The 623 dispute method is often a viable substitute to getting erroneous or unsupported information removed from your client’s credit reports. The 623 dispute method allows you to dispute any inaccurate information on your credit report directly with the original creditor.

A 623 dispute does not work in the same way as a traditional dispute because you are not asking for “verification” of the account, but for an “investigation” as to the accuracy of the records on that account. If your creditor does not have accurate records pertaining to that account, they must remove the negative information off the credit report.

The Original Creditor often do not have keep records longer than 13-18 months. If in this regards, if you have delinquents on your credit report prior to this period, they won’t be able to prove you were late and they need to remove that negative information if it is unproven and it’s the law.

If you place a call to your creditors and they say that ask for you to send in information to prove your identity, they unusually do not have the records. Therefore they may say that they have NO RECORDS at all but yet these creditors continue to report negative information on my client’s credit reports. This is illegal!

 Case Laws

(Richardson vs. Fleet, Nelson vs. Chase Manhattan),

RICHARDSON, v. FLEET, EQUIFAX, et al
http://proselitigant.net/wwwthreads/Wc59d0bd2d89b8.htm
United States District Court for the District of Massachusetts – August 10, 2001

TOBY D. NELSON, v. CHASE MANHATTAN MORTGAGE CORP., 

http://www.law.com/regionals/ca/opin…/0015946.shtml
United States Court of Appeals for the Ninth Circuit – Filed March 1, 2002

Toby D. Nelson (“Nelson” ) appeals the judgment of the district court for the District of Nevada dismissing his suit under the Fair Credit Reporting Act, 15 U.S.C. § § 1681-1681u (“the FCRA” ) for failure to state a cause of action against the defendant Chase Manhattan Mortgage Corporation (“Chase” ). Holding that section 1681s-2(b) does create a cause of action for a consumer against a furnisher of credit information, we reverse the judgment of the district court.

The consumers claimed that a third-party bank had improperly reported a charge off in the consumers’ name, and that the company continued to indicate the improper charge off on the consumers’ credit reports. The court held that as to the claim that the company failed to follow reasonable procedures, relying on creditors for accurate credit information had not necessarily constituted a reasonable procedure as a matter of law since the company had reason to know of the dispute between the consumers and the company. The consumers sent notices to the company regarding errors in their credit history on at least three occasions before the company prepared its credit report for a third party creditor. Hence, a genuine issue of material fact existed as to whether it was reasonable for the company to rely exclusively on the information provided by the third-party bank. As to causation, the consumers submitted letters from the third-party creditor, rejecting their applications for credit, and citing to the company’s credit report as the primary reason. Finally, no evidence indicated that the company willfully misrepresented or concealed any part of a credit report from the consumers.

the FACTA legislation passed recently allows the consumer to go directly to the original creditor and dispute information which the original creditor (called the information furnisher) in the FCRA, has supplied to the credit bureaus.

However, before disputing with the original creditor, the CONSUMER MUST HAVE DISPUTED WITH THE CREDIT BUREAUS first.  See why below.

The Language of the Law

Here is the exact statute in the FCRA:

623. (a)(8) ABILITY OF CONSUMER TO DISPUTE INFORMATION DIRECTLY WITH FURNISHER

(A) IN GENERAL The Federal banking agencies, the National Credit Union Administration, and the Commission shall jointly prescribe regulations that shall identify the circumstances under which a furnisher shall be required to reinvestigate a dispute concerning the accuracy of information contained in a consumer report on the consumer, based on a direct request of a consumer.

(B) CONSIDERATIONS – In prescribing regulations under subparagraph (A), the agencies shall weigh–

(i) the benefits to consumers with the costs on furnishers and the credit reporting system;

(ii) the impact on the overall accuracy and integrity of consumer reports of any such requirements;

(iii) whether direct contact by the consumer with the furnisher would likely result in the most expeditious resolution of any such dispute; and

(iv) the potential impact on the credit reporting process if credit repair organizations, as defined in section 403(3), including entities that would be a credit repair organization, but for section 403(3)(B)(i), are able to circumvent the prohibition in subparagraph (G).

