Archive for January, 2011

FCRA recidivism

January 28, 2011 Leave a comment

I recently stumbled across a series of posts by a Mr. Jack Gordon, who occasionally provides a public service by publishing national data about FCRA and  FDCPA lawsuits:  how many have been filed, by which lawyers, on behalf of which consumers, in which courts.  See one such post here:

What I found most interesting about this particular post was its statement that of roughly 500 plaintiffs who had filed an FCRA or FDCPA lawsuit, 181 – or almost 40% – had filed a similar lawsuit before.  These 181 people had filed over 1000 lawsuits in the past decade.

Is this good or bad?

It’s bad in that it suggests a certain cynicism about the law:  I’ve seen complaints in which a repeat plaintiff or repeat plaintiff’s lawyer sued everybody and their mother, not because everybody and their mother had done something wrong, but (I think) in the hope that most defendants would cough up a few thousand dollars and settle.

It’s good in the sense that one goal of the FCRA and FDCPA is to keep credit reporting agencies and debt collectors honest.  Most grocery shoppers don’t compare prices, but the grocery stores are kept honest by the few shoppers that do.  Likewise, it only takes a few repeat plaintiffs to keep credit reporting agencies and debt collectors honest.

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Everything’s a FCRA violation? Not really.

January 21, 2011 Leave a comment

I just stumbled across an “eHow” entry on finding FCRA violations in one’s credit report.  It’s at:

The eHow post claims that if you notice ANY error, no matter how small or inconsequential, on your credit report, it’s an FCRA violation and may entitle you to file a lawsuit.

On behalf of all the FCRA defense lawyers in the world, I should probably tell the author “thank you.”  More lawsuits = more business for me.

But I won’t do that.  Instead, I would like to point out that an error on a credit report is NOT necessarily an FCRA violation.  Here’s why:

Credit reports are collections of data that come from all sorts of different sources.  The data is subject to error:  by way of example, if a clerk mistypes someone’s name, or address, or social security number while opening a credit card account, that could cause the account to appear on someone else’s credit report.

When Congress created the FCRA, it recognized that credit reports were not and could not be 100% accurate at all times – there are too many variables in play for that to happen.  So Congress did not make every error in a report an FCRA violation.  Instead, and I’m speaking generally here, an error only becomes a violation if somebody wasn’t being careful enough.  See, e.g., 15 U.S.C. Sec. 1681e(b), which states that a credit reporting agency will NOT be liable if it uses “reasonable procedures” and will be liable if it doesn’t.

So if you’re a consumer reading this, please note that you only have proof if an FCRA violation if:  1) something in your credit report is inaccurate; and 2) somebody’s carelessness caused the inaccuracy.

Just wanted to get that off my chest.

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We couldn’t delete it if we wanted to

January 14, 2011 Leave a comment

In recent years, I’ve seen a number of cases in which a consumer report about A is pulled by creditor B from the files of reporting agency C, allegedly without A’s permission.  In this post, I’d like to note one weird quirk that can occur when such a situation takes place.

Whenever A’s report is pulled, a record of the “inquiry” is made by C, and the inquiry will appear on future consumer reports issued about A by C.  (When you, the reader, get your report, you’ll see such  inquiries toward the end, as a list of everyone who’s seen your report in the past two years).

Are you with me so far? B pulls A’s report from C, and C makes a record of the inquiry.  But A alleges that B had no permission to pull the report.

Suppose the facts come out, and everyone agrees that B pulled A’s report by mistake.  In such a situation, can C delete the inquiry so that it doesn’t show up on future reports about A?

As written, the FCRA’s answer is NO.  The FCRA states at 15 USC Sec. 1681g(a)(3))A) that every reporting agency must keep a record of every inquiry about every consumer for 2 years (if the inquiry concerned employment) or 1 year (if the inquiry concerned anything else).*  The statutory language makes no exception for mistaken inquiries.

The staff of the FTC noted this quirk in August 2000, when it sent an opinion letter that can be found at  At section 5 of the letter, the FTC argued that a reporting agency must keep a record of every inquiry, mistaken or otherwise, per 15 USC 1681g(a)(3)(A).  If the agency deletes an inquiry to appease a consumer, the agency has just violated the FCRA.  Or so says the FTC.

Some consumers are extremely sensitive to inquiries on their reports; they think that each inquiry depresses their credit score.  (They are sometimes right about that and sometimes not, but that’s a topic for another post).  Unfortunately for such consumers, it appears that they cannot get incorrect inquiries deleted, even if everyone involved agrees that the inquiry was a mistake.  Under the FCRA as written, the reporting agency couldn’t delete the inquiry even if it wanted to.

*  It appears that most reporting agencies keep all inquiries – no matter their purpose – on file for two years.  I don’t think there’s an easy way for the agencies to determine whether an individual inquiry was for employment or for some other purpose.  So they keep a record of all inquiries for the two-year period required for employment inquiries.  15 USC 1681g(a)(3)(A)(i).

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Can a consumer waive his FCRA rights?

January 7, 2011 Leave a comment

The FCRA is structured to encourage consumers to hold consumer reporting agencies accountable for errors in consumer reports.  If the FCRA did not exist, consumers whose reports were inaccurate might want to sue, but they wouldn’t have much incentive to do so:  most FCRA cases seek damages in the thousands (as opposed to tens or hundreds of thousands) of dollars.  By imposing statutory damages for some violations, and by throwing in attorney fees as damages in any successful suit, the FCRA encourages to consumers to file lawsuits.  That doesn’t make my clients very happy, but it helps keep me off the streets.

It also raises this question:  should a consumer be permitted to waive the rights that the FCRA provides?  Some credit/employment/rental applications include clauses in which the applicant waives the right to sue for inaccurate background data in a consumer report.  Could a credit bureau enforce such a clause in court?

My research suggests that this issue has come up only once in a reported decision.  Lane-Detman v. Miller & Martin, 82 S.W.3d 284 (Tenn. Ct. App. 2002).   Martin is not a typical FCRA case:  the plaintiffs there were not consumers