What are the most common errors on a credit report that lead to FCRA claims — and resulting damages?
In our consumer practice, I was surprised to see that denials of life insurance or annuities are often a violation of the Fair Credit Reporting Act (“FCRA”). The medical screening reports are often ad hoc and inaccurate.
If you have applied for life insurance and been denied, don’t give up. Instead, check your report with Medical Information Bureau (“MIB”). You may find that it’s patched together and has information well over the allowed seven years or contains otherwise inaccurate diagnosis.
Prescriptions and your Rx history are tracked by Milliman INtelliscript based out of Brookfield, Illinois – 871-211-4816.
When you have an apartment or employment denial, you can call the numbers listed below for the screening company and request a copy of the background report:
The FCRA requires that “[w]henever a consumer reporting agency prepares a consumer report it shall follow reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the report relates.” 15 U.S.C. Section 1681e(b).
That’s a high burden “maximum possible accuracy”! And it is not being met. In one over the top case of ours, despite a client providing proof of life, she was reported as deceased by her student loan servicer over and over again wrecking havoc on her credit report.
More typically we run into instances where student loans are incorrectly reported as being in default when in fact they are no longer owed due to a settlement or discharge in bankruptcy. This in fact is becoming our bread and butter raising these types of claims.
Are you looking down the barrel of an arbitration clause in your consumer/creditor agreement? I’ve posted before (Arbitration Clauses in Consumer Contracts – How to Avoid Being Thrown out of Court) on some local case law here in Florida to help avoid arbitration clauses – but here’s a new case in the consumer’s favor in Bankruptcy Court for the Middle District of Florida.
The Bankruptcy Court ruled that an arbitration clause did not constrain the court’s contempt powers, “[w]ords in a consumer agreement cannot deprive the bankruptcy court of the inherent power to enforce compliance with an injunction.” Verizon Wireless Personal Communications, LP v. Bateman, No. 14-5369, Adv. Pro. No. 18-1394 (M.D. Fla. Sept. 24, 2019).
So if you’re in bankruptcy, or had a previously filed one that you can reopen (without a filing fee), challenge the arbitration clause in bankruptcy – you may be much more likely to win!
It’s very easy to file an online or even phone dispute with a credit bureau. It’s fine to start a dispute in this manner. However, to ensure that all parties are required to investigate the dispute and update the consumer’s credit report, it is important to provide notice to the furnisher as well. A furnisher is the party who reports to the credit reporting agencies (“CRAs”).
In an April 2019 decision, Hunt v. JP Morgan Chase Bank, Nat’l Ass’n, the 11th Circuit, the appellate court governing the State of Florida, held that a class action could not go forward against the furnisher of consumer information because it (JP Morgan Chase) was not notified of the dispute. When JP Morgan Chase initially provided information to the CRAs about a consumer’s account being past due, this was an accurate statement.
The Court did not address whether JP Morgan Chase had an obligation to “refresh” information it had previously provided — had it received notice of the dispute. Finding that the furnisher did not receive notice of the dispute, the Court stopped its analysis there.
Many of our clients are getting their feet back under them now from the bankruptcies and foreclosures of the past few years. In our efforts to help them improve credit scores, we often will see an old creditor which reports a debt inaccurately after its been sold or transferred to another. Some of these furnishers/creditors argue that once they sell the debt, they have no further responsibility to ensure accurate reporting for that debt.
This is not true. The duty to report accurately does not end once ownership of an account transfers or is sold. Any furnisher must re-investigate upon receipt of a dispute from a Credit Reporting Agency (CRA). Failure to do so, opens both the furnisher and the CRA up to liability for an FCRA violation. If the furnisher does not respond to the dispute, then the CRA must delete the tradeline.
Damages under the FCRA can be substantial and can include claims against all three of the CRAs as well as the furnisher if they do not abide by this law. Statutory and actual damages are available as well as attorney’s fees and costs – which are usually handled on a contingency basis where fees and costs are only due in the event of a successful recovery. Further information can be found on our website.
What happens to the original debt when a consumer files an unlawful debt collection lawsuit? Sometimes the creditor will file a counterclaim to force the underlying debt to judgment in an effort to turn the tide in favor of the debt collector.
Fortunately, in the Middle District of Florida there are several good recent cases that prevent this outcome. The federal court has ruled there is no subject matter jurisdiction because there is no supplemental jurisdiction over the counterclaim based on the fact that the counterclaim is permissive and would substantially predominate over the plaintiff’s claims, and because the “set off” position didn’t support supplemental jurisdiction. See Della Vecchia v. Ally Financial, Inc., No. 8:17-cv-2977-T-23AAS, 2018 WL 907045 (M.D. Fla. Feb. 15, 2018); Vernell v. Ally Financial, Inc., et. al., No. 2:15-cv-674-FtM-38MRM, 2016 WL 931104, at *4 (M.D. Fla. Mar. 11, 2016).
This can be an important litigation concern that could force an early and minimal settlement if it weren’t for this case law favoring the consumer.
When you are thinking about hiring a bankruptcy attorney, what should you consider? – besides all the regular stuff like client reviews, years of practice, cost, availability, knowledgeable, friendliness of attorney and staff etc.
One thing to keep in mind is what other areas does that law firm handle and could that help you fix your situation. As you can see from the chart above, many bankruptcy attorneys just take bankruptcy cases. While that’s fine, most people facing a bankruptcy also have issues with their credit report, foreclosures, debt collection violations, robo calls, student loans etc. We handle all of that. We also have a class action team. One consumer area we don’t handle is vehicles – I don’t know a thing about our lemon laws or other issues regarding vehicles for instance.
I’m not suggesting you hire someone who dabbles in bankruptcy to file your bankruptcy. That is probably the worst thing you can do. But hiring a firm that is experienced in bankruptcy plus the other issues you are facing is probably best. We have over 25 years experience in bankruptcy plus a myriad of other consumer related issues commonly faced by our clients.
Did you ever wonder why credit reporting agencies cannot correct an error? Even one that seems rather obvious to you?
The reason is the elaborate mechanism created by the credit reporting industry is inherently flawed. This leads to inaccurate credit reports that lead consumers to paying too much for credit or being denied credit altogether.
The Fair Credit Reporting Act (“FCRA”) uses a standard that requires “maximum possible accuracy”. This high burden was created by Congress in 1970 due to the need for consumer reporting agencies to assemble and evaluate consumer credit and other information on consumers while acting in a fair, impartial manner respectful of a consumer’s right to privacy. Congress recognized that the power to control this information could easily be misused and abused. Credit bureaus do not consider the consumer as their customers. They work for the creditors.
Reboot Your Life: Tampa Student Loan and Bankruptcy Attorney Blog