What if you learn that someone has reported a debt against you that is wrong or is being disputed by you?
Since your credit rating and your ability to secure credit may be significantly compromised, you wish to challenge the reporting but what is the recourse.
Collection agencies in Ontario are governed by the Collections Agencies Act and the Consumer Reporting Act. Both statutes govern the conduct of a collection agency and set out a list of prohibited practices and methods for the collection of the debt.
Can a breach of these statutes give rise to an action against the collection agency for damages? In the case of Haskett v. Equifax Canada Inc. in 2003, the Court of Appeal permitted a civil action to proceed against a collection agency for “improperly and illegally including information” in the proposed Plaintiff’s credit report which they were not entitled to report, and which was inaccurate. While this action did not proceed to trial, a number of cases since then have awarded damages for breach of a statutory duty owed by the collection agency to the consumer about whom it reports.
A credit agency is entitled under the Consumer Reporting Act to distribute a credit report concerning your financial dealings as reported to it. The collection agency does not create the credit information but relies on its members to provide accurate information. The duty imposed on the agency is not to guarantee the accuracy of the information but rather to set up reasonable procedures to investigate disputes.
In order to satisfy its duty of care with respect to the receipt of a complaint from the consumer as to its accuracy this agency must within a reasonable period of time:
- Ensure that the date in the database came from an approved member who has been appropriately screened;
- Ensure that there are no obvious errors on the face of the information in the data base;
- Contact the member for verification of the accuracy of the data;
- Accurately and specifically describe the problem raised by the consumer to the member;
- Insist upon prompt and complete reply from the member.
In the case of Spencer v. Equifax Canada Inc. the Court did not find on the evidence any breach of duty when it accepted the evidence for reporting or in its subsequent duty to investigate upon hearing the complaint of the consumer.
However, it was pointed out in the evidence that Equifax had adapted a policy of offering to the complainant the opportunity to provide a consumer statement of his own in which he could dispute or explain the basis on which he disputed the claim. Thereafter any credit report distributed by Equifax would have attached to it this dispute/explanation. A consumer should therefore insist on the inclusion of a dispute statement in these circumstances.
While not a complete resolution, failure to avail yourself of this alternative would be considered a failure to mitigate one’s damages in cases where a breach of duty did lead to damages.