(C) APPLICABILITY Subparagraphs (D) through (G) shall apply in any circumstance identified under the regulations promulgated under subparagraph (A).

(D) SUBMITTING A NOTICE OF DISPUTE- A consumer who seeks to dispute the accuracy of information shall provide a dispute notice directly to such person at the address specified by the person for such notices that–

(i) identifies the specific information that is being disputed;

(ii) explains the basis for the dispute; and

(iii) includes all supporting documentation required by the furnisher to substantiate the basis of the dispute.

(E) DUTY OF PERSON AFTER RECEIVING NOTICE OF DISPUTE- After receiving a notice of dispute from a consumer pursuant to subparagraph (D), the person that provided the information in dispute to a consumer reporting agency shall–

(i) conduct an investigation with respect to the disputed information;

(ii) review all relevant information provided by the consumer with the notice;

(iii) complete such person’s investigation of the dispute and report the results of the investigation to the consumer before the expiration of the period under section 611(a)(1) within which a consumer reporting agency would be required to complete its action if the consumer had elected to dispute the information under that section; and

(iv) if the investigation finds that the information reported was inaccurate, promptly notify each consumer reporting agency to which the person furnished the inaccurate information of that determination and provide to the agency any correction to that information that is necessary to make the information provided by the person accurate.

(F) FRIVOLOUS OR IRRELEVANT DISPUTE-

(i) IN GENERAL- This paragraph shall not apply if the person receiving a notice of a dispute from a consumer reasonably determines that the dispute is frivolous or irrelevant, including–

(I) by reason of the failure of a consumer to provide sufficient information to investigate the disputed information; or

(II) the submission by a consumer of a dispute that is substantially the same as a dispute previously submitted by or for the consumer, either directly to the person or through a consumer reporting agency under subsection (b), with respect to which the person has already performed the person’s duties under this paragraph or subsection (b), as applicable.

(ii) NOTICE OF DETERMINATION – Upon making any determination under clause (i) that a dispute is frivolous or irrelevant, the person shall notify the consumer of such determination not later than 5 business days after making such determination, by mail or, if authorized by the consumer for that purpose, by any other means available to the person.

(iii) CONTENTS OF NOTICE – A notice under clause (ii) shall include–

(I) the reasons for the determination under clause (i); and

(II) identification of any information required to investigate the disputed information, which may consist of a standardized form describing the general nature of such information.

and

623. (b) Duties of furnishers of information upon notice of dispute.

(1) In general. After receiving notice pursuant to section 611(a)(2) [§ 1681i] of a dispute with regard to the completeness or accuracy of any information provided by a person to a consumer reporting agency, the person shall

(A) conduct an investigation with respect to the disputed information;

(B) review all relevant information provided by the consumer reporting agency pursuant to section 611(a)(2) [§ 1681i];

(C) report the results of the investigation to the consumer reporting agency;

(D) if the investigation finds that the information is incomplete or inaccurate, report those results to all other consumer reporting agencies to which the person furnished the information and that compile and maintain files on consumers on a nationwide basis; and

(E) if an item of information disputed by a consumer is found to be inaccurate or incomplete or cannot be verified after any reinvestigation under paragraph (1), for purposes of reporting to a consumer reporting agency only, as appropriate, based on the results of the reinvestigation promptly —

(i) modify that item of information;

(ii) delete that item of information; or

(iii) permanently block the reporting of that item of information.

 Layman’s Terms Version

Now that your head is spinning with all that law, here is what is really means.

Basically, you can dispute information placed on your credit report by an original creditor in the same way as you would with a credit bureau. An original creditor must:

Conduct an investigation of the dispute.

Review all information provided by the consumer relating to the dispute.

Respond within 30 days to the investigation.

If the information is inaccurate, they must notify the credit bureaus of the mistake and tell the credit bureau to correct it.

However, the creditor can also determine the dispute is frivolous just like a credit bureau can. Reasons a dispute is frivolous:

You just disputed the same thing without changing the reason for the dispute.

