UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION
WASHINGTON, D.C. 20580
Division
of Credit Practices
Bureau of Consumer Protection
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Clarke W. Brinckerhoff
Attorney
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(202) 326-3224
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April 24, 1998
Mr. Michael Lovern, Sr.
President
TRIAL MANAGEMENT ASSOCIATES, INC.
8972 Quioccasin Road - Suite 172
Richmond, Virginia 23229
Dear Mr. Lovern:
David Medine asked me to respond to your
Fax transmission of December 26, 1997, requesting our views concerning
the legality under the Fair Credit Reporting Act (FCRA) of a credit
bureau report of an account that has been discharged in bankruptcy
as "charged off as bad debt." We acknowledge receipt
of your request, pursuant to the Commission procedure set forth
in 16 C.F.R. §2.2(a), for an investigation of the credit bureau.
Section 607(b) of the FCRA requires credit
bureaus "to follow reasonable procedures to assure maximum
possible accuracy of the information concerning the individual
about whom the report relates." In our view, it is not a
reasonable procedure to label an account that has been discharged
in bankruptcy as "charged off as bad debt" if the account
was open and not charged off when the consumer filed bankruptcy.
Such a designation would be inaccurate or misleading, because
it would indicate that the creditor had written off the account
at the time of bankruptcy when it had not in fact done so.
Thank you for the information and documentation
you submitted to us in connection with your request that we investigate
this credit bureau's practices. As you may know, it is Commission
policy not to comment on the status or existence of any nonpublic
investigation.
The opinions set forth in this informal
staff letter are not binding on the Commission.
Sincerely yours,
Clarke W. Brinckerhoff
- cc:
- David Medine
- Jay Shaffer
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