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posted on 2015-06-03 by Gerri Detweiler
Deborah is trying
to clean up her credit so she can purchase a home. But it's not proving
easy. In particular, three collection accounts are causing major
headaches. "One has listed a collections agency no longer in service,
One collection agency will not return my calls. (left messages) and one
has false info on it," she writes on the Credit.com blog.
Dealing with collection accounts on your credit reports can sometimes be a long, frustrating process.
But relief is on the way — at least for some consumers. A recent
agreement between 31 state attorneys general and the three major credit
reporting agencies (CRAs) — Equifax, Experian and TransUnion — will
change certain practices related to credit reporting. And when it does,
there will be several important changes that may impact consumers who
have debt in collections.
The End of Double Jeopardy?
If you don't pay a collection account, it may wind up with a second —
or third — collection agency, resulting in multiple negative items on
your credit reports. Sometimes referred to as "double jeopardy," two or three collection accounts for the same debt can affect your credit scores.
What will change:
When collection agencies sell, transfer or no longer manage accounts
they must update or delete the account. The agreement requires the CRAs
to update their training materials for these companies that report, and
make sure they know and follow this requirement.
Who Is That?
Sometimes consumers have found
collection accounts listed on their reports but aren't sure what they
are for. Collectors are supposed to report the name of the original
creditor but not all do.
What will change:
Collection agencies are already supposed to provide the name of the
original creditor and a "classification code" that indicates the type of
debt (for example, credit card or medical). Under the agreement, the
CRAs must make this information mandatory and can reject accounts that
don't meet the standards.
Note that you still won't see the names of medical providers because
doing so may compromise your right to medical privacy; for example, if
your credit report showed the name of a substance abuse rehabilitation
clinic or a cancer center. "Privacy is the issue here," says Norm
Magnuson vice president of public affairs for the Consumer Data Industry
Association. "The collection account is codified so that others who
receive the credit report can't identify the medical facility. The
consumer can get the medical facility's name from the collection agency
and/or the credit bureau if they want to validate the debt or don't know
for whom the collection agency is working the debt."
But I Paid That!
We've received complaints from consumers who have paid off, or are
making payments toward, collection accounts but their credit reports
don't reflect those payments. From the complaints we received about this
issue, it doesn't seem to be unusual for collectors to fail to update
accounts when payments are being made.
What will change:
Under the settlement, credit reporting agencies must require collection
agencies that report data to "regularly reconcile" information about
accounts that haven't been paid in full. If they don't? The agreement
says, "This regular reconciliation will be accomplished, in part, by
periodic removal or suppression of all collection accounts that have not
been updated by the Collection Furnisher within the last six months."
In other words, if a consumer has been making payments but the
collection agency fails to update the account for at least six months,
the account will either have to be removed or "suppressed," which means
it won't be shown to companies that order the report, and won't be used
to calculate a credit score.
It's worth noting, though, that
unlike other types of credit accounts, making regular payments on a
collection account typically doesn't help your credit scores. Under the
most widely used credit scoring models, a collection account is
considered negative, regardless of the size of the balance or payments
that are being made. Still, there are some credit scoring models that
ignore collection accounts where the balance is zero (VantageScore 3 and FICO 9) so it's helpful to make sure the information that is reported is accurate.
I Had No Idea
A reader recently told us he was contacted by a collection agency out
of the blue, trying to collect on a court citation. "I have never
received a citation and have contacted the court since I was not the
driver of vehicle and live out of state." Whether is was a toll charged
to you via your license plate number, or a parking ticket your son or
daughter "forgot" to tell you about, tickets and other bills can
sometimes wind up in collections without your knowledge. A survey by Credit.com
found that one in 10 consumers who reviewed their credit reports said
they found a collection account they weren't aware of on their reports.
What will change: The agreement prohibits collection
agencies from "reporting debt that did not arise from any contract or
agreement to pay (including, but not limited to, certain fines, tickets,
and other assessments)." Even better, this prohibition is retroactive:
the CRAs are supposed to find a way to identify previously reported
accounts of these types and remove them.
Like any change of this scale,
this won't happen overnight. Magnuson says these initiatives must be
implemented within 6 – 36 months from the effective date of May 20,
2015. In the meantime you still have the right under the federal Fair
Credit Reporting Act to dispute information on your credit reports that you believe is incorrect or incomplete. That won't change.