You haven’t provided enough information for the creditor to conduct an investigation. At the minimum, you need to identify the account by account number and provide a reason why you are disputing.

If the creditor DOES determine the dispute is frivolous they MUST notify you in writing by any other means available to the person within 5 days.

If the Creditor Fails to Comply with the Law

If the original creditor fails to comply with your dispute, they are in violation of the FCRA, but you can’t sue them unless you have disputed with the Credit Bureaus FIRST.

Disputing with the credit bureau FIRST is not something you can shortcut or forget. In order to place the liability of reporting accurately squarely on the shoulders of the creditor, you must have disputed the listing with the credit bureaus. This means you have either online, via the telephone or in writing, disputed a listing with the credit bureaus and then WAITED FOR THE RESULTS OF THE INVESTIGATION.

Here is the law which enforces the fact that you must dispute with the credit bureau first:

• 623. (c) LIMITATION ON LIABILITY- Except as provided in section 621(c)(1)(B), sections 616 and 617 do not apply to any violation of–

(1) subsection (a) of this section, including any regulations issued thereunder;

(2) subsection (e) of this section, except that nothing in this paragraph shall limit, expand, or otherwise affect liability under section 616 or 617, as applicable, for violations of subsection (b) of this section;

Sections 616 and 617 of the FCRA talk about how much the fines are for violations of the FCRA (the willful and negligent non compliance), typically $1000.

What the above section of the FCRA § 623. (c) means is that if you dispute with the original creditors first, without having disputing through the credit bureaus, and they refuse to answer you, or provide you with proof, yes, they are in violation of the FCRA, but you as a private citizen cannot take them to court and sue them; only your state authorities (like your state attorney general) or federal authorities (like the FTC) can sue them.

However, if you have disputed the information with the credit bureaus FIRST, they are supposed to have talked to the original creditor, even though we know that doesn’t happen, and the original creditor is supposed to have at that time conducted an investigation, under FCRA § 623 (b), under which you, as a private citizen CAN sue them. When you go to the original creditor under FCRA § 623 (a)(8), you are just merely asking for the OC’s proof that they must have (hear the sarcasm in my voice here) provided to the credit bureaus during the OC’s thorough (there’s that sarcasm again) investigation. If they have no proof of negative information, but the credit bureau says that the results of the investigation show the negative information is accurate, then you have the OC on an actionable, sue-able (by you) offense.

Once again, YOU MUST DISPUTE WITH THE CREDIT BUREAUS FIRST – Have we said this often enough??

Dispute Steps with Original Creditor

What is the exact procedure when you want to dispute things with the original creditor (or any other information furnisher)?

Steps:

1.  Dispute the listing with the credit bureau.
2. Wait for the results of the investigation.
3. If the listing is deleted or modified per your desires, you’re done!
4. If the information furnisher does not get back to you within 30 days:
5. You need to send a letter to the company’s legal department informing them they are in violation of the FCRA and you intend to sue if they do not remove the listing.
6. If they do not remove the listing, you will have to sue if you want to get it off.
7. If the information furnisher says the results of the investigation is “verified”, then:
8. Call up the credit card company and ask them what kind of documentation they have to prove the negative mark. Many times they will have nothing.
9. If they admit to having nothing, send this letter to their legal department

——————————————————– Sample Dispute ———————————————

Attention: Legal Department:

Re: Acct #XXXXXXXX

Gentlemen:

I’m writing regarding the phone call placed to your company regarding the account listed above on <Date >, 2007 that you states belongs to me. I called seeking clarity about this account because it is  listed on my Credit Reports. I spoke to a (Name of Person) as provided by them.  I was informed that your company does not have any information on this account and that it was all sent out for collections to an agency. I disputed this account with the credit bureau and have a question: How did you investigate this account without any documentation? I contacted the collection agency your rep shared and they could not validate the debt. This collection agency subsequently removed all information regarding this account from my credit reports. I am informing your company of my intent to sue if action is not taken to remove all of the negative information off my credit report.

Sincerely,

Client’s Name