Debt Collection

Lawsuit Shows Just How Frustrating Validating a Debt Can Be

Written by Steve Rhode

A consumer, Juan Flores, filed suit against LVNV Funding and Resurgent Capital Services in what appears to be an overwhelming frustration with just getting a debt validated to make sure the collection claim is accurate.

There is no better way to cover the frustration than to let the complaint speak for itself.

FACTUAL ALLEGATIONS

9. Plaintiff is a natural person allegedly obligated, to pay a debt asserted to be owed or due a creditor.

10.    Plaintiffs alleged obligation, owed or due, or asserted to be owed or due a creditor, arises from a transaction in which the money, property, insurance, or services that are the subject of the transaction were incurred primarily for personal, family, or household purposes.

11.    On or around June 15, 2017 RESURGENT sent Plaintiff a letter informing him of the transfer of an alleged Plaintiffs “account” to LVNV. RESURGENT stated in the letter that it was “the master servicer” of the alleged “account” for Defendant LVNV

12.    On or around June 20, 2017 CREDIT ONE BANK NA sent Plaintiff a letter informing him of the sale of an alleged Plaintiffs “account” to LVNV.

13.    On July 13, 2017 Plaintiff sent a validation letter to Defendant RESURGF1NT by Certified Mail # 7016-2710-0000-9686-4009.

14.    On or around September 27, 2017 RESURGENT sent Plaintiff a letter attempting to collect an alleged debt.

15.    On or around October 5, 2017 RESURGENT sent Plaintiff a new (2nd) letter attempting to collect an alleged debt.

16.    On or around November 14, 2017 RESURGENT sent Plaintiff a new (3rd) letter attempting to collect an alleged debt.

17.    On or around January 31, 2018 RESURGENT sent Plaintiff a new (4th) letter attempting to collect an alleged debt.Said letter included also the 30 days Validation Notice required by the FDCPA.

18.    On February 21, 2018 Plaintiff sent a validation letter to Defendant RESURGENT by Certified Mail # 7017-2620-0000-6959-3179. Letter asked RESURGENT specific information about the alleged account it was trying to collect.

19.    On or around April 22, 2018 RESURGENT sent Plaintiff a new (5th) letter attempting to collect an alleged debt and first letter since second request for validation.

20.    On July 17, 2018 Plaintiff sent a validation letter to Defendant LVNV by Certified Mail #7016- 2710-0000-9686-4143-4146.

21.    On July 17, 2018 Plaintiff sent a validation letter to TRUEACCORD by Certified Mail #7017- 2620-0000-6959-3216.

22.    On July 19, 2018 at 4.49 pm TRUEACCORD sent Plaintiff an email to Plaintiff attempting to collect an alleged debt, allegedly belonged to LVNV.

23.    On February 21, 2018 Plaintiff sent a validation letter to Defendant RESURGENT by Certified Mail #7017-2620-0000-6959-3179.

24.    On or around September 12, 2018 RESURGENT sent Plaintiff a 2 new (6th and 7th) letters attempting to collect an alleged debt and second and third letter since second request for validation.

25.    Defendants RESURGENT and LVNV has failed to validate the alleged debt they are trying to collect. Defendants never stopped collecting as required by the FDCPA 1692 g (B).

26.    Defendants are furnishers of information governed by the FCRA, 15 U.S.C. § 1681s-2.

27.    On or around October 22, 2018. Plaintiff sent a dispute letter to Experian, Equifax and Trans Union (collectively the “consumer reporting agencies” or the “CRAs”) after finding entities that he was unfamiliar with in the reports.

28. Plaintiff found after examination of his EXPERIAN consumer credit report that Defendant RESURGENT had pulled Plaintiff s consumer credit report on; July 26, 2017

29.    As described in the FTC Report of July,

2011( https://www.ftc.gov/sites/default/files/documents/reports/40-years-experience-fair-credit-reporting-act-ftc-staff-report-summarv- interpretations/110720fcrareport.pdf), “since its initial passage in 1970, the Federal Trade Commission (“FTC”or “Commission”) has played a key role in the implementation, oversight, enforcement, andinterpretation of the FCRA. Under the Consumer Financial Protection Act of 2010 (“CFPA”), the FTC retains its enforcement role but will share that role in many respects with the newly createdConsumer Financial Protection Bureau (“CFPB”)”

30.    The FTC,in said Report, shares their interpretation of the law on“permissible purpose” in a clear and unmistakable manner backed by 40 years of experience.

