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guys welcome to this video if you're interested in an overview of how the automated dispute process works when you do a dispute through the credit bureaus then i think you'll find this video interesting so we're going to talk about acdv metro 2 what's a cra what's a furniture who in the world is a cdia and we'll just do this in an overview format but i hope that this will be helpful to you my name is john watts i'm a consumer protection lawyer and for many years i've been helping consumers with their credit report errors by using primarily the fcra fair credit reporting act so let's kind of look at the the terms or the players here so number one we have the cras okay sometimes we call these the credit bureaus the credit reporting agencies more formal name would be a consumer reporting agency and we have four big ones but three are really big and then the fourth one is kind of lagging behind but we're going to mention them because they're involved in the cdia and the metro 2. so the big ones are equifax experian transunion and then number four would be anovus or envis depending on how you want to pronounce it then we have the furnisher so the cras collect our information and they'll publish it to people well where do they get that information well it's from the furnishers sometimes called the data furnishers so this would be like capital one bank of america midland funding portfolio recovery these are people who provide or furnish information to the credit bureaus so you have the cra and you have the the furniture the data furniture and they provide data to the cras and that's where your credit reports come from well who or what is the cdia well that's the consumer data industry association now that almost makes it sound like this would be some type of consumer advocacy they are not okay absolutely not this is made up really of those four credit bureaus that we talked about equifax experian transunion and innovas and they publish what we call the metro 2 guy now that's not the official name but it's metro 2 which we'll talk about that in just a second so what is e oscar and if you look on the screen i'll try to get my cursor over here you know the e it would just be sort of electronic okay but the oscar is going to stand for these words so online solution for complete and accurate credit reporting so think about that this is something it's an online portal online system if you will and it's for complete and it's not complete or accurate it's complete and accurate reporting so this is kind of the communication system between the cras and the furnitures okay so you could think of it like you know it's a messaging system uh i i heard one guy from e oscar describing he's like we're sort of like fedex you know somebody hands us a package we deliver it so the the credit bureau the cra consumer reporting agency hands us a package related to a dispute we take that to the furniture the furniture gives us a response we take that back to the cra at least that's how they like to describe themselves well what's an acdb well it stands for automated consumer dispute verification so that's the information if we go back to here's the cra here's the furniture and e oscar is kind of the communication network between them four disputes the credit bureau the cra turns the dispute into an acdb and it sends it through e-oscar to the furniture and then the furniture responds through e oscar to the cra well what's metro t well that's just a standardized way of compiling the data so these four credit bureaus again equifax experian trade union enemies they don't want to get 10 000 furnitures giving them information in all different formats so they say look here's the standard sort of uniform way that you must report to us and the stated purpose in metro 2 is to comply with the fcra fair credit reporting act to have complete and accurate credit reporting so not incomplete credit reporting not inaccurate credit reporting but complete and accurate credit reporting so that's the purpose of metro 2 is to guide you in as a furnisher how do we report this you know what do we do if there's a bankruptcy and then there's this or how do we report collection accounts what about the date of first delay all these things it's a couple hundred pages and metro 2 put out by the cdia which if you sort of follow this here here are the cras they make up this group which comes up with this metro two which tells the furnitures how to furnish so we got the furnitures over here how to furnish to the bureaus and then this e oscar's kind of the communication for disputes and those disputes are turned into an acdb i know it's kind of a lot of information but i just want you to kind of see at least to get a quick understanding of kind of the players and what these terms mean so what is the fcra so we're putting aside all this metro2 cdia all that stuff what does the fcra require well there's two ways to dispute under the fcra one is you go directly to the furniture so you get a capital one or bank of america and you say guys there's a problem you have inaccurate credit reporting and they do have obligations there unfortunately you can't sue for that they can violate the law and say we're proud to violate the law you can't touch them in a suit over that so we're going to ignore that for now we're going to talk about what in the industry is called an indirect dispute which sounds sort of weird but what that means is you go to the cra the consumer reporting agency equifax experience transunion and office now again there's dozens of different ones but whoever qualifies as a cra you go to them i have a dispute here's who i am here's the account or accounts that i'm disputing here's why i'm disputing them then what happens well they have liability or obligation under the section 1681 i