Consumer complaint received 2025-03-22 00:00:00
Product: Credit reporting or other personal consumer reports — Credit reporting
Issue: Problem with a company's investigation into an existing problem — Their investigation did not fix an error on your report
Company: Bread Financial Holdings, Inc.
State: NY

Complaint narrative:
XXXX XXXX XXXX, NY XXXX XX/XX/XXXX Comenity Capital Bank XXXX XXXX XXXX XXXX, OH XXXX Subject : Final Notice of Legal Violations and Penalties CFPB Ref. No. : XXXX ( Submitted XX/XX/XXXX ) Dear Comenity, Your actions violate federal and state laws, incurring significant penalties. This matter is under active review by the Consumer Financial Protection Bureau ( CFPB XXXX. No. XXXX, filed XX/XX/XXXX ). Below is a detailed breakdown of your violations and the remedies required to resolve this matter : 1. Fair Credit Reporting Act ( FCRA ) Violations 15 U.S.C. 1681s-2 Violation Details : Re-Aging : You updated the " Status Updated '' field for the account ending in XXXX to XX/XX/XXXX, despite charging off the debt in XX/XX/XXXX. This falsely extends the XXXX reporting period under 15 U.S.C. 1681c ( a ) ( 4 ). 
XXXX XXXX : You reported the account as a XXXX balance " chargeoff '' while XXXX XXXX XXXX simultaneously reports it as a {$4900.00} collection. This violates 15 U.S.C. 1681s-2 ( a ) ( 1 ) ( A ), which prohibits furnishing conflicting or inaccurate information. 
Legal Penalties : Statutory damages of XXXX XXXX per violation ( re-aging + dual reporting ). 
Punitive damages for willful non-compliance under 15 U.S.C. 1681n.

2. Fair Debt Collection Practices Act ( FDCPA ) Violations 15 U.S.C. 1692e Violation Details : Misrepresentation of Debt Validity : By selling the debt to XXXX XXXX XXXX on XX/XX/XXXX, you abandoned ownership yet continued to report it as a " charge-off, '' misleading creditors about your legal right to collect or report the debt. 
False Implication of Recency : Updating the " Status Updated '' date to XX/XX/XXXX falsely implies the debt is active and recent, violating 15 U.S.C. 1692e ( 2 ) ( A ).

Legal Penalties : {$1000.00} statutory damages per violation.

Actual damages for credit harm ( e.g., loan denials, higher interest rates ).

3. IRS 26 U.S.C. 6050P Violation Violation Details : Failure to Issue 1099-C : After charging off and selling the {$4900.00} debt to XXXX, you failed to issue a 1099-C, violating IRS rules.

o IRS Publication 4681 ( Page 3 ) : A discharge of debt occurs when a creditor gives up on collecting a debt and abandons the debt ( e.g., charge-off ). 
o XXXX. XXXX. XXXX ( a ) ( 2 ) : Debt sales trigger 1099-C if the creditor ceases collection activity and charges off the debt.

Legal Penalties : IRS fines of {$580.00} per form under 26 U.S.C. 6721.

Tax liability risks for the consumer due to unreported canceled debt income.

4. UCC 3-603 + NY UCC 3-302 Violation Violation Details : Unlawful Retention of Negotiable Instrument : On XX/XX/XXXX, I sent a negotiable instrument ( Money Order ) via USPS Certified Mail ( XXXX XXXX ) to resolve this debt. You failed to : o Accept the instrument as payment. 
o Return it or provide proof of disposition, violating UCC 3-603 ( b ).

Conversion Damages : Retaining the instrument constitutes unlawful conversion under NY UCC 3-420, entitling me to recover the instruments value ( {$4000.00} ) + statutory penalties. 

5. State Law Violations ( NY Gen. Bus. Law 349 ) Violation Details : Deceptive Business Practices : Re-aging and dual reporting constitute unfair or deceptive acts under NY Gen. Bus. Law 349, which prohibits misleading representations in consumer transactions. 
Legal Penalties : Statutory damages of XXXX XXXX per violation + attorney fees. 

Demands for Compliance 1. Delete All Credit Entries : Remove the Comenity charge-off ( account ending in XXXX ) and Midlands collection entry ( account # XXXX ) from all credit bureaus within 30 days. 
2. Issue a 1099-C : Provide a 1099-C for tax year XXXX for the {$4900.00} canceled debt within 30 days. 
3. Return the Negotiable Instrument : Return the original negotiable instrument ( XXXX XXXX # XXXX ) or provide notarized proof of disposition within 30 days. 

Consequences of Non-Compliance Failure to resolve these violations by [ Insert Deadline Date ] will result in : 1. Lawsuit Filed in Federal Court : Claims under FCRA, FDCPA, UCC, and NY Gen. Bus. Law 349.

2. Escalation of CFPB Complaint : Formal request for punitive action under XXXX. No. XXXX. 
XXXX. IRS Complaint : Submission of Form XXXX documenting willful failure to issue a 1099-C.

4. FTC Complaint : For FDCPA and GLBA violations related to deceptive debt reporting.

5. Pursuit of Maximum Penalties : Including statutory damages, punitive damages, and recovery of legal fees. 

Sincerely, XXXX XXXX

Company response to consumer: Closed with explanation