K-Mart, in Pitt v. K-Mart Corp., Case No. 11-cv-00697, has reached a $3 million settlement in a class action lawsuit pending before the U.S. District Court for the Eastern District of Virginia. The class consisted of more than 64,000 job applicants who sued K-Mart for violations of the Fair Credit Reporting Act (the “FCRA”). Specifically, Plaintiffs alleged they lost out on jobs without having a chance to challenge negative information reported to their prospective employers in background checks and that K-Mart failed to notify the job applicants they were rejected for employment because of the background checks.
Are Consumers Ordering Credit Reports Online From Experian Being Billed For Monthly Credit Report Service Without Their Consent?
Possible Unauthorized Charges By Experian Cento Law is currently investigating claims that Experian, a national consumer reporting agency, directly or indirectly through its various other websites, such as FreeCreditReport.com, ProtectMyId.com, LowerMyBills.com, ClassesUSA.com, Pricegrabber.com, may be charging consumers for credit reports or credit reporting services without their authorization and consent.
The Consumer Financial Protection Bureau (CFPB) to Hold Two Field Hearings in January, 2013
The Consumer Financial Protection Bureau (“CFPB”) has announced that it will hold two field hearings in January on mortgage policy. In addition to hearing testimony from consumer groups, industry representatives, and members of the public, the field hearings will feature remarks from CFPB Director Richards Cordray. I
Limitations of the e-OSCAR System | Credit Report Disputes
In a study released this month by the Consumer Financial Protection Bureau, the CFPB found that there are specific limitations on the e-OSCAR system; the electronic system used by the national consumer reporting agencies (Trans Union, Experian and Equifax) (CRAs) to process consumer disputes of the accuracy of their credit reports. Under the Fair Credit Reporting Act, the CRAs are required to send data furnishers a notice of a consumer dispute that includes “all relevant information regarding the dispute that the agency has received from the consumer.”
Credit Reports and Employment Background Screening
One of the Federal Trade Commission’s (“FTC”) roles is to protect job applicants and employees against inaccurate information being reported to employers; because employers can access your credit report to make decisions regarding hiring, firing, promotion, reassignment, or retention. In addition to financial history, the consumer reports provided to employers consist of arrests, convictions, judgments, and bankruptcies. Recently, settlements have been reached in legal actions that have been brought against companies like Spoekeo, Inc. and HireRight Solutions, Inc. for failure to take reasonable measures to ensure the accuracy of consumer reports. Such failures resulted in inaccurate criminal history, belonging to someone other than the actual consumer being reported as if it was relating to the individual the report was requested for. Other failures included noncompliance with the FCRA rules and not ensuring the reports were used for only purposes provided by the law.
CRA Reinvestigation Obligations Under the FCRA
When a consumer disputes the completeness or accuracy of any information contained in his/her credit report, the consumer reporting agency (CRA) must conduct a "reinvestigation." The term "reinvestigation" is a statutory term under the Fair Credit Reporting Act (FCRA). If the reinvestigation reveals that the information is inaccurate or cannot be verified, the CRA must promptly delete the information. 15 U.S.C. § 1681i(a). Failure to conduct a reasonable reinvestigation violates the FCRA. Cushman v. Trans Union Corp., 115 F.3d 220, 223–24 (3d Cir.1997). The burden to conduct the reinvestigation is on the credit reporting agency. It cannot be shifted back to the consumer.
A credit reporting agency's reinvestigation obligation is to verify the accuracy of its original source of information. This duty may include going beyond the original source. Whether the credit reporting agency must go beyond the original source depends on a number of factors, including: (1) whether the consumer has alerted the CRA that the original source may be unreliable; (2) whether the CRA itself knows or should know that the original source is unreliable; and (3) the comparative costs of verifying the accuracy of the original sources versus the potential harm the inaccurate information may cause the consumer. Dixon-Rollins v. Experian Information Solutions, Inc., 753 F.Supp.2d 452 (2010).
Does Your Credit Report Have Errors?