31.    First, the FTC and later the CFPB defined “creditor” as follows;

“Creditor” “means any person who offers or extends credit creating a debt or to whom a debt is owed, but such term does not include any person to the extent that that person receives an assignment or transfer of a debt in default solely for the purpose of facilitating collection of such debt for another”

32.    The FTC also stated creditors can have a permissible purpose to access a consumer’s credit file. However, debt buyers, such as LVNV and/or RESURGENT arc not creditors since (1) they have never extended credit of the Consumer, (2) they are assigned or transferred the debt through purchase, and (3) they are collecting on their own behalf rather than the creditor.

33.    Some debt collectors are permitted to access a consumer’s file. A collection agency, detective agency, private investigator, or attorney can have a permissible “collection” purpose under this section to obtain a consumer report on a consumer for use in obtaining payment of that consumer’s account on behalf of a creditor. That does not fit LVNV, LVNV is not a creditor.

34.    Defendant RESURGENT used or obtain Plaintiffs consumer report in behalf of LVNV; a debt buyer

35.    Defendant RESURGENT used or obtain Plaintiffs consumer report for an impermissible purpose and did not certify the purpose through a general or specific certification.

36.    Defendant RESURGENT accessed Plaintiff s consumer report in attempting to collect on an alleged account that Plaintiff did not have.

37.    After further examination Plaintiff discovered that Defendant LVNV has harmed the Plaintiff by reporting a disputed account in his credit files with CRAs.

38.    LVNV reported a collection account to the national CRAs.

39.    Plaintiff disputed the alleged account on October 22, 2018.

40.    On information and belief, each CRA then forwarded the disputes to LVNV through the credit industry’s "e-Oscar” system and in response to the dispute, LVNV simply responded that it had "verified” that the alleged account belonged to it and was owed by the Plaintiff.

41.    On information and belief, LVNV standard procedure for receiving and processing consumer disputes is to do so entirely by automated response. It does not conduct a substantive investigation. laterally nothing is done to investigate any dispute.

42.    LVNV also knew when it received Plaintiffs dispute that it did not have any underlying documents-card member agreements, signed applications, credit card statements, etc.-to support the alleged debt. LVNV only lawful option was to delete the tradeline.

43.    LVNV had actual knowledge that this is what the FCRA required- a "meaningful searching inquiry” and that LVNV could not report or "verify” the account tradcline to the CRAs when it lacked underlying documentation.

44.    In 2000, the Federal Trade Commission held that the FCRA barred a debt buyer from "verifying” a tradeline disputed by a consumer when it did not possess the original documents. The F FC entered into a Consent Decree with Performance Capital Management Inc. (PCM), a debt buyer and furnisher of credit information subject to § 1681 s-2. Among the FTC’s allegations was that upon receiving a CDV form from a CRA, "it is the practice of PCM to compare the name, address, and information in PCM’s computer database with the information provided on each consumer dispute verification form. Where the two matches, PCM reports that is has verified as accurate the information in its file”

45.    The FTC alleged that "verifying information in the computerized PCM files does not constitute an “investigation” for purposes of section 1681s-2(bl3)” The FTC’s Consent Decree remedied this noncompliance with 1681s-2(b) with entry of the following injunction enjoining PCM from: failing to properly investigate consumer disputes, as required by Section 623(b) of the Fair Credit Reporting Act, 15 U.S.C. 1681s-2(b), when consumer reporting agencies refer disputes to the defendant pursuant to Section 611(a)(2), 15 U.S.C. 1681 i(a)(2). In order to comply with Section 623(b) when a consumer disputes the accuracy of information reported by the defendant to a consumer reporting agency, defendant shall either verify the information with the original account records within the time period set forth in the Fair Credit Reporting Act or take all necessary steps to delete the information from the files of all consumer reporting agencies to which the information was reported. In any situation where the defendant either knows that no original records exist, or is informed by the original creditor that no records exist, the defendant shall, within five business days after receiving the consumer dispute, notify all consumer reporting agencies to which the information has been provided that the information is to be deleted from the file of the consumer who has disputed the account;..

You can read the entire complaint here.




About the author

Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

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