Just your friendly neighborhood collection industry expert chiming in to offer my 2 cents.
Step 1 is to immediately contact the collection agency in writing and ask for written validation of the debt. They must respond within 30 days. The entire point of a validation request is for situations like this -- for them to provide you with documentation to prove what the debt is, that the debt is valid, and you truly owe it. If they are unable to satisfy validation requirements within 30 days, they can't pursue collection anyway and will remove your tradeline from the bureaus. If they don't do this, you have a CFPB complaint on your hands. Problem solved.
Sure, contact the sorority and ask them WTF the fee is and have them confirm that they sent the fee to collections if you'd like, but they're probably going to tell you to talk to the collector at this point.
If they fulfill validation requirements and you're like "oh shit, yep, looks like she really did owe this $165," but you STILL want to fight it, you can file a written dispute. You can claim that you were not contacted by phone or by mail. The problem here is twofold: you're claiming the sorority never contacted you between 2015 and 2018 about this debt, and you're claiming that the collection agency has not contacted you since 2018 about this debt, despite reporting it to the bureau. This is... highly unlikely. More likely is that you did not answer the phone OR that the mail was going to the wrong address and no one told you about it. You say it's her old family address... do her parents still live there? Can you ask them about letters received? Did you leave a forwarding address?
Either way, it is your right to dispute the debt after you receive validation. They will investigate your dispute and either 1) determine it is valid and close the account/remove the tradeline, or 2) provide you with evidence that the dispute is resolved (i.e. we DID call/send you letters, here they are.)
If, after all that, you're still on the hook, you pay it. It's $165 that you didn't know about. It sucks. It happens. I once signed up for Proactiv face wash regimen, cancelled it, they tried to send me another bill, I never got it because I moved and didn't leave a forwarding address, and it ended up in collections.
As for the impact to your credit score -- if you pay this, they report to the bureau that it is paid, and your credit score reacts appropriately. If they can't validate OR you prevail in the dispute and they remove the tradeline it's like it never happened and your credit score reacts appropriately. This should have very little impact to you as long as you're not trying to buy a house tomorrow or next month. This will be nothing in a year, much less 7. Go ahead and get it resolved.