What should you do if you learn that your credit report has errors? You can either contact us about how to proceed or send a dispute to the consumer reporting agency (CRA) on your own. There are several ways to initiate the dispute process with the CRAs, including using the dispute form which you may have received when you ordered your credit report; using the CRAs online dispute form; sending a dispute letter by mail (certified mail is recommended but not required); or by telephone. Whichever method you choose, you should remember to keep an accurate record of your dispute, including a copy of your dispute form or letter. If you use the online dispute form, you should take a screen shot of your dispute before sending it.
CFPB Releases Results of Study of Differences Between Consumer and Creditor Purchased Credit Scores
What should you do if you learn that your credit report has errors? You can either contact us about how to proceed or send a dispute to the consumer reporting agency (CRA) on your own. There are several ways to initiate the dispute process with the CRAs, including using the dispute form which you may have received when you ordered your credit report; using the CRAs online dispute form; sending a dispute letter by mail (certified mail is recommended but not required); or by telephone. Whichever method you choose, you should remember to keep an accurate record of your dispute, including a copy of your dispute form or letter. If you use the online dispute form, you should take a screen shot of your dispute before sending it.
Class Action Suit Against Experian & CSC
Indiana Consumer Files Class Action Suit Against Experian and CSC | Challenging the Accuracy of Bankruptcy Credit Reporting
Today, Cento Law, along with Eric Pavlack, filed a class action lawsuit against two consumer reporting agencies, Experian Information Services, Inc. and CSC Credit Services alleging numerous violations of the Fair Credit Reporting Act. In the suit, Plaintiff alleges the consumer reporting agencies inaccurately reported her bankruptcy on her credit report as dismissed when it was in fact withdrawn and failed to report that her bankruptcy was withdrawn before any bankruptcy plan was approved. Earlier this year, Plaintiff filed a similar lawsuit against Trans Union, LLC.
If you have any questions regarding this lawsuit, then please feel free to contact us.
Findings & Purpose of the Fair Credit Reporting Act
The Fair Credit Reporting Act (commonly known as the “FCRA”) is codified at 15 U.S.C 1861, et seq. In enacting this legislation, the United States Congress made several findings: (A) The banking system is dependent upon fair and accurate credit reporting. Inaccurate credit reports directly impair the efficiency of the banking system, and unfair credit reporting methods undermine the public confidence which is essential to the continued functioning of the banking system.
How to Dispute a Credit Report
How to Dispute Credit Report
Obtaining your credit report is the first step in disputing any inaccurate or wrong information which may appear on it. Federal law requires the three national credit reporting companies, Equifax, Experian, and Trans Union, to provide you with a free credit report every year. Get your free credit report at AnnualCreditReport.com; which is the official site to help consumers obtain their free credit report. Inaccuracies on your credit report may negatively affect you. If you find wrong information on your credit report start here:
Contact the credit reporting company in question. The disputing procedure can be initiated online.
To dispute a credit report from Experian,click here.
To dispute a credit report from Trans Union, click here.
To dispute a credit report from Equifax, click here.
Credit reporting companies must investigate disputes made by consumers. Thirty (30) days after the dispute is initiated, credit reporting companies are required to provide consumers with the results. The results should be accompanied by a free credit report. If the disputed information has not been corrected following the credit reporting companies dispute procedures, consider seeking legal action.
You May Have More Than One Credit File
At any given time, the national consumer reporting agencies maintain hundreds of millions of consumer "credit files" in their databases. According to some estimates these files relate to approximately 250 million credit active consumers across the United States. This means that many consumers have more than one file in a consumer reporting agency's system. Having more than one file on any one consumer serves as a catalyst to incomplete and inaccurate data being relied upon in the creation of a consumer report (commonly known as a “credit report”).
Numerous credit files may exists on a single consumer for the following reasons:
- Consumer reporting agencies may not have enough information to say with the highest degree of certainty that each of the credit files should "merge."
- The various creditors' records do not always identify an individual consumer in the same way.
- Consumers may use two or more names in their credit activities (such as nick names, maiden and married names, names with and without generational suffixes).