you can remember this because i stands for investigation you go to them the cra and say investigate something i think there's an account on my credit report that's either incomplete or inaccurate i want you to fix it or delete it well 1681i is what tells the cra what its obligation is now if the cras are negligent or even worse you can sue them if the furnishers are negligent or even worse you can sue them if you have gone directly to the cra who then will provide in sort of the industry language and indirect dispute to the furnisher so you're not necessarily going directly to the furniture although you can but you need to go through the credit bureau the cra and then that puts liability on everybody if they do a negligent or even worse type of violation so on the the right hand side of the screen we've got cra must respond within 30 days sometimes it can be 45 days now what do they have to do unless they can just immediately fix it without going to the furniture or if there is no furniture involved like it's a public record you know they have a bankruptcy on there you've never filed bankruptcy well there is no furniture they're just supposed to go investigate by dealing with the court or lexus nexus or whoever they're doing but they have an obligation to fix it but putting aside something unusual where the bureau says we don't even need to contact the furniture they have five business days to notify that furnisher now the fcra doesn't say here's exactly how you must notify them but just says you must notify within five business days so you've got to tell the furnisher what's happening here you know what's the dispute about who's disputing what's the account what's the basis of now then the furniture when they're notified however that happens through the cra they must investigate and if it's complete incomplete information it's inaccurate information they must fix it or delete it and they're supposed to review the information that comes from the cra now they might also hear directly from you and then they may have their own documents now some of them would argue with that last point they've said no no no we can close our eyes all of our records that prove that we're doing false credit for we don't have to look at it most judges do not agree with that okay if you properly notify a cra you say this is the account this specifically is what is inaccurate or incomplete then the furniture is going to have to take whatever the cra tells them whatever you've told the furniture and i believe they have to look at their own information i mean if you're talking about payment history is all messed up well i don't think they can just close their eyes to their payment history on their computer okay and again most judges would agree with that now the cra has to investigate as well it's not enough just to notify the furniture within five business days they say it is and they say all we have to do is just pare it back you know just repeat back whatever the furniture says almost all courts say no no that's wrong and if the furniture or the bureau the cra realizes hey this is in accurate information it's not accurate it's incomplete it's not complete information then make it accurate make it complete or delete the account pretty simple that's what they have to do now let's look and see how is that translated in this world that we've got acdvs we got e oscar we got metro 2 like what how does that work so on the left hand side i've got this is what the industry would tell you so cra receives the dispute they turn that dispute into an acdv okay usually they're picking one or maybe two codes from about 25 26 codes okay it might be it's not mine it's been paid it's fraud whatever it might be and then they transmit that through e oscar to the furniture and then the furniture receives it through e oscar and then they need to verify it as accurate they need to modify it they need to delete it or say we have to delete it because of fraud and then transmit that back to the cra through e oscar so again e oscar's kind of this pathway you know or like a shuttle or something that goes from cra to furniture and back from the furniture to the crm now let me tell you the real world here that's what we have on the right hand side the cra is trying to have either no human involvement or the most limited human involvement that's why they love for you to go online they're begging you go online fill out a dispute form you check the box so see over here where the the cra would normally would have to have some employees or contractors take your letter and turn that into codes well you do their work for them over here and they limit you on the number of codes okay and the choices and i mean i i very rarely have clients do an online dispute i happen to just go through it because i wanted to see the process and it's incredibly annoying how limited things are you go well wait this doesn't quite fit with what the error is and so you're checking a box that really is not correct and that's designed on purpose to limit your options and then if you're trying to sue and they go well you know you check this box and that's a little different than what you are complaining about now you may lose your case so i do not recommend online if you do online make sure you do a screen record just like i'm doing right here i'm recording my screen and also i would upload document upload a letter okay give them all the information that you possibly can and when the cra does have a human looking at usually it's a foreign worker and and really a foreign contractor okay the at the furniture level so remember here's the cra they transmit through the oscar to the furniture well the furniture is trying to have no involvement with humans or very very limited involvement so they can just immediately flip that back through e oscar to the cra so here's a