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Was Equifax Information Services, LLC Sued for Alleged Inaccurate Credit Reporting?

On January 29, 2020, a class action lawsuit was filed against Equifax Information Services, LLC (“Equifax”), for alleged inaccurate credit reporting, in the U.S. District Court for the Eastern District of New York.  The case is Rabinowitv v. Equifax Information Services LLC, et al., Civil Action No. 1:20-cv-00496.  The Plaintiff, Ms. Bella Rabinowitv, alleged that she disputed an inaccurate item on her Equifax credit report, and that Equifax told her it would investigate the dispute, but they did not resolve the issue.  So, she alleged that she filed a statement of dispute with Equifax, but when she got another copy of her credit report later on, she noticed that Equifax had not put her statement of dispute in her credit report, in violation of the Fair Credit Reporting Act, 15 U.S.C. § 1681, et seq. (“FCRA”).  The class action lawsuit alleges that Equifax intentionally failed to include statements of disputes with later copies of people’s credit reports, in violation of the FCRA.  Ms. Rabinowitv allegedly disputed the accuracy of the information on her credit file.  Violations of the Fair Credit Reporting Act can provide consumers with possible statutory damages, actual damages, and the consumer’s attorney’s fees and costs to be paid by the defendant.

The Plaintiff also alleged that Bank of America and GM Financial – the furnishers of her credit information – willfully, maliciously, recklessly, wantonly, and/or negligently failed to update their accounts based on the statement of dispute by her, despite their promise to do so, and also did not follow the requirements put forth under the FCRA.

What is the FCRA?

The FCRA is a federal consumer protection statute.  It regulates consumers’ access to their credit reports.  It also regulates how their credit information is collected by credit reporting agencies, and it makes the credit reporting agencies ensure that the information that they collect and distribute is a fair and accurate summary of a respective consumer’s credit history.  It was enacted in 1970, and the policy reasons behind enacting this law were to ensure that the personal information in the files of consumers that is within credit reporting agencies is fair, accurate, and private.  The FCRA has been amended twice since it was enacted.  All credit bureaus have to follow the FCRA.  It governs how they can collect and share information about individual consumers.

The FCRA protects consumers from misinformation being used against them. It outlines specific guidelines and rules on the methods that credit reporting agencies can utilize in order to collect information and to verify information, and it also outlines the reasons for which the credit reporting agencies can release information about a consumer.  Pursuant to the FCRA, consumers have certain rights.  One of these rights includes having free access to their respective credit reports.

Are Consumers Entitled to Copies of their Credit Reports?

Consumers are entitled by law to one free credit report every 12 months, from each one of the three major credit bureaus; Experian, TransUnion, and Equifax.  The FCRA is primarily aimed at Experian, Equifax, and TransUnion because they are the three major credit reporting agencies, and there is a widespread use of the information that those three credit bureaus collect and sell.  Credit reports can be requested at an official government-authorized website, which is AnnualCreditReport.com.  It can be requested however, in other locations as well, but that specified website would provide it to a consumer each year for free.  A consumer has the right to a free copy of their credit report within 15 days of requesting it, and they must have proper identification in order to obtain the credit report.

If a business has taken adverse action against a consumer because of information in their credit report, such as denying their application or charging a higher interest rate, then the credit bureaus would have to give the consumer a copy of their credit report for free.  The three major credit bureaus, Experian, TransUnion, and Equifax, would also have to give the consumer a copy of their credit report for free if they are unemployed and are planning to look for a job within the next 60 days; if the consumer is on welfare; if their credit report has inaccurate information in it emanating from identity theft; and if they have been the victim of identity theft.

The credit bureaus would still have to provide the consumer with their credit report at any other time, but they can decide to charge them for it.  The consumer would always have to provide personal, identifying information in order to attain a credit report, so that a credit reporting agency like Experian, TransUnion, or Equifax can confirm that they are definitely the person requesting the credit report before it is released it to them.  This is a measure that is taken to ensure the safety of consumers’ credit information.  It can aid in preventing situations where credit information is released to the wrong person, which, for example, can help to prevent identity theft, and other negative situations.

