6/14/09 DRAFT FTC / AG complaint to Portfolio Recovery legal for comments

This is the DRAFT of regulatory complaint #2 about Portfolio Recovery Associates.

Portfolio Recovery Associates is a debt buyer notorious for violating the FCRA and FDCPA, ignoring consumer disputes and even multiple hard inquiries.

While the FCRA explicitly PERMITS collection inquiries to be reported to 3rd parties (hard inquiries), this practice defames consumers who are often INNOCENT.   Collectors and debt buyers utilize credit reports to LOCATE debtors and OFTEN the consumers had no opportunity to dispute the alleged debts.

All too often collectors obtain the credit reports of truly innocent parties in error or for discharged accounts.

While it is debatable whether debtors with valid debts deserve to be punished by multiple FICO score lowering credit inquiries, I can’t see ANY argument to allow collectors to lower the FICO scores of consumers who do NOT owe the alleged debt.

  • The FCRA must be changed to prohibit the reporting of collection inquiries to 3rd parties.

When I spoke to Portfolio Recovery collector James, he falsely stated that PAYING collections would improve the credit.

Of course this is totally FALSE, as a collection reported as such will NOT get you a single FICO score point when updated to “paid.”

As I pointed out in my 5/28/09 fax to the Portfolio compliance department, they should lobby legislators to change the law.  Legislators should MAKE Fair Isaac change the FICO scoring formulas, require DELETION of collections after payment/settlement or even better, prohibit FICO scoring entirely.   After all, everybody ought to know by now that FICO scoring doesn’t PREDICT defaults, but CAUSES defaults and it greatly contributed to the mortgage crisis.

Not only is there NO incentive for consumers to pay/settle valid collections, but it will likely PERMANENTLY damage their credit rating.

In fact, once a collection is settled, chances of deletion are severely lowered.  I recommend that consumers wait for reported collections to be assigned/purchased by a NEW collector.  The old collector has to delete and then they can settle BEFORE the new collector reports on the credit.

Why do they make it SO difficult for consumers to PAY their debts?

Obviously, the primary goal is NOT to collect the debts, but to PERMANENTLY destroy the credit rating of GOOD people!

Since a STATE AG complaint is more likely than the FTC complaint to result in an investigation and hopefully legislative changes, I will also send the complaint to my client’s state AG as well as Portfolio’s state AG.

It is truly outrageous that Portfolio Recovery didn’t even bother to respond to my previous fax.

Here is the DRAFT complaint:

To:     Portfolio Recovery Associates
LEGAL DEPARTMENT – Notice of Publication and Regulatory Complaint

Below is the DRAFT of my complaint to the FTC and to the MN and VA AGs.

Please respond by 6/19/09 by fax or email if you should find any inaccuracies in the DRAFT complaint:

Re:      Complaint # 2 – Portfolio Recovery Associates FCRA and FDCPA violations

[Introduction]

Portfolio Recovery Associates FCRA and FDCPA violations:

  • It failed to cease collecting after receiving my client’s dispute
  • It reported false information about the alleged collection to the credit bureaus
  • It failed to report the account as disputed as required by the FDCPA
  • It obtained the consumer’s credit report without permissible purpose while the account was disputed and not validated.

I contacted Portfolio Recovery on behalf of my client who had disputed a Portfolio Recovery collection since 11/07. According to the credit reports, he allegedly owes to Collect America, a company he has never done business with.

Portfolio Recovery failed to validate the collection and it continued to report it on the client’s credit reports without notice of dispute.

On 5/27/09 I personally confirmed with James at Portfolio Recovery that at least one of my client’s disputes since 11/07 was received.

I explained to James that the collection is disputed and that Portfolio Recovery had not validated. James admitted that the original creditor is NOT Collect America as reported to the credit bureaus.

The 6/11/09 Trans Union credit reporting:

James claimed that Trans Union fabricated the remark: “Dispute resolved – customer disagrees”

On 5/28/09 I faxed several questions to the Portfolio Recovery Compliance Department:

Since it is apparently impossible to get coherent information about this account and the dispute history on the telephone, I’ll greatly appreciate your fax or email to clarify what really happened.

•1)     Did Portfolio validate the account?
If so, when and how was the account validated?  My client states that he received nothing and that he provided you with his correct address in 2007.