- Consumers may have two or more addresses (such as home/school, work/home or vacation or second homes).
- Creditor's records may misspell or invert letters in names, street addresses, or social security numbers.
Know Your Credit History | Protect Your Rights
Credit Report
Consumer reporting agencies, also known as “credit reporting agencies” or “credit bureaus,” serve a critical role in a consumer’s financial life. After collecting financial and personal data on individuals; the credit reporting agencies are able to generate the aggregated results into a consumer report, commonly known as a “credit report.” In most lending, credit reports, and the credit scores which are derived from them, form the basis of lending decisions. Many employers also use credit reports and other investigative reports to make hiring decisions. From the ability to pay back a loan to establishing one’s worthiness for a job, the information contained in a credit report can cause substantial injury to a consumer when that information turns out to be inaccurate.
Federal laws, like the Fair Credit Reporting Act, were passed by Congress to require credit reporting agencies to “follow reasonable procedures to assure maximum possible accuracy of the information” contained in credit reports, and to protect consumers when inaccuracies cause such injury. However, the burden is still heavily on the consumer when resolving such issues because those federal laws require consumers to know what is on their credit reports and to take action when inaccuracies are discovered. For this reason, it is critical that consumers take advantage of the federal law which requires the agencies, which are Equifax (including credit files owned by CSC Credit Services), Experian, and Trans Union, to provide them with one free credit report each year. To obtain your free annual report go to the only official site: www.AnnualCreditReport.com.
Consumer Reporting Agencies Subject to Increased Federal Supervision
Earlier this week, the Director of the Consumer Financial Protection Bureau (“CFPB”), Richard Cordray, spoke at a field hearing were he discussed the CFPB’s new authority to supervise consumer reporting agencies. Starting this September, the CFPB will have the authority to supervise 94% of the credit reporting industry. Until now, consumer reporting agencies (commonly referred to as “credit reporting agencies” or “credit bureaus”), the largest of which are Equifax (including credit files owned by CSC Credit Services), Experian, and Trans Union, have never been subject to like supervision. From conducting on-site examinations to seeking better comprehension of policies and procedures, the CFPB’s supervisory authority will seek to ensure that the consumer financial laws are being followed.
The creation of the consumer bureau, the CFPB, was done so in response to the recent financial crisis experienced by the United States.
Understanding How Credit Information Is Reported
In order to effectively protect your credit history, you must first understand how credit information is reported to the consumer reporting agencies. The consumer reporting agencies (Trans Union, Experian, Equifax and CSC Credit Services) receive credit related information and store that information in sophisticated databases. Those that provide credit information to the agencies are known as "furnishers." Furnishers are typically lenders (such as those that provide revolving credit lines, mortgages, student loans and the like) but may also include others like public information venders that collect and provide public record information (such as judgments and bankruptcies) to the consumer reporting agencies.
One common misconception is that when furnishers report your credit information that information posts directly to your "credit report" which in turn is provided to potential creditors when you apply for new credit. This misconception is wrong for many reasons all of which relate to how the agencies collect, sort and then disseminate credit information.
Supreme Court Ruling Prompts the FTC, the Department of Justice, and the CFPB to Intervene
In May 2012, the Federal Trade Commission, the Department of Justice, and the Consumer Financial Protection Bureau intervened and filed a memorandum in support of the constitutionality of the Fair Credit Reporting Act (FCRA). The issue arose in Shamara King v. General Information Services, Inc. when the defendant, General Information Services (GIS), moved to dismiss the case; claiming that the FCRA was unconstitutional based upon the recent Supreme Court ruling in Sorrell v. IMS Health, Inc., 131 S. Ct. 2653 (2011). As the dissent in Sorrell noted, the ruling would potentially open a Pandora’s Box of First Amendment challenges pertaining to the disclosure of public information. The issue of disclosing public information is the very issue at the heart of a class action lawsuit which was filed in the U.S. District Court for the Eastern District of Pennsylvania against the credit reporting agency, GIS.
