When a debt collector reports wrong information to a credit bureau, federal law generally bars it from furnishing information it knows or has reasonable cause to believe is inaccurate. A consumer may dispute the item, and the credit bureau generally must reinvestigate within 30 days. False credit information from a debt collector may also violate the Fair Debt Collection Practices Act.
A consumer may first see it when a loan application comes back with a collection account they do not recognize, a balance that is too high, or a debt they paid years ago still listed as unpaid. The worry is practical. Who put it there, does anyone have to fix it, and what happens after a dispute is sent? This page walks through the two federal laws that answer those questions and how they fit together.
Two federal statutes govern this situation, and each has its own lane. The Fair Credit Reporting Act (FCRA) governs consumer reporting agencies and furnishers. The Fair Debt Collection Practices Act (FDCPA) governs debt collectors.
A consumer reporting agency, also called a credit bureau or credit reporting company, is a company that compiles and sells credit reports, according to the CFPB. A consumer report is the report it sells about a person, including the credit report. A furnisher is a company that supplies information about a consumer to a credit bureau, such as a bank, a card company or a collection agency.
Under 15 U.S.C. § 1692a(6), a debt collector is "any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another." When a debt collector sends information to a credit bureau, it is furnishing, so the FCRA's furnisher rules reach that reporting too.
Wrong information takes many forms, including a wrong balance, a wrong account status, a paid debt shown as unpaid, a debt that belongs to someone else, a debt older than the reporting period, and the same debt listed twice. Federal law applies across the United States; state law may add protections and differs from state to state.
What the FCRA Requires of Furnishers Who Report Debt
Accuracy is the starting duty. Under 15 U.S.C. § 1681s-2(a)(1)(A), a person "shall not furnish any information relating to a consumer to any consumer reporting agency if the person knows or has reasonable cause to believe that the information is inaccurate." The statute defines reasonable cause as specific knowledge, other than solely allegations by the consumer, that would cause a reasonable person to have substantial doubts about the information's accuracy.
A second rule follows a consumer's notice. Under 15 U.S.C. § 1681s-2(a)(1)(B), a furnisher may not furnish information if the consumer has notified it, at the address it specified for such notices, that specific information is inaccurate, and the information is in fact inaccurate. A furnisher that clearly and conspicuously specifies that address is not subject to the first rule, though the law does not require one.
Regulation V adds process. Under 12 C.F.R. § 1022.42(a), each furnisher must establish and implement reasonable written policies and procedures on the accuracy and integrity of what it reports. For debt collectors specifically, 12 C.F.R. § 1006.30(a)(1) generally bars furnishing information about a debt before the collector speaks to the consumer about it in person or by phone, or mails a letter or sends an electronic message and waits a reasonable period for a notice that it was undeliverable. The CFPB describes that period as generally 14 days.
How the Credit Report Dispute Process Works
A reinvestigation is the credit bureau's check of a disputed item. Under 15 U.S.C. § 1681i(a)(1)(A), when a consumer disputes the completeness or accuracy of an item and notifies the bureau, the bureau must, free of charge and unless it reasonably determines under 15 U.S.C. § 1681i(a)(3) that the dispute is frivolous or irrelevant, conduct a reasonable reinvestigation and record the item's current status or delete it, within 30 days of receiving the dispute. That period may be extended by up to 15 days if the consumer sends relevant information during the 30 days, but not when the item is found inaccurate or incomplete or cannot be verified.
Within five business days of receiving the dispute, 15 U.S.C. § 1681i(a)(2) requires the bureau to notify the company that provided the item, with all relevant information the consumer sent. The FTC explains that the business must then investigate and report back, notify all three nationwide bureaus if it finds the information inaccurate, and that the bureau must give the consumer the results in writing, plus a free copy of the report if the dispute leads to a change.
A written dispute typically identifies the item, explains what is wrong and includes copies of supporting documents. The CFPB notes a consumer may dispute with both the bureau and the furnisher. For the full bureau process, see wrong information on credit reports.
Disputing directly with a furnisher runs on a separate track under 12 C.F.R. § 1022.43, covered in the FAQ below and on the page about a creditor reporting incorrect information.
When the FDCPA Also Applies to Wrong Reporting
Separately from the FCRA, 15 U.S.C. § 1692e says a debt collector "may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt." Reporting a debt to a credit bureau can be part of collecting it, so when the reporter is a debt collector under 15 U.S.C. § 1692a(6), the FDCPA may apply as well.
Two items on the statute's list matter most here. Under 15 U.S.C. § 1692e(8), communicating or threatening to communicate credit information "which is known or which should be known to be false, including the failure to communicate that a disputed debt is disputed," may violate the FDCPA. Under 15 U.S.C. § 1692e(2)(A), falsely representing the character, amount, or legal status of any debt may also violate it; the page on a collector claiming the wrong amount covers that in detail. Whether a particular report violates the FDCPA depends on its facts.
