Expert: Regan Shinski - 5/25/2010

Question
"I returned merchandise purchased from an online company within their 60 day timeframe for returns, I have the delivery confirmation from the company's website to verify this.  The company did not return the merchandise to their inventory for 3 weeks and then would not refund my money, they only wanted to do a merchandise credit.  I successfully disputed this with my credit card company.  The merchandise company sent this to collections and the collections agency sent me a request for payment.  I responded with all the evidence involved in the credit card dispute, demonstrating that I do not owe this debt and requesting debt validation.  Within a week of receiving my letter and without sending me validation of the debt, the collection agency sent this to the credit reporting agencies.  I am soon to take out a personal loan, within the next 10 days, and although I have disputed this with the credit reporting agencies, the timeframe of 30 days means that I will likely not have my credit report cleared of this fraudulent collection before I apply for the loan (it must be completed before June 1).  Can I bring suit against the collection agency, not located in my state, for FCRA violations in my small claims court or local courts, violations specifically being not providing debt validation and sending the matter to collections after evidence showing the debt was not due?  I will be incurring a higher interest rate on the personal loan, as my credit score (Experian's model) went from 782 to below 700 because of this collection.  Thank you for considering my question and any information you can offer."

Answer
Hi Amanda:

Yes, it sounds like you have a pretty clean case and well-documented.  One minor correction, you want to file under the Fair Debt Collection Practices Act (FDCPA), not FCRA (or both).  The FDCPA deals directly with third-party collection agencies.

You may want to send a formal draft of the lawsuit papers you will file in federal court to the collection agency.  Send it certified mail.  State in the cover letter the case will be filed in seven business days and they will be responsible for court costs and your attorney fees.  You can demand some amount of money for damages if you want or just offer immediate settlement if they delete the credit file IMMEDIATELY.  The demands are really up to you, but the point is to send them the actual court documents you will file quoting their violations and SOME of your evidence.  Get it to their legal department.  Call a couple days after they receive it and ask to speak to the legal department - only.  Once you get a hold of their attorney with that evidence trail in front of them, you likely can get a deletion and cash settlement without having to go to court.

Otherwise, you will likely win in court.  You can hire an attorney but will likely have to pay fees up front.

Good luck and good job on the work you have done so far.

Regan