Possible Credit Files - You May Have More Than One Credit File
Consumer reporting agencies (commonly known as "credit reporting agencies" or "credit bureaus") provide consumer reports (commonly known as "credit reports") to subscribers who use the information to make credit granting decisions. In order to obtain a consumer report, the agencies require their subscribers (i.e. banks, department stores, insurance companies and others) to furnish the name and address for the person on whom they are inquiring. Some agencies, such as Trans Union, also encourage subscribers to provide a consumer's social security number as well. At any given time, the national consumer reporting agencies maintain hundreds of millions of "credit files" in their databases. A credit file contains indicative information (such as name, address, former address, social security number and other information) and individual trade lines (such as account number, credit terms, payment history and other items) belonging to the consumer. These files relate to the credit active consumers across the United States of which there are approximately 250 million, meaning that many consumers have more than one file in a consumer reporting agency's system.
Credit Scores - FICO and VantageScore
FICO Score
According to court filings by Fair Isaac, the creator of the FICO score (the dominant and most well-known consumer credit score in the United States), a “Credit Score” is a representation of an individual consumer’s financial creditworthiness that quantifies the risk that a consumer will fail to repay a loan or other credit obligation. “Credit Scoring” is the process by which an algorithm, or set of algorithms is applied to Aggregated Credit Data to generate a Credit Score.
“Aggregated Credit Data” is the historical records of an individual consumer’s borrowing and repayment as reported to credit reporting agencies by multiple lenders and servicers of loans. “Aggregated Credit Data” is separately compiled, reported, and sold by Equifax, Experian, and Trans Union (collectively, the "Consumer Reporting Agencies"), with such activity representing the core of their respective businesses. Credit reporting in the United States is entirely voluntary and, therefore, the Consumer Reporting Agencies depend on major financial institutions, other lenders, and merchants to provide data.
May a consumer claim defamation against a furnisher of inaccurate credit information?
The following is a summary of a recent federal court ruling addressing this question:
In Longman v. Wachovia Bank, the Connecticut District Court held that the consumer's state law defamation claim was preempted by the Fair Credit Reporting Act (the "FCRA"). The consumer had alleged Wachovia defamed him by falsely reporting information to the consumer reporting agencies (the "CRAs") related to a three-year balloon lot note which he had obtained to finance a land purchase from Wachovia. The Court found, among other things, that Section 1681t(B)(1)(F) of the FCRA expressly preempts the application of state law regarding any matters regulated by Section 1681s-2. The Court reasoned that because the consumer alleged Wachovia reported this false information to the agencies, he was necessarily asserting a violation of Section 1681s-2, the Section of the FCRA which in part governs the reporting of information to the CRAs.
Therefore, according to this Connecticut District Court a consumer may not claim state law defamation against a furnisher of inaccurate credit information since that claim would be preempted by the FCRA.
HOWEVER, all is not lost. To sue a furnisher for reporting inaccurate information on your credit report, you simply need to dispute that information through the credit reporting agencies. And then, if the inaccurate information is not corrected, you may file suit under the FCRA.
How Long Will a Withdrawn or Dismissed Bankruptcy Stay on Your Credit Report?
A bankruptcy can end in a number of ways prior to discharge; for example, a bankruptcy can be subsequently withdrawn at the request of the debtor or dismissed by the court for a variety of reasons. There are several reasons a debtor may file bankruptcy just as there are several reasons why a debtor may decide to seek withdrawal of that bankruptcy. Because bankruptcy filings are public record those filings will eventually be picked up by the third party public information vendors which consumer reporting agencies use to collect public record information or directly by the consumer reporting agencies through the electronic PACER court reporting service.
Federal law requires that consumer reporting agencies that choose to report a bankruptcy must also report the type of bankruptcy filed (e.g. Chapter 7, Chapter 13, etc.) and, in the case of a withdrawn bankruptcy, that the bankruptcy has been withdrawn. The current practice of the consumer reporting agencies is to report a bankruptcy, including a withdrawn or dismissed bankruptcy, on a debtor’s credit report for up to 10 years.