2)     How did Portfolio resolve my client’s disputes (as Portfolio reports to credit bureau Trans Union) and what did my client disagree with?

•3)     Why is Portfolio reporting FALSE INFORMATION to the credit bureaus?
Portfolio KNOWS that Collect America is not the original creditor and even a brief review of the credit reporting reveals OBVIOUSLY incorrect data.

•4)     How do you arrive at the balance for the alleged debt?

No response was received. I attempted to confirm receipt of the fax, but I was unable to get to a person and I had to leave a message. My request for a return call was apparently ignored.

Instead of deleting the account from the credit reports, Portfolio Recovery obtained my client’s Trans Union credit report on 5/27/09 – the day I spoke with James.

Portfolio Recovery had NO permissible purpose to obtain my client’s credit report.

This “hard” collection credit inquiry is reported to third parties and lowers my client’s FICO scores.

My 5/28/09 fax to Portfolio Recovery is attached and no response was received.

On 6/14/09, I faxed the DRAFT of this complaint to the Portfolio Legal Department for comments and/or corrections.

[Portfolio Recovery response, if any, conclusion].

Sincerely,

Christine Baker

c: posted at http://credit-reporting-collection-ftc-complaints.info and at other sites

The 5/28/09 fax to Portfolio Recovery (no response received):

ATTN:            Compliance Department
Portfolio Recovery

May 28, 2009

Re: [redacted]

To Whom It May Concern:

You received my power of attorney for my client on 5/21/09.  He disputed the account reported by Portfolio to the credit bureaus with account # #5489555111667418 several times, but he never received any documentation for the account and Portfolio continued to report the disputed account to the credit bureaus.

I spoke to Serena on 5/22/09 and she informed me that all information about the account is on the Portfolio website and she explained how to gain online access.  I reviewed the information and just as on the credit reports, the original creditor was incorrectly identified as Collect America and I could not locate any account statements.

On 5/27/09 James informed me that the original creditor is not Collect America, but Household.  He admitted that Portfolio received my client’s dispute in 11/07, stated that Portfolio sent a “dispute package” to my client, but then claimed that my client called to advise that he no longer disputes the account.  That is totally absurd!

Why on earth would he call Portfolio to inform it that he no longer disputes the account?  In fact, my client disputed the account on numerous occasions.

James DENIED that Portfolio reports to Trans Union:

Account Remark: Dispute resolved – customer disagrees”

James claimed that Trans Union has made up this statement and that it is NOT reported by Portfolio.  I asked James to transfer me to your credit reporting department and after 50 minutes of listening to hold music, I finally hung up.

Since it is apparently impossible to get coherent information about this account and the dispute history on the telephone, I’ll greatly appreciate your fax or email to clarify what really happened.

•1) Did Portfolio validate the account?
If so, when and how was the account validated?  My client states that he received nothing and that he provided you with his correct address in 2007.

•2) How did Portfolio resolve my client’s disputes (as Portfolio reports to the credit bureaus) and what did my client disagree with?

•3) Why is Portfolio reporting FALSE INFORMATION to the credit bureaus?
Portfolio KNOWS that Collect America is not the original creditor and even a very quick review of the credit reporting reveals OBVIOUSLY incorrect data.•4) How do you arrive at the balance for the alleged debt?

My client retained my services because he is trying to purchase a home and obviously his FICO scores are seriously lowered by the Portfolio credit reporting.

Please IMMEDIATELY DELETE this disputed collection from all credit bureaus.

Reporting the collection as disputed to the credit bureaus will NOT improve the FICO scores utilized to rate my client’s mortgage and the disputed account must be deleted to mitigate his damages.

And I hope you will train your collectors to refrain from making false statements such as that paying collections will improve FICO scores.  I already explained to James that FICO scores don’t improve by a single point after a collection is reported as paid.

Obviously I can not recommend that my clients settle collections until either Fair Isaac changes its rating of collections or the FDCPA or FCRA require DELETION of paid collections.

I hope you will lobby for the appropriate legislative changes.

I’m looking forward to your response and a quick resolution of this matter.  Please feel free to contact me with any questions anytime.

Sincerely,

Christine Baker



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