Consumers Have the Right to Have Their Credit Information Reported Accurately

Pursuant to the FCRA, consumers have a right to verify the accuracy of their credit report if they need it for employment purposes.  They also have a right to dispute information in their credit report that is inaccurate and that is not complete in general.  They have the right to have the credit bureaus correct any information in their credit report that is not complete, and that is inaccurate.  If the inaccurate information cannot be verified by the credit bureau, then the credit bureau has a responsibility to remove it.  Consumers also have the right to be notified if information in their file has been used negatively against them after they have applied for credit, or after they have applied for other transactions to happen.  If a consumer cannot get information corrected on their credit report, it is their right to be able to have a statement added to their credit file that explains the situation.

Pursuant to the FCRA, consumers also have the right to have negative and/or outdated information removed from their credit report.  Outdated and negative information would have to be removed from a consumer’s credit report, in most situations, after 7 years of it being reported on the credit report.  If the negative and/or outdated information is in regard to a bankruptcy, then it must be removed after 10 years of being on the credit report.  If a consumer cannot get outdated information removed from their credit report, they can submit a statement to be added to their credit file that explains the situation for anyone who might validly look at the credit report.  Information regarding a criminal record can remain indefinitely on the credit report.

Businesses can check consumers’ credit reports for multiple reasons.  Two of those reasons can be for the business to decide whether or not to give a loan to an individual consumer, or whether or not to sell insurance to an individual consumer.  For these reasons, and others, what is in the consumer’s credit file must be fair, private, and accurate.  Credit information of respective consumers must be shared and collected accurately pursuant to the FCRA.

How the Credit Bureaus Must Respond Regarding Credit Report Disputes

If an individual consumer files a dispute with a credit bureau, and the credit bureau does not respond to their request in a satisfactory and proper manner within 30 days, that could be a violation under the FCRA.  The credit bureau could then owe the consumer damages pursuant to the FCRA.  The credit bureaus have a duty to respond to the consumer’s dispute within a timely manner and the credit bureaus must do a reasonable investigation.

If a credit bureau does not remove outdated or inaccurate information that is being improperly collected and shared by the credit bureau within 30 days in response to a dispute and a consumer has given them reason to know that the information that is being collected and shared is outdated and/or inaccurate and/or has given them the evidence to display that, then the consumer can sue the credit bureau for damages pursuant to the FCRA.  The consumer can also for the same reason sue the business that originally reported and then verified the inaccurate or outdated information to the credit bureau when the credit bureau was doing its investigation.

Regarding the Sharing and Collecting of Credit Report Information

Two federal agencies that oversee and enforce provisions of the FCRA are the Consumer Financial Protection Bureau (“CFPB”) and the Federal Trade Commission (“FTC”).  States have their own respective laws relating to credit reporting.  The three major credit reporting bureaus, and other smaller ones and specialized companies, collect and sell information regarding the credit scores of individual consumers.  This can affect the interest rate that a consumer would have to pay on a loan, or if the consumer gets approved for a loan or for a credit card.  So, it is important that said information is reported accurately.  The information in a consumer’s credit report is used to compute their credit score.

The FCRA outlines what type of data and information that a credit bureau like Experian, TransUnion, and Equifax is allowed to collect.  This can be information like the bill payment history of a consumer, current debts, past loans, employment information, whether the consumer has filed for bankruptcy before, whether the consumer has an arrest record, what the consumer’s past and present addresses are, and if the consumer is behind on child support.

Pursuant to the FCRA, access to a consumer’s credit report is only allowed under certain circumstances.  Generally, a mortgage lender, or a credit card provider, or a loan financer, or a vehicle loan provider, or a landlord, or an insurance company can only request a credit report when one of those loans or cards or policies or rental applications is applied for by the consumer.  The government can request the credit report of an individual person in response to a federal grand jury subpoena, or a court order, or if the person is applying for a specific type of license that is government-issued.  Employers can request the credit report for a job applicant, but only if the job applicant has already given their express permission for them to do so.  Employers who are in the trucking industry generally are not required to have attained the written consent of a job applicant before requesting the credit report of a job applicant.

The consumer has to be the one who initiates the transaction in almost all circumstances, or they would have to in almost all circumstances be the one to have agreed in writing for the report to be released before the credit bureau can release it.  The FCRA therefore restricts who can see a consumer’s credit file, and for what purposes. It has to be for a permissible purpose.  For example, a permissible purpose would be if a business requests to see a consumer’s credit report in the event that the business wants to grant them credit after they have submitted an application.  It has to be for a valid need, and Experian, TransUnion, and Equifax have to keep this in mind before allowing anyone access to see a consumer’s credit report, and the approximately 50 different companies that self-identify as consumer reporting agencies have to do so as well.  This is because the FCRA’s rules apply to all of them as well. Consumers also have the right to know who has requested to look at their credit report in the last year.  For employment purposes, consumers have the right to know who has requested to look at their credit report in the past two years.

