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Credit Reporting Agencies are Getting in Trouble for Reporting Public Records

ConsumerRights2

Most people already know that the major credit reporting agencies (CRAs) Equifax, Experian and TransUnion report debts and credit history information. When we think of this kind of information we may think about credit cards, medical debts, home or car loans, or student loans. We often forget that these CRAs also report on tax liens and judgement.

Equifax Gets Sued

However, the handling of these liens and judgments was so poor by Equifax, the company was sued. The class action lawsuit alleges that Equifax failed to timely update people’s credit reports when tax liens were satisfied. The plaintiffs alleged that if Equifax is going to leave on people’s credit reports the fact that a tax lien is owed, but fail to report when the lien is paid or satisfied, consumer’s credit reports are left incomplete and inaccurate.

Although Equifax fought the allegations initially and challenged the plaintiffs’ right to even bring the case as a class action, eventually Equifax did settle the lawsuit. As part of the settlement, Equifax has agreed not to report tax liens or judgments on consumers’ credit reports for the next five years.

Settlement Has Damage Award

The parties also worked out an alternative dispute resolution method, whereby consumers that have been impacted by inaccurate or incomplete reporting of these liens or judgments can be compensated up to $1,500.

This amount seems like a good settlement figure. However, the Fair Credit Reporting Act normally allows a plaintiff to recover up to the actual damage suffered by errors and inaccuracies in credit reports. So, for example, if someone had to obtain a mortgage at 6% because of an inaccuracy on credit, instead of the 4% the consumer may have otherwise qualified for, the difference that the consumer must now pay over the life of the loan with the higher interest rate would be the measure of damages.

CRAs Have Been Sued Before

This isn’t the first time the CRAs have gotten in trouble because of inaccurate reporting of public records. In 2015, all the agencies agreed as part of a settlement agreement not to report public records (other than bankruptcies), unless the public record contains a consumer’s name, address, date of birth or Social Security number (to ensure that the correct person’s debt ends up on the correct person’s credit report).

This is a big problem, because many municipalities may not keep this kind of information. The city may know who the “Jane Smith” is who owes a tax lien, but Equifax may end up putting that tax lien on the credit report of any one of many “Jane Smiths.”

Additionally, the settlement requires that the CRA (or its agent) must visit the courthouse or public records department to verify the accuracy of reported records every 90 days.

Make sure your credit reports are accurate. If they are not, the Miami consumer rights lawyers at Jacobs Legal can help you in enforcing your rights under the Fair Credit Reporting Act.

Resources:

bankrate.com/personal-finance/credit/public-record-credit-report/

natlawreview.com/article/equifax-settles-fcra-claims-related-to-reporting-civil-judgments-and-tax-liens

https://www.jakelegal.com/alternative-credit-scoring-methods-are-being-used-more-often/

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