couple of thoughts and this is the third bullet point if you send a long letter if you have lots of documentation if you have detailed explanations for what's wrong they do not like that okay because they're being paid on sort of a per dispute basis well if that you know is a half a page that's one thing if it's 18 pages they don't really get paid anymore for that and so this is not something they're interested a lot of times they'll just ignore it okay now is that good or bad well if you're trying to fix it it's bad it's also really really bad for the cra to ignore your letter and say well judge i mean we only read the first page like this thing was five pages long and they had 35 pages of attachment we are not reading all that i mean here's what i want you to think about if you know let's say there's a problem with your capital one account and uh and you dispute it and you give a very detailed explanation here's exactly what's wrong with this field and that field and this field and i feel and in the excuse from capital one and equifax experience transgender so it's too long of a letter we don't read well does that work when you don't pay your bill to capital one and they hit you with the late fee and you're like well i didn't know there's a late fee they're like it's on page three of the term and the conditions you're like well i can't read past page one that doesn't work you know if we break our lease in an apartment and on page seven it says hey you may be liable for three months of room we can't go i didn't make it to page seven i can only read the page one no that doesn't work it certainly doesn't work for these massive multinational corporations okay so i say send them as long of letter as you need don't make it longer than you need to but if you need five pages to explain everything take five pages i mean we've sent dispute letters that have 30 40 pages of attachments or enclosures with them hey if they choose not to read it that's on them buddy they got a big big problem if they choose to do that and they get to the wrong result so i have down here in the green just to emphasize this there are lots of mistakes made and part of that is think about this one does the cra make any money when you send a dispute letter the answer is no so it's not that they're just even you know they don't make any money but they only know they lose money because they have to pay their contractors they have to set up computer systems they should set these things up where it would flag illogical things okay so like if it says on equifax which reports state of first delinquency that your date of first delinquency was january 2018 and then the pay history for january 2018 it says you were current never been late well that's illogical they ought to flag that they don't want to spend money on that okay all that does is cost them money brings down their revenue brings down their profit brings down their net income okay and so when you do a dispute they don't care about it i mean they're just like how do we do this as quickly as possible and keep moving on and how can we avoid it even that would be better to just like pretend we never got it avoid it you know if if the consumer says i got five accounts that are raw how about we just investigate one that'll save us you know five times the money right we don't pay somebody to do five disputes we just pay somebody for one dispute and so they're always looking for ways to cut corners on this and that's why there are so many mistakes that are made so what do you do when there's an actual error and and i know i harp on this but i probably talked to one person a day that reaches out to me at least one person a day who says hey i did this dispute i think they did a lousy investigation can i sue and my question is always well whatever it is that you're disputing about is it being reported accurately or inaccurately usually they go well it doesn't matter because they did a lousy investigation i'd go no actually the only thing that matters is is it accurate or inaccurate that's the threshold the foundation if it is reporting accurately i don't care if the credit bureau ignored you there's really nothing you can do now if it's inaccurate now we look at the investigation was it negligent was it reckless was it willful but we have to have that inaccuracy so let's say you do it you have a true inaccuracy on some of the data you dispute it through the credit bureaus you identify the account you identify the errors you identify what you want them to do correct it or delete it and they just don't do it okay what can you do well let's start with th cra remember let me go back to the slide here when we do a dispute through the cra it's section 1681 i remember i is for investigation so we can sue under section 1681 i for negligent or wanton or willful or reckless all the same thing investigation now there's also a provision called eb which is maximum possible accuracy and if they don't have reasonable procedures i'm talking about the crn they don't have reasonable procedures that they follow to assure maximum possible accuracy then that can violate section eb now sometimes there are some requirements about it must be published in other words a creditor or a user must have looked at your credit report to trigger that liability that's true in some states not in other states but that's a possibility and then the furniture can be sued under section 1681 s2b and i mentioned this before but i can't tell you how many lawyers make this mistake they file a lawsuit i mean it's a fabulous lawsuit under section 1681 s2a they said i went to capital one i went to midland funding whoever it is they did a lousy investigation and and i'm suing under that and the court says you have no right to sue under section 1681 s2a and the lawyer's like oh my goodness i can't believe this that's