whatever you call it and will make it difficult for you to take your banking business elsewhere. I went several years without a checking account do to a 100 balance i left with wachovia a few years ago. needless to say it was worth taking care of

[RobertEG]

Regarding reporting inaccurate information to a CRA, you are correct in assuming it could easily be done.  The credit reporting system relies upon integrity of furnishers of information, and the CRAs, unless they have clear knowledge that any reporting is clearly erroneous, just post reported information to the consumer's credit file.

The check and balance is incorporated into the statute at FCRA 623(a)(1)(A), which states:

"A person shall not furnish any information relating to a consumer to any credit reporting agency if the person knows or has reasonable cause to believe that the information is inaccurate."

Knowingly reporting inaccurate information makes the party subject to civil action under that provision of the FCRA.  They do so at their legal peril.