And neither will the need to
review your credit reports and monitor your credit scores on a regular
basis for changes. You can get your free annual credit reports from AnnualCreditReport.com, and you can get a free credit report summary including two scores every month on Credit.com. After all, you can't fix a problem you aren't aware of in the first place.
posted on 2015-06-03 by Brian J. Wise
month, the Consumer Financial Protection Bureau issued a “framework”
for a rule that seeks to make it more difficult for consumers to obtain
short-term or “payday loans.”
At first glance, it defies
explanation that the financial regulator would act so aggressively
against a product that has high customer satisfaction rates and accounts
for less than
5 percent of consumer complaints to the CFPB. It defies explanation
until you understand who benefits the most; and it’s not the consumer.
CFPB’s rule is actually the culmination of a complex campaign executed
by a network of political operatives under the direction, and for the
benefit, of major Democrat Party operative Martin Eakes. Eakes
is the chief executive officer, and co-founder, of Self-Help
Enterprises. By severely limiting the ability for payday lenders to
operate, it dramatically increases the market share for a portfolio of
alternative products offered by Eakes and the numerous affiliated
companies of Self-Help Enterprises.
Put simply, the rule is designed
to increase profits for Self-Help Enterprises (and Eakes) by making the
CFPB, DOJ, and FDIC effectively serve as a front for Eakes’ network of
“financial reform” organizations. Ultimately, taxpayers will foot the
bill for the windfall.
The products that Eakes offers are not
unlike those of your typical storefront payday lender. The biggest
difference comes in the form of Self-Help’s genius marketing and
branding, and the unique business model that allows them to be
profitable. While simultaneously vilifying the payday loan industry,
Eakes offers his own subprime consumer loan products and charges
overdraft fees - often at significantly higher rates than your standard
Eakes can offer these loans at a lower cost than
free-market payday lenders because businesses connected with Eakes are
the largest recipients of taxpayer funds through the Community
Development Financial Institutions (CDFI) Fund - over $300 million in
the last 10 years. This taxpayer money subsidizes these types of loans
to low-income families.
Over the years, Eakes has relied on a
front group he co-founded, the Center for Responsible Lending (CRL), as
well as government agencies, to ensure that his pockets stay full and
his companies stay successful. Between 2008 and 2010, CRL spent
at least $2.1 million on Washington lobbyists. Of course, plenty of
private companies invest in government outreach and lobbying. However,
most aren’t so influential that they can orchestrate near complete
control of government agencies like the CFPB and FDIC; and use those
agencies to destroy their competition.
Eakes makes no secret of
the interconnected web of his non-profit and for-profit service
providers including Self-Help Ventures, the Center for Community
Self-Help, Self Help Credit Union, Self-Help Federal Credit Union,
Self-Help Enterprises, his preferred front group, the Center for
Responsible Lending, and his most powerful asset yet, the CFPB.
example, the first president of CRL, Mark Pearce, was appointed by
President Obama to head the consumer protection division at the FDIC.
Pearce has since been implicated as one of the masterminds behind
Operation Choke Point, the Obama administration program that targets
legal businesses by intimidating banks into cutting off their banking
relationships with certain industries (including payday lenders and gun
Eakes’ connections to the CFPB extend at least as high
as Steve Antonakes, deputy director of the CFPB, whose personal
relationships with both Mike Calhoun, president of CRL, and Eakes, extend back
to his time as Massachusetts’s Banking Commissioner. Antonakes’ work in
Massachusetts also centered around limiting or destroying the ability
for consumers to access credit.
Between the CFPB’s forthcoming
rule on payday lending and Operation Choke Point (at the direction of
Mark Pearce), Eakes’ network of operatives in the government’s most
powerful agencies are poised to realize his objective – taking down the
short-term loan industry and replacing it with products from his own
network of service providers.
If the free-market short-term
lending industry is eliminated through regulatory action, the consumer
need for such products will still exist. Eakes is poised to fill that
need with taxpayer subsidized consumer loans, offered through his vast
network of organizations throughout the country.
