A class action lawsuit was filed against TransUnion, LLC in the U.S. District Court for the Eastern District of Virginia, Clark v. Trans Union LLC, Civil Action No. 3:15-cv-00391. In the lawsuit, consumers alleged that their credit reports contained false records of civil judgment(s) and/or tax lien(s), and that TransUnion communicated those false records to third parties, such as lenders or employers, when the liens or judgments were reported inaccurately and did not belong to the consumers.
TransUnion’s actions were allegedly in violation of the Fair Credit Reporting Act, 15 U.S.C. § 1681, et seq. (“FCRA”). Inaccurate credit reporting can harm a consumer’s ability to get a loan, and it can also harm the interest rates that they do qualify for in regard to loans they are able to obtain. It can even affect an individual consumer’s employment prospects. Therefore, it is very important that a consumer’s credit information is collected, reported, and shared accurately. Violations of the Fair Credit Reporting Act by a defendant can provide consumers with statutory damages and actual damages. It can also entitle consumers to have their attorney’s fees and court costs paid for as well.
What is the FCRA?
The FCRA is a federal consumer protection statute which regulates consumers’ access to their credit reports. It regulates how their credit information is collected by credit reporting agencies. It also makes the agencies ensure that the information that they collect and distribute is a fair and accurate summary of an individual consumer’s credit history. The FCRA was enacted in 1970, and the policy reasons behind enacting this statute were to make sure 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 as it governs how they can collect and share information about individual consumers.
The FCRA protects consumers from having misinformation used against them. It outlines specific guidelines and rules in regard to the methods that credit reporting agencies can utilize in order to collect information, and also in order to verify information. The FCRA 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 includes having free access to their respective credit reports.
Are Consumers Entitled to Have Copies of their Credit Report(s)?
Consumers are entitled by law to one free credit report every twelve months, from each one of the three major credit bureaus; Experian, TransUnion, and Equifax. The FCRA is primarily aimed at Experian, Equifax, and TransUnion. This is because Experian, TransUnion, and Equifax 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: AnnualCreditReport.com. They can be requested, however, in other locations as well, but that website would provide them to consumers for free once a year. Consumers have the right to a free copy of their credit report within 15 days of requesting it. Consumers have a unique credit score with each credit reporting agency. They must have proper identification in order to obtain their 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 have to give them a free copy of their credit report. The three major credit bureaus, Experian, TransUnion, and Equifax would also have to give a 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, and also if they are on welfare. The three major credit bureaus would also have to give a consumer a free credit report 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 consumers with their credit reports at any other time, but they can decide to charge the consumers for it. A 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. This is a measure that is taken to ensure the safety of consumers’ credit information. This measure 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 problematic 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 they believe and know is inaccurate and 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, as well as after they have applied for other transactions to happen. If a consumer cannot get information corrected on the consumer’s credit report, it is their right to be able to have a statement added to their credit file that explains the situation.
Consumers also, pursuant to the FCRA, 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 the consumer’s credit report, in most situations, after 7 years of it being reported on their 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 consumer’s credit report. If the consumer cannot get outdated information removed from their credit report, the consumer can submit a statement to be added to their credit file that explains the situation for anyone who might be allowed look at the consumer’s credit report. Information regarding a criminal record can remain indefinitely on a person’s 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 for the business to decide 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 also 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 reporting agency 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. Therefore, businesses that are reporting credit information to credit reporting agencies must ensure that they are reporting information accurately, and that they are responding to these investigations properly and truthfully.
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”). Different States have their own respective laws regarding credit reporting. The three major credit reporting bureaus, and other smaller ones and other specialized companies, collect and sell information regarding the credit scores of individual consumers. The collecting and selling of information regarding the credit scores of individual consumers can affect the interest rate that a consumer would have to pay on a loan, and it can also affect whether or not the consumer gets approved for a loan or for a credit card. So, it is important that an individual consumer’s credit 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. Consumers’ medical information remains private, as consumers are protected from having their medical information disclosed in their credit report. Creditors are prohibited from obtaining or using medical information when they are making decisions in regard to credit.
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. The purpose must be a permissible one. 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 – this would be a permissible purpose. The purpose has to be for a legitimate need, and Experian, TransUnion, and Equifax must have that solidified before allowing anyone access to a consumer’s credit report. The approximately 50 different companies that self-identify as consumer reporting agencies must have that solidified as well. This is because the FCRA’s rules also apply to all of them. A consumer also has the right to know who has requested to look at their credit report in the last year. For employment purposes, a consumer has 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 furnish and provide information to the credit bureaus. These businesses are also known as information furnishers. 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 any of the credit bureaus. They cannot refuse to do so.
Information furnishers have to tell consumers about any credit information that is negative that the information furnishers reported to any of the credit bureaus within thirty (30) days. Consumers also have the right to have information furnishers tell them about any credit information that is negative that the information furnishers are simply planning to submit to any of the credit bureaus within thirty (30) days. Information furnishers can notify consumers that they have submitted, or plan to submit, negative information to a credit reporting agency via things such as a billing statement or a notice of default.
The information furnishers also have to let the credit bureaus know when a consumer has voluntarily chosen to close an account of theirs. The information furnishers must not report accounts that a consumer has previously reported was the result of identity theft. Information furnishers must have procedures in place in order for them to respond to any notices of identity theft that the credit bureaus like Experian, Equifax, and TransUnion send to them. Businesses are not allowed to publish consumers’ full credit card numbers on receipts. The FCRA allows consumers to protect their Social Security numbers by having it truncated on their credit reports so that the whole social security number is not visible.
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 directly dispute any information on the credit report that is inaccurate, 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 consumer’s dispute. To do otherwise would be a violation of the FCRA and the business could then owe damages to the consumer. A business does not have to report information to the credit bureaus as there is no legal requirement that any business has to 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 for credit opportunities, insurance, employment, and so forth, because of information that is in their credit reports, 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 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 the consumer the chance to opt-out of prescreened credit offers and to opt-out of insurance offers. Prescreened offers for credit and insurance that were unsolicited have to include a toll-free telephone number that the consumer can call if the consumer chooses to remove the consumer’s name and address from the lists that those prescreened offers were based on. This is what is called ‘opting out’, and 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 freeze prevents a consumer reporting agency, such as TransUnion, Equifax, and Experian, from releasing to others any information in a consumer’s credit report without first obtaining their express consent and authorization. That way, credit, loans, and services cannot be approved in a consumer’s 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 that are 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, 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 obtaining and placing a security freeze on their credit report, 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 opportunities. 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.