Agency Sued for Not Using Proper Condition Code

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A complaint has been filed against a collection agency, accusing it of violating the Fair Credit Reporting Act and the Fair Debt Collection Practices Act by using the wrong condition codes when furnishing information about the debt to the credit reporting agencies.

A copy of the complaint in the case of Wright v. AR Resources can be accessed by clicking here.

The plaintiff made two visits to an emergency room for injuries that were suffered during a car accident. A third-party provider at the hospital billed the plaintiff for charges she thought were covered by her insurance. The two debts were placed with the defendant for collection. In December 2018, the defendant began reporting the debts to the credit reporting agencies. The plaintiff disputed the debts with one of the credit reporting agencies. The defendant reported back to the CRA that it had completed its investigation and that the information being furnished was accurate. The plaintiff disputed the debt again, the dispute was again forwarded to the defendant, and again the defendant verified the information was accurate.

The defendant then began reporting the debts using the “XH” condition code, which indicates an account that was previously in dispute but an investigation had been completed by the furnisher. This, according to the plaintiff, was a way of saying that the dispute about the account had been settled or that a solution had been found. By using the “XH” code instead of the “XB” code — which indicates accounts that are currently in dispute, the defendant “materially damaged” the plaintiff’s credit score.

The plaintiff is accusing the defendant of violating Sections 1692e, 1692e(2)(A), 1692e(8), and 1692e(10) of the FDCPA by making false or deceptive representations in connection with the collection of a debt, and Section 1681s-2(b) of the FCRA for failing to update or modify reports after receiving notice of a dispute.

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