Consumer complaint received 2024-12-07 00:00:00
Product: Credit reporting or other personal consumer reports — Credit reporting
Issue: Improper use of your report — Reporting company used your report improperly
Company: Sezzle Inc.
State: NY

Complaint narrative:
Account Name : SEZZLE INC Date Opened : XX/XX/year> Issue : This account has been charged-off with {$1700.00} written off. It continues to appear as an active debt, despite it being written off and reported to the IRS as gross income, violating 15 USC 1681s-2 ( b ) and FDCPA 1692e. I WANT THIS ACCOUNT TO BE DELETE IMMEDIATELY NO CONSENT WAS GIVEN TO REPORT SUCH INFORMATION. I want to OPT-OUT OF SHARING. REMOVE ACCOUNT. Under IRS guidelines, once a debt has been charged off and reported on a 1099-C as gross income, it is no longer legally considered a collectible debt. Continuing to report such an account as charged-off or written-off, when the IRS has acknowledged it as income, violates 15 USC 1681s-2 ( b ) and constitutes false representation, as defined in XXXX 's XXXX XXXX. Furthermore, under Bankruptcy law, the debtors obligations are considered XXXX, and the debt should not be misrepresented as due or owing. 


- FCRA ( Fair Credit Reporting Act ) 15 USC 1681s-2 ( a ) ( 1 ) ( A ) Prohibits reporting information that is known to be inaccurate or misleading. Reporting a charged-off account as an active debt violates this provision.

15 USC 1681e ( b ) Mandates credit reporting agencies to ensure maximum possible accuracy in consumer reports, which includes accurately reflecting a charged-off debt status.

15 USC 1681i ( a ) Requires proper investigation of disputed information and timely correction if inaccuracies are found.

FDCPA ( Fair Debt Collection Practices Act ) 15 USC 1692e ( 2 ) ( A ) Prohibits false representation of the character, amount, or legal status of any debt. Listing a charged-off account as active violates this clause.

15 USC 1692f Prohibits unfair or unconscionable means to collect or report a debt. Reporting a written-off debt as active is deceptive and harmful.

IRS Reporting Violations 26 USC 61 ( a ) ( 12 ) A charged-off amount reported to the IRS as gross income ( Form 1099-C ) indicates the debt has been forgiven. Continuing to report this as an active debt misrepresents the legal status of the account.

Key Points to Dispute Once a debt is charged off and reported to the IRS as gross income, the creditor acknowledges it as uncollectible. It can not legally remain an " active '' debt on the credit report.

Reporting this incorrectly inflates liabilities and damages the consumers creditworthiness, constituting unfair reporting practices.

UCC 9-210 Request for Accounting : This section requires the creditor to provide an accurate accounting of the debt. If the account is charged off, any discrepancies or incomplete information about its status can support its removal.

UCC 1-304 Obligation of Good Faith : Creditors and furnishers must act in good faith. Reporting a charged-off account as active violates this obligation, as it misrepresents the true status of the account.

UCC 2-615 Unconscionability : Continuing to report a charged-off account as active, especially after being reported to the IRS, can be argued as an unconscionable act that harms the consumer.

USC ( United States Code ) Fair Credit Reporting Act ( FCRA ) 15 USC 1681s-2 ( a ) ( 1 ) ( B ) Duty to Update Information : Creditors must promptly update and correct any inaccurate information. A charged-off account should not remain as active.

15 USC 1681c ( a ) ( 4 ) Obsolete Information : Charged-off debts must not remain on a credit report beyond seven years from the date of delinquency.

Fair Debt Collection Practices Act ( FDCPA ) 15 USC 1692e ( 10 ) False or Deceptive Practices : Reporting a charged-off account inaccurately can be classified as a deceptive practice.

15 USC 1692e ( 8 ) Failure to Communicate Dispute : If the account is disputed, the creditor must note this status in credit reports. Failing to do so violates this provision.

IRS Reporting Codes 26 USC 6050P Debt Discharge Reporting : Once a debt is discharged and reported on Form 1099-C to the IRS, it is considered forgiven. Reporting this as active debt on a credit report misrepresents its legal status.

Unfair Practices and Contractual Law 15 USC 45 ( a ) Unfair Trade Practices : Reporting false information about a charged-off account constitutes an unfair trade practice under the Federal Trade Commission Act.

15 USC 1637 ( b ) Billing Error Correction : Failure to correct inaccuracies related to charge-offs may be a billing violation.

Company response to consumer: Closed with explanation