Update On Consumer Disputes

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With the regulators and lawmakers making it easier to dispute credit bureau items, they have created some negative and unintended consequences. Many consumers have learned how to scam the system and have started disputing even legitimate debts over and over again hoping that we don’t respond or don’t have the ability to verify the debt. They intend to become an irritant and hope that we will remove items from their credit simply to save us the trouble of responding.

More and more we are seeing consumers take the path of utilizing “credit repair organizations”…

lettersThe picture to the left is our mail from credit repair company Lexington Law for one day.  These organizations practice the disreputable practice of “Jamming”, which is the practice of trying to overwhelm data furnishers with letters demanding all sorts of responses to the consumer. They are notorious for flooding our offices with repeated letters and ACDV (Automated Consumer Dispute Verification) disputes for the same account. There is never any real information or definitive dispute – usually it states that they are “unaware of the collection item” or that there “may be errors”. They then make demands for us to “validate” and “verify” information to the consumer or demand that we delete the information from the Credit Bureaus. Many consumers are under the false impression that Lexington Law or other Credit Repair organizations are actually representing them as their legal counsel and refuse to talk to us. Instead they refer us to their “Attorney”.

When we call these organizations we discover that they aren’t represented at all. Many consumers are paying $300.00 per month for this service. As far as we can tell, these organizations mostly serve to clog the system and make us rethink using the Credit Bureaus at all.

There are some upsides to this flood of letters. First, these consumers have jobs or some sort of income – they are paying a premium price for a few letters a month. It would be cheaper to mail the letters themselves or even make payments on their debts to resolve their credit issues. Secondly, these consumers are verifying their addresses! In many cases we have lost contact with the consumer and now they are delivering the gift of outing themselves to our skip-tracing team. We are beginning to pursue these consumers legally and diligently working to curb this behavior.