it's it's like pages and pages of text and i can't use that no you can't so 1681 s2b that is where again we have cra in the furniture we notify the cra it goes to the furniture acdv through e oscar and then the furniture looks at that sends the response back through e oscar to the cra now if the cra did allows the investigation that's 1681 i if the furniture did a lousy investigation that's 1681 s2b and then we may also can get the cra under that section 1681 eb for maximum possible accuracy so let's say you can sue any or all these guys what do you get well in the green have actual or compensatory damages that could be economic or emotional here's the whole concept with this this is where you were before the furnisher or the the cra violated the law in other words it allows the investigation after what they did you drop down to here compensatory or actual damages all same thing it's to bring you back to where you were so what would that be in economic terms well maybe they do a lousy investigation and when you close on your house after that you get a five percent interest rate instead of a three percent interest rate well this is where you were or where you should have been had they not done this wrong thing to you and now you're dropped down to here because you're paying more money what's the amount of money that you're paying extra that would be the economic and so we would look at that for a mortgage over 30 years you know maybe it's an extra 100 bucks 200 bucks 300 bucks a month whatever it is maybe you had to make a higher down payment but on the monthly we'd take that out over 30 years add it up and then reduce that to present value in other words what is you know it's just a math question 200 a month for the next 30 years that's x number of dollars and then what amount of money right now represents what would be 30 years of 200 extra dollars a month okay well emotional distress is here's where i was before they broke the law here's where i am now how much money will it take to bring me back up because i'm worrying about it i'm upset about i'm angry about it my stomach is churning about it i'm nervous about all these things that that at least where i practice and certainly most places will allow you to recover these are real damages sometimes they're called emotional distress sometimes middle language all the same thing now you also get attorneys fees and costs and this is why i'll just be very candid with you it's very puzzling when a consumer says hey i have a great case i'm filing it on my own i mean you can do that but the credit bureaus especially the credit bureaus absolutely love that most of the bad law comes from pro se cases because the credit bureaus will not that they are smarter than the person without a lawyer not that they even have a good case but they understand the procedural rules better and so it'd be like playing in the super bowl and not realizing that you have four downs to make a first down what if you think you only have two downs and so at the end you know it's like second down and five and you're like punting the ball people are like what are you doing well that's you don't understand the rules same thing and particularly in federal court and there's just no reason for that because your lawyer is going to be paid out of the settlement or paid by the bad guys that you sue and the cost of litigation so if you go in without a lawyer not only do you not have the expertise i mean i presume you're getting a lawyer who knows what he or she is doing okay it doesn't really make sense to get one that doesn't know what they're doing but if you get an experienced lawyer they know what they're doing under the fcra you lose that benefit and you just made it a whole lot cheaper for the credit bureau or the furniture they don't have to pay attorney's fees unless you have an attorney and if it's wanton reckless or willful so here's negligence that's being careless under the circumstance that's not using reasonable care under the circumstances willfulness wantedness recklessness is a higher level okay and i'm not going to get into all the details of that but when you show that you can get statutory damages okay up to a thousand more importantly you can get punitive damage that's to punish that credit bureau punish that furnisher and to send a message to all other furnishers or bureaus cras to say do not ever do this again we're not talking about negligent conduct we're talking about reckless or willful or wanting content it just sends that message out your procedures are lousy your investigation techniques are terrible and you knew it or should have known it and now we're going to punish you above and be remember actual damages or compensatory here's where you should have been here's where you are it's to bring you back to you punitive is more than that it's to punish them and to send this message so that when a credit bureau is going you know should we let go of all these skilled investigators and hire people who don't know what they're doing because we could save money somebody's supposed to pipe up and go excuse me do you remember when equifax got popped excuse me do you remember when this furniture got hit with a five hundred thousand dollar punitive damage or a million dollar pune today we don't want that and they're oh okay that's the point of punitive damages so i hope that this overview not sure how long this video is taken but anyway thanks for sticking with me i hope that has been helpful to you and if you like this type of video feel free to subscribe we try to put out a video every day a lot of them have to do with debt collectors and credit reports and if you have any comments put those in if you you think somebody else might like this feel free to share it with them and i appreciate you guys watching and i will catch you tomorrow have a great day bye