Regarding Information Furnishers

As mentioned, the FCRA’s rules can also apply to the businesses which provide information to the credit bureaus.  These businesses are also known as information furnishers; they furnish and provide information to the credit bureaus.  The legal obligations of information furnishers can include, but are not limited to, having to report accurate information.  Any information that is reported by them cannot be inaccurate.  The information furnishers must also promptly update and correct any inaccurate information that they have previously provided to the credit bureaus.  They cannot refuse to do that.

Information furnishers have to tell consumers about any negative information that they reported to the credit bureaus within thirty (30) days.  They also have to let the credit bureaus know when a consumer has chosen voluntarily to close an account of theirs.  The furnishers must also not report accounts that consumers have previously reported were the result of identity theft.  Information furnishers must have procedures in place to respond to any notices of identity theft that the credit bureaus like Experian, Equifax, and TransUnion send to them.

Regarding Disputing Inaccurate Information on A Consumer’s Credit Report

Consumers have the right to dispute any information on their credit report that is inaccurate.  They can do so directly in writing.  The creditor has to notify the credit bureaus of a consumer’s dispute after the creditor receives it.  The creditor cannot continue reporting the inaccurate information until it has fully investigated the dispute.  To do otherwise would be a violation of the FCRA and the business could then owe the consumer damages.  A business does not have to report information to the credit bureaus as there is no legal requirement that they do so.  However, if a business chooses to report information to the credit bureaus, then they must follow the rules set forth under the FCRA.

The FCRA requires that businesses let consumers know when they have been turned down because of information that is in their credit report.  The FCRA also requires that businesses provide consumers with the name, address, and phone number of the credit bureau that supplied the report used in the decision by the business to turn the consumer down for a credit opportunity.

Regarding Pre-Screened Offers and Security Freezes

The three major credit reporting agencies – Experian, TransUnion, and Equifax – also have to give consumers the chance to opt-out of prescreened credit offers and to opt-out of insurance offers.  Unsolicited prescreened offers for credit and insurance must include a toll-free telephone number that the consumer can call if the consumer chooses to remove their name and address from the lists that those offers were based on.  This is what is called ‘opting out’.  A consumer can ‘opt-out’ with the nationwide credit bureaus, by calling the following phone number, which is 1-888-5-OPTOUT (which is 1-888-567-8688).

Consumers can obtain a security freeze, and have it placed on their credit report.  This prevents a consumer reporting agency like TransUnion, Equifax, and Experian from releasing to others any information in their credit report without first obtaining their express consent and authorization.  This way, credit, loans, and services cannot be approved in their name without first having their express consent.  Having a security freeze in place can potentially delay, prohibit, or interfere with the timely approval of a subsequent request or application made regarding a new loan, credit, mortgage, and so on.

Security freezes do not apply to people or entities or their affiliates or collection agencies which are acting on those people or entities’ behalf that a consumer has an existing account with, and who are requesting information in a consumer’s credit report so that they can review the account or collect on it.  Part of what is entailed in reviewing an account includes, but is not limited to, monitoring the account, undertaking account maintenance-related activities, increasing the credit line, and enhancing and upgrading the account.

Consumers could also have an initial or extended fraud alert put on their credit file in the alternative to a security freeze, and there is no cost for this.  These alerts can be extremely helpful.  Initial fraud alerts last for one year.  A new business seeing this has to take steps to verify the consumer’s identity before they extend any new credit.  Extended fraud alerts are available to all victims of identity theft, and they last for 7 years.

Options for Victimized Consumers

Consumers have the right to sue and seek damages from credit bureaus, users of consumer reports, and information furnishers that act in violation of the FCRA. Additionally, many states have their own consumer reporting laws and it is possible that consumers have more rights under state law. If a consumer believes that their rights have been violated under the FCRA, they should contact a law firm or a consumer protection attorney who is licensed in the state that they reside in. It is important for a consumer to have an accurate reporting of their credit history. Professional legal assistance can provide consumers with guidance, help them seek restitution, and assist them in determining the answers to any questions that they may have in regard to the FCRA.