The Fair Credit Reporting Act: Important News For Business Owners

The Fair Credit Reporting Act: Important News For Business Owners

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 FCRA.

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.

Understanding The Fair Credit Reporting Act

A business needs to understand the Fair Credit Reporting Act. This act states that consumers have the right to verify the information on their credit report. It also states that businesses must ensure that the information on these reports is accurate to the best of their ability. It is essential the business understand this part of debt collection.

If your business receives a complaint from one of the national credit bureaus (Equifax, Experian or TransUnion), you have a 30-day period to verify the accuracy of the alleged debt owed, or it has to be removed off the individual's credit file, as per The FCRA.

In regards to debt collection, The FCRA is crucial to understand. If you file an inaccurate claim, you face possible legal ramifications if done so intentionally. Moreover, The FTC can possibly limit your abilities to file future claims.

However, The FCRA does work to the benefit of your business as well. As long as the information is reported accurately about the debt, it can and should be used by the business so that other businesses know of this individual's negligence in paying their debt. This is information other businesses will certainly want to know before working with this potential customer.

More Important Facts

For any business responsible for debt collection, much needs to be known about The Fair Credit Reporting Act. If they provide consumer information to the credit reporting agencies, they are also responsible for submitting only accurate information. These laws have been recently updated to expand the rights of consumers.

Consumers have the right to know what is contained in their credit report. They can file a request with the credit reporting agencies. During that process, if it contains any information deemed inaccurate, such as missing or wrong account information, debt collection activity, or erroneous history, the business has to offer proof of the accuracy of the debt, or it has to be removed from the credit report. The Fair Credit Reporting Act places this burden of proof on the business claiming the owed debt.

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.

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