Question: On my credit report there are two derogatory tradelines. One from sears for a credit card that I was unable to pay for and the other from Lvnv. Lvnv bought the charged off account and they are reporting it as an open installment.
Is it legal for them to report it as an open installment or should it be reported as a collection account? Which is worse a derogatory tradeline or for it to report as a collection?
Answer: There has been a lot of debate about LVNV credit reporting practices. Both a past due reporting of an “installment loan” and collection entry are negative but the installment reporting is much more detrimental to your credit score and I firmly believe that is why LVNV engages in this illegal practice. I believe the “installment” reporting is illegal and a violation of FRCA laws and here is why:
1. LVNV hides behind a lot of intertwined companies, often passing the same debt around within its family of companies. LVNV acts as though they are the original creditor then hands the debt off to one of its companies to collect the debt.
2. LVNV is a debt buyer and debt collector period! As a debt collector they are subject to the FDCPA. You did not open a credit account with LVNV and as such they did not extend credit to you. Reporting as an installment causes the credit scoring model to view LVNV as a current past due open account, thereby keeping your credit scores low — month after month.
3. LVNV representing itself on your credit reports as an installment loan is inaccurate reporting although when many consumers dispute this inaccuracy, they will often verify it as accurate. But the law says something different. LVNV is violating the Fair Credit Reporting Act, Sections 611 and 623 and the Fair Debt Collection Practices Act, Section 1692e – False or misleading representations.
In re Martinez vs. Albuqueque Collection Services, United States District Court for the District of New Mexico, Case No. CIV 93-1468 JB, decided October 14, 1994:
IT IS FURTHER ORDERED that Plaintiff's motion for partial summary judgment on the ground that Defendant's attempt to recover attorney fees by representing Plaintiff's accounts as “open” was a false representation of the character of a debt in violation of section 1692e(2), and was also the attempted collection of an amount not permitted by law, in violation of section 1692f(1) be, and hereby is granted. Defendant's cross motion for summary judgment on the same ground is hereby denied.
Many consumers have fought LVNV and been successful. It just takes time and persistent pressure. There is a very good, informative and I must warn you – VERY LONG discussion about LVNV on www.creditboards.com; but it’s worth the read. It contains sample letters and stories of how consumers are fighting LVNV and winning.