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In this week’s Research Assistant Peer Group meeting, we discussed whether a request for verification always constitutes a dispute. Many believe it is safer to automatically mark an account as disputed any time a consumer requests validation or verification.
This sounds like a good plan, but is it always necessary?
Consider the following scenarios:
- During tax season, a consumer may request an itemized statement of medical debt for tax purposes.
- A person undergoing a divorce or custody battle may need account balances to determine how to divide financial responsibilities.
- A patient might request an itemized statement to reconcile their records with insurance claims.
- A consumer may be trying to budget for all their debt and ask their creditors and collection agencies for bills to be able to do so.
- Someone planning to consolidate their debt may request account balances to apply for a loan.
Do these cases indicate a dispute? Even if the consumer acknowledges the debt but requires documentation for personal reasons, should the account automatically be marked as disputed?
Understanding the Distinction
Some members, particularly those handling medical debt collection, follow a dual process when obtaining verification of debt:
- Clear Disputes – The no brainers! If a consumer explicitly disputes a debt in writing during the validation period, per the Fair Debt Collection Practices Act (FDCPA), collection efforts must cease until validation is provided.
OR
If the consumer uses language that obviously disputes the debt and no cease-and-desist request is in place, the agency marks it as disputed and updates the trade line on the credit report, adding “Disputed by Consumer”.
- Requests for Validation (Not Disputes) – If a consumer merely requests validation while acknowledging they owe the debt, agencies may obtain the requested documentation and provide it without marking the account as disputed.
- The process may be once the validation is obtained, to send it directly to the consumer, or to send it to the agent first to review before sending it to the consumer.
Best Practices for Determining a Dispute
To differentiate between a dispute and a request for information, consider the consumer’s language:
- If a consumer states, “I dispute this,” or “I don’t owe this and won’t pay,” or similar statements that do not use the word dispute but show they do not believe they owe the debt, the account should be marked as disputed. In such cases, acknowledge their statement: “I am marking your account as disputed.”
- To assist the consumer and help in investigating the dispute, you may follow up with: “I have some information on your account. Would you like to discuss anything, or do you have questions for me?” If they decline, stop asking, politely end the call and proceed with your company’s dispute policy.
- If the consumer has questions, or wants to discuss details, and responds with statements like, “Oh, Ok I know what this is now!”, “ I understand now!” or “That was for my minor child, I thought it was for me” or any other statement that indicates they are no longer disputing, simply get clarity and ask the consumer. “Am I understanding correctly that you are no longer disputing this account?” Their response will clarify the status.
- If uncertainty remains, simply ask directly, “Are you disputing this account?” A clear yes or no provides assurance and documentation for future reference. And if they say No, you have it recorded if later they state you didn’t mark the account as disputed.
Compliance and Risk Management
Misclassifying an account as disputed when it is not can lead to other risks. Agencies have faced lawsuits for inaccurately marking disputes on credit reports. Conversely, failing to acknowledge a genuine dispute can also result in compliance violations. FCRA requires data furnishers to report accurate information.
To mitigate risks:
- Train staff to distinguish between disputes and validation requests, what to do when they are not sure and give scripts of what to say.
- There is a fine line between asking, clarifying questions, and badgering someone. Avoid pressuring consumers into withdrawing a dispute; instead, focus on clarifying their intent.
- Take time to audit past cases where accounts were marked as disputed to assess accuracy. Was it a dispute or just a request for information? Could the agent have sent validation and continued to collect the account? Or did they not mark accounts disputed when they should have?
- Review call recordings and transcripts to ensure compliance and improve processes. You may find nothing should change, or you may find an opportunity to do better for you, your client, and the consumer.
As always, ensure your policies, procedures, and training are clear about how you handle these situations.
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