The private remedy is 15 U.S.C. § 1692k. It makes potentially available any actual damage caused by the failure, additional damages as the court may allow not exceeding $1,000 in an individual action, and, in a successful action, costs and a reasonable attorney's fee. The court considers the frequency, persistence and nature of the noncompliance and whether it was intentional. A collector is not liable if it shows the violation was not intentional and resulted from a bona fide error despite procedures reasonably adapted to avoid it. Under 15 U.S.C. § 1692k(d), an action must be brought within one year from the date the violation occurs. More on that process appears on suing a debt collector.
Civil Liability Under the FCRA for Inaccurate Reporting
For someone whose report still shows an error after a dispute, the FCRA's liability sections describe what the law makes potentially available, and each depends on how the requirement was missed.
Under 15 U.S.C. § 1681n(a), any person who willfully fails to comply with an FCRA requirement is liable for actual damages or damages of not less than $100 and not more than $1,000, punitive damages as the court may allow, and, in a successful action, costs and reasonable attorney's fees; 15 U.S.C. § 1681n(a)(1)(B) sets a different measure for a natural person who obtains a consumer report under false pretenses or knowingly without a permissible purpose. Under 15 U.S.C. § 1681o(a), a person who is negligent in failing to comply is liable for actual damages and, in a successful action, costs and reasonable attorney's fees. Under each section, on a finding that an unsuccessful pleading, motion, or other paper filed in connection with the action was filed in bad faith or for purposes of harassment, the court shall award the prevailing party attorney's fees reasonable in relation to the work expended in responding to it.
Not every FCRA duty carries this liability. Under 15 U.S.C. § 1681s-2(c), subject to a stated exception, sections 1681n and 1681o do not apply to any violation of subsection (a) of 15 U.S.C. § 1681s-2, including any regulations issued under it. That subsection holds the furnisher duty described above not to furnish information it knows or has reasonable cause to believe is inaccurate. Under 15 U.S.C. § 1681s-2(d), those violations are enforced exclusively by the federal agencies and officials and the State officials the Act identifies for that purpose. A failure by a credit bureau in its reinvestigation and a failure by a furnisher are judged under different provisions.
Under 15 U.S.C. § 1681p, an action must be brought by the earlier of two years after the consumer discovers the violation or five years after it occurs.
Filing a Complaint with the CFPB or FTC
The Consumer Financial Protection Bureau takes complaints about debt collection and credit reporting. The CFPB states that a consumer who thinks a debt collector reported a debt without meeting its FDCPA obligations can submit a complaint online or by telephone, and that a consumer having issues with debt collection can submit a complaint with the CFPB.
The Federal Trade Commission's debt collection guidance notes that, besides reporting a collector, a consumer has the option to sue a collector in a state or federal court.
An agency complaint is not a lawsuit and does not decide a private dispute. It sits alongside the dispute rights described above.
What the Law Does Not Require: Limits and Gaps to Know
A mixed file is a consumer report that contains information belonging to a different person. A collection account that is entirely unfamiliar can sometimes trace back to one, and it is disputed through the same reinvestigation process.
Time limits also apply. Under 15 U.S.C. § 1681c(a)(4), a consumer reporting agency generally may not report accounts placed for collection or charged to profit and loss that antedate the report by more than seven years. For a delinquent account placed for collection or charged to profit and loss, the seven years begin on the expiration of the 180-day period beginning on the date the delinquency that preceded that action commenced (15 U.S.C. § 1681c(c)(1)), and 15 U.S.C. § 1681c(b) makes the rule inapplicable to a report used in connection with a credit transaction of $150,000 or more, the underwriting of life insurance of $150,000 or more, or the employment of an individual at an annual salary of $75,000 or more. That rule falls on the credit bureau; whether reporting an old debt breaks a law depends on who reported it, what was reported and when.
The FDCPA reaches only debt collectors as 15 U.S.C. § 1692a(6) defines them. That definition does not include, among other exclusions, any officer or employee of a creditor while, in the name of the creditor, collecting debts for the creditor, or a person collecting a debt owed or due another to the extent the debt was originated by that person; it does include a creditor who, in collecting its own debts, uses any name other than its own that would indicate a third person is collecting. A creditor collecting its own debts is still a furnisher when it reports. Whether a business qualifies depends on its facts.
State law can add a layer. California, for example, has its own statute, which Cal. Civ. Code § 1788 says may be cited as the Rosenthal Fair Debt Collection Practices Act; that is California's rule, and other states differ.
If You'd Like a Consumer Rights Case Review
Wrong collection reporting often involves two laws, two kinds of company and two separate deadlines, which is why the details matter. This page does not address collection lawsuits or anything beyond the reporting itself.
A reader may request a consumer rights case review through Federal Consumer Rights.