The Center for
Responsible Lending is widely credited with advocating for, and
developing the CFPB alongside one of its most closely aligned advocates,
Sen. Elizabeth Warren (D-Mass.). It isn’t hard to see why Eakes, and
CRL’s funders Herb and Marion Sandler, invested so much time and money
into the inclusion of the consumer bureau in the Dodd-Frank
There is no better way to manipulate the market for a
product than to control the competition. And there is no better way to
control the competition than through the heavy hand of an “independent”
and unaccountable regulatory agency like the CFPB.
In an interview about CRL, Martin Eakes said,
“It’s an affiliated research and policy organization that started
because we got really angry at the financial services sector, and in
2002 started this organization that has hired fifty lawyers, PhDs, and
MBAs to basically terrorize the financial services industry.” There is
no doubt that Martin Eakes has not only terrorized the financial
services industry, but American consumers as well, threatening to
deprive them of the ability to access the products and services that
they want and need.
Wise is the senior adviser to the U.S. Consumer Coalition. (www.USConsumers.org). @USConsumers
posted on 2015-05-27 by Bob Sullivan
Debt collectors reportedly have a new strategy to get consumers’ attention: text messages.
“YOUR PAYMENT DECLINED WITH CARD ****-****-****-5463 . . . CALL
866.256.2117 IMMEDIATELY,” reads one such text, according to the Federal
The agency has temporarily halted three debt collection operations
that allegedly misused texts and is attempting to permanently ban the
activity as part of its “Messaging for Money” enforcement sweep.
New York-based Unified Global Group sent the text above, and others
like it, the FTC says. Some consumers who received such texts hadn’t set
up any card payment with the firm; and the firm failed to identify
itself as a debt collector in the message, a violation of the Fair Debt Collections Practices Act, according to the FTC.
“Legitimate debt collectors know the rules,” said Jessica Rich,
Director of the FTC’s Bureau of Consumer Protection. “They can’t harass
or lie to you, whether they send a text, email, or call you.”
The FTC also obtained restraining orders against New York-based
Premier Debt Acquisitions and Georgia-based Primary Group, accusing each
of sending texts and making phone calls that violated federal law.The FTC alleges that Premier impersonated state or law enforcement
officials, falsely threatened consumers with a lawsuit or arrest, and
falsely threatened to charge some consumers with criminal fraud, garnish
their wages, or seize their property. The FTC says the firm claimed in
text messages that it would sue the consumers and threatened to seize
their possessions unless they paid.
Primary Group was also accused of sending illegal texts. One example
provided by the FTC: “I’m a process server w/ Primary Solutions,
appointed to serve you papers for case [eight digit number]. Would you
like delivery at [consumer’s home address]?”
Premier did not immediately respond to an email request for comment. A
website listed for Primary Group was no longer in operation, and
contact information for the firm was not immediately available. The same
was true for Unified Group.
According to the FTC, Premier Debt Acquisitions also sent deceptive emails claiming that making a payment would help a consumer’s credit report, but the defendants had no ability to make good on that claim.
“They also kept trying to collect after consumers challenged the debt
or its amount, without investigating the dispute,” the FTC said. “In
one instance, they persisted despite written evidence that the debt was a
result of identity theft and a prior debt collector had marked it fully
paid. In other instances, the defendants tried to collect a payment
even after they had received it, and hounded one person for two years
about someone else’s debt.”
When a debt collector – or a party claiming to be one – contacts you,
it’s important to do your research before you pay them. Ask the party
to provide written verification of the debt
they’re attempting to collect on. It’s also a good idea to get your
credit reports to see if there are any collection accounts listed, and
if there are any errors. You can get your free credit reports every year from AnnualCreditReports.com, and you can get a free credit report summary every month from Credit.com to watch for changes that could signal a problem that needs your attention.
posted on 2015-05-20 by Karen Damato
Finding fraudulent purchases on your credit-card account is bad
enough. Having a thief gain access to your bank balance is much worse.
Criminals are stealing card data from U.S. automated teller machines at the highest rate in two decades, preying on ATMs while merchants crack down on fraud at the checkout counter.
Meanwhile, the risk of unauthorized bank withdrawals is weighing on
consumers deciding whether to make purchases with debit cards, which are
connected to a bank account, versus credit cards, for which
accountholders get a bill to pay later.
If fraudulent transactions are made on your credit-card account,
there is no immediate financial hit while you straighten things out,
notes Greg McBride, chief financial analyst at website Bankrate.com.
By contrast, if a thief is able to withdraw dollars from your bank
account, “the horse is out of the barn,” he says. The money is gone from
your account until you are able to get it restored.
