Sunday, May 21, 2006

Can I Demand Proof of My Signature on a Credit Card Debt Collection?

The Fair Debt Collection Practices Act (FDCPA) provides consumers with protection against potentially abusive collection tactics. One right you receive under the FDCPA is the right to dispute a collection account by requiring a debt collector to provide you with validation or "proof" that you owe the debt. Obtaining a copy of your signature on the original's creditor's contract is one method of validating a credit card debt in collections.

Facts

    While the FDCPA gives you the right to demand a debt validation, it doesn't specifically state what constitutes a legitimate debt validation. Thus, you can demand that a collection agency provide you with your signature on the original credit card contract, but the collection agency can legally validate your debt without doing so. Once you request a debt validation, the FDCPA prohibits collection activity from the company until it responds to your request.

Significance

    Collection agencies purchase debts in batches. Original creditors rarely include documentation of each account they sell. Because your credit card debt can be sold repeatedly and most credit card companies purge their records after 18 months to two years, a collection agency may not be able to access your original records.

Features

    When a collection agency receives your debt validation request, standard protocol dictates that the company mail you a printout of your account information. Thus, you likely receive a document reflecting all of the information the company currently has on file for you, such as your full name and Social Security number, as well as the amount you owe. Certain collection agencies, however, do have records of your original contract and signature and will send you copies of the documents as proof of your debt.

Misconceptions

    Credit card companies often transfer debts to an in-house collection department before selling them to collection agencies. Because the FDCPA only applies to third-party debt collectors, a credit card company's collection department isn't legally required to respond to consumer requests for debt validation before conducting collection activity.

Prevention/Solution

    While a printout from a collection agency proves that the company has an account open in your name, it doesn't prove that you signed a credit card contract agreeing to pay the original debt. The Fair Credit Reporting Act gives you the right to dispute the account on your credit report. If the collection agency can't successfully validate the debt to the credit bureaus, they remove the collection agency's derogatory entry from your credit records.

    If a collection agency continues to pursue you for a debt without providing you with debt validation, the FDCPA allows you to either force the collection agency to stop contacting you by putting your request in writing or sue the company for violating federal consumer protection laws.

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