In 2009, a settlement was reached in White v. Experian Information Solution, et al, a class action lawsuit that was settled for approximately 45 million dollars, in which Experian Information Solutions, Inc. (“Experian”) as well as TransUnion, LLC (“TransUnion”) and Equifax Information Services, LLC (“Equifax”) were sued as Defendants. It was alleged that Experian kept reporting debts as having balances, even though those debts pre-dated the filing dates of Chapter 7 bankruptcies that consumers had undertaken. From the consumers’ perspective, if the debts were dischargeable, then they should have been showing a $0 balance, since they were canceled already by the Chapter 7 bankruptcy that each consumer had gone through.
The case had originally been filed in the Federal District Court in the Central District of California. At the time, the settlement was the second largest settlement in history regarding alleged violations of the Fair Credit Reporting Act, 15 U.S.C. § 1681, et seq. (“FCRA”). Allegedly, anyone who had a Chapter 7 bankruptcy on their credit file that showed that it was discharged, but still had some of their pre-bankruptcy debts that were on their credit file with Experian that were still showing as though they were due and owing, could have been a member of the class. Violations of the Fair Credit Reporting Act by a defendant can provide consumers with statutory damages, actual damages, and the consumer’s attorney’s fees and court costs to be paid.
The FCRA is a federal statute. It regulates consumers’ access to their credit reports, and how their credit information is collected. It was enacted in 1970. 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. Credit Bureaus have to follow the FCRA, as it governs how they can collect and share information about individual consumers.
Pursuant to the FCRA, consumers have certain rights. One of these includes having free access to their respective 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. 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 website would provide it to a consumer each year for free.
If a business has taken adverse action against a consumer because of information in their credit report, such as denying a consumer’s application or charging a higher interest rate, then the credit bureaus have to provide them with a free copy of their credit report. Experian, TransUnion, and Equifax would also have to provide consumers with a free copy of their credit report if they are unemployed and are planning to look for a job within the next 60 days; if they are on welfare; if their credit report contains inaccurate information resulting from identity theft; and if they have been the victim of identity theft.
The credit bureaus would still have to provide consumers with their credit report at any other time, but they can charge them for it. Consumers would always have to provide personal, identifying information, so that a credit reporting agency like Experian, TransUnion, or Equifax can confirm that they are the person requesting the credit report before releasing it to them. This can aid in preventing situations where credit information is released to the wrong person, which can help to prevent identity theft, and so on.
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 is not complete, and they have the right to have the credit bureaus correct any information in their credit report that is not complete, and that is inaccurate. 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 occur.
Consumers, also pursuant to the FCRA, have the right to have negative information, and outdated information, removed from their credit report. In most cases that outdated and negative information would have to be removed from a consumer’s credit report after 7 years of it being reported on the report. If the negative, outdated information pertains to a bankruptcy, then it must be removed after 10 years.
Businesses can check credit reports for multiple reasons. Two of those reasons can be to decide whether or not to provide a loan or to sell insurance to an individual consumer. For these reasons, and others, what is in their credit file must be fair, private, and accurate. Credit information of consumers must be shared and collected accurately. If a consumer files a dispute with a credit bureau, and the credit bureau fails to respond to their request in a satisfactory manner within 30 days, that could be a violation under the FCRA, and they could 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 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 and evidence to display that said information that is being collected and shared is outdated and/or inaccurate, 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.
Two federal agencies that oversee and enforce provisions of the FCRA are the Consumer Financial Protection Bureau (“CFPB”) and the Federal Trade Commission (“FTC”). Respective states have their own laws related 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 a consumer would have to pay on a loan like a mortgage, or if the consumer gets approved for a loan at all, or for a credit card. Therefore, 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 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 they have filed for bankruptcy before, whether they have an arrest record, what their past and present addresses are, and if the consumer is behind on child support.
Access to a consumer’s credit report is only allowed under the FCRA under certain circumstances. Generally a mortgage lender, or credit card provider, or loan financer, or vehicle loan provider, or landlord, or 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 a credit report of an individual person in response to a federal grand jury subpoena, or 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 after the job applicant has given their express permission for them to do so. Employers who are in the trucking industry, however, 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 initiated the transaction in almost all circumstances. Or they would have to – in almost all circumstances – have agreed in writing for the report to be released before the credit bureau can release it. The FCRA therefore restricts who can see consumers’ credit files, and for what purposes. It has to be for a permissible purpose. For example, a business can request to see a consumer’s credit report if they want to grant the consumer credit after they have submitted an application, and that would be a permissible purpose. 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, as the FCRA’s rules apply to all of them as well.
Experian, TransUnion, and Equifax also have to give consumers the chance to opt-out of prescreened credit offers and insurance offers. Prescreened offers for credit and insurance that were unsolicited must include a toll-free telephone number that the consumer can call if they choose to remove their name and address from the lists that those offers were based on. This is called opting out. A consumer can opt-out with the nationwide credit bureaus, by calling the following phone number 1-888-5-OPTOUT (which is 1-888-567-8688).
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, as they furnish and provide information to the credit bureaus. Their legal obligations can include, but are not limited to, having to report accurate information. The information reported by them cannot be inaccurate. They must also promptly update and correct any inaccurate information that they have previously provided to the credit bureaus, they cannot refuse to do so.
Information furnishers must tell consumers about any negative information that they reported to the credit bureaus within thirty (30) days, and they also must let the credit bureaus know when consumers have chosen voluntarily to close an account. They must also not report accounts that a consumer has previously reported as being the result of identity theft, and they must have procedures in place to respond to notices of identity theft that the credit bureaus like Experian, Equifax, and TransUnion send to them.
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 bureau of a consumer’s dispute after the creditor receives it. The creditor cannot continue reporting the inaccurate information until it has 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 credit bureaus since there is no legal requirement that they do so. However, if a business chooses to report to the credit bureaus, they must follow the rules set by the FCRA.
The FCRA requires that businesses let consumers know when they have been turned down because of information in their credit report, as mentioned. The FCRA also requires that businesses provide consumers with the name, address, and phone number of the credit bureau that supplied the report to them that was used in the decision to turn them down for a credit opportunity.
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 the consumer’s credit report without their express consent and authorization. This way, credit, loans, and services cannot be approved in a consumer’s name without their given 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 acting on those people or entities’ behalf that a consumer already has an 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, 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. Initial fraud alerts last for one year. A new business seeing this has to take steps to verify the consumer’s identity before extending any new credit. Extended fraud alerts are available to 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 so it is possible that consumers have additional 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.