Mr. McBride says he generally recommends credit cards over debit
cards, but principally for benefits such as more-generous rewards
Website CardHub.com says fraud concerns are one reason it suggests
consumers use a credit card as their “primary spending vehicle.”
CardHub Chief Executive Odysseas Papadimitriou says he has personally
experienced credit-card fraud and a fraudulent $3,000 withdrawal from
his bank account. The credit-card problem was annoying but when money
disappeared from his bank account, he says, “I got really, really
stressed out. It was very painful to see that.”
Here’s a look at your fraud-related liability on credit and debit cards:
The Consumer Financial Protection Bureau says that if your
credit-card number—not your physical credit card—is stolen, “you are not
responsible for unauthorized charges under federal law.”
If the actual credit card is stolen, you are liable for no more than
$50 in unauthorized charges as long as you report it to the card issuer.
But “most card issuers don’t even hold you to the $50,” Mr. McBride
The Visa V -0.38% and MasterCard MA -0.25% networks and big issuers Discover Financial Services DFS -0.45% and American Express AXP -0.10% all have a zero-liability policy on fraudulent credit-card transactions, according to a recent study by CardHub.
Many banks have instituted a zero-liability policy on their debit
cards, says Mr. McBride, because “they want people to use their debit
But issuing banks usually have some discretion to determine if the
customer promptly reported the theft. And different types of debit-card
transactions may be treated differently.
Federal rules allow significant liability for fraudulent debit-card transactions that aren’t reported in a timely manner.
With debit cards, the CFPB says that “if an unauthorized transaction
appears on your statement (but your card or PIN has not been lost or
stolen), under federal law you will not be liable for the debit if you
report it within 60 days after your account statement is sent to you.”
The rules are different if the card or PIN has been lost or stolen:
Report the problem within two business days and liability is limited to
$50 of unauthorized charges. Then the maximum liability rises to $500.
“If any unauthorized charges go unreported for more than 60 days,”
the CFPB says, “your money, and future charges by the same person, could
While financial-industry policies can be more generous than the U.S.
requires, that can also vary with the type of debit-card transactions
involved, the CardHub report says.
For instance, CardHub says Visa and MasterCard both provide for zero
liability on signature-based transactions on their debit cards. Also,
there’s no liability on a PIN-based Visa debit-card transaction
processed through the Visa network—and the same for MasterCard
transactions on that network. (But a consumer “has no way of knowing
what network transactions are processed on and therefore how much
coverage they have,” the CardHub report says.)
Meanwhile, on ATM withdrawals, CardHub says coverage is at the discretion of the individual bank that issued the card.
The Federal Trade Commission has a handy summary of the rules and advice on how to report card fraud on its website.
posted on 2015-05-15 by By H. Scott Kelly and Michael E. Lacy
On May 5, Virginia Governor Terry McAuliffe signed an executive
directive which sets enhanced security requirements for the purchase
card program used by state agencies, including the implementation of
“chip and pin” technology by December. The directive further instructed
Virginia’s treasurer, comptroller, and secretaries of finance and
technology to implement enhanced payment technologies that “meet or
exceed” federal standards for the state’s prepaid debit card, merchant,
and purchase card programs.
“Ensuring the safety of citizen data is a critical responsibility of
the Commonwealth of Virginia,” the Governor stated in the executive
directive. “In the face of ever-increasing cybersecurity attacks on
consumer and business-related entities, I am committed to ensuring that
transactions conducted between citizens and the Commonwealth meet the
highest level of transactional security standards.”
The security features have been a hot issue for the Obama
administration. The President recently signed two executive orders that
attempt to spur greater collaboration between the public and private
cybersecurity sectors and encourage enhanced payment card technology.
The executive directive issued by Governor McAuliffe builds on both
orders by making Virginia the first to apply the principles at the state
“I am keenly aware of the need for best practices and models to help
spur states to advance their cybersecurity position and make it more
difficult for hackers to gain access to our sensitive data,” McAuliffe
said. “We must partner with the federal government, the private sector
and other states to push innovation and adoption of enhanced electronic
payment technologies — by our agencies, our merchants and our citizens —
to help reduce credit card fraud. This directive will ensure the
highest level of security for transactions conducted between citizens
and state agencies.”
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