April 2, 2011
The Fair Credit Reporting Act: Important Information Every Business Owner Should Know
The Fair Credit Reporting Act affects all businesses. Businesses are required by the FTC to report only accurate information regarding the debts owned to the business by debtors. Businesses responsible for handling in house debt collections needs to understand The Fair Credit Reporting Act.
Companies that fail to heed these laws could be risking costly fines. In some cases, debts owed to them could be discharged. Debt collection can be a difficult process, but it is very important for any business handling debt collections to fully understand this law.
The Fair Credit Reporting Act
The Fair Credit Reporting Act states that consumers have the right to verify the accuracy of the information contained in their credit report. It also says that businesses are responsible for ensuring the accuracy of the information contained in these reports to the best of their ability. It is imperative that businesses understand how this affects debt collection.
Should your business receive a complaint from one of the three credit bureaus (TransUnion, Equifax or Experian), you have a period of 30 days to show proof of the debt owed or it will be removed from the individual’s credit report, per the Fair Credit Reporting Act.
In debt collection, The Fair Credit Reporting Act is critical to understand. If you file a claim that is inaccurate, you could face legal ramifications if you did so intentionally. More so, the FTC, or Federal Trade Commission can work against your ability to file such claims in the future.
The Fair Credit Reporting Act does work on behalf of your business though. As long as the debt collection is accurate, it should be utilized by the business to ensure that other businesses know that this individual failed to make payment. Any business will want to know what to expect from a potential debtor before working with them.
Important Facts
For any business handling debt collection, there is a lot one needs to know about The Fair Credit Reporting Act. If they supply consumer information to the credit bureaus, they are responsible for providing only accurate information. This law was recently updated to expand consumers rights.
Consumers are able to learn what is on their credit report by filing a request with the credit reporting agencies. And, during that process, if there is any information deemed inaccurate, including missing account information, debt collection activity, or inaccurate history, the business must show proof of the accuracy of the debt or it is removed from the report. The Fair Credit Reporting Act puts the burden of proof on the business claiming the debt is owed.
Negative, but accurate, information can stay on one’s credit report for up to seven years. Bankruptcies can remain up to ten years. Some information can remain much longer, such as criminal convictions, information related to consumer job applications with salaries over $75,000.
Also, discover more important information and resources about debt collection laws, as well as collection agency services.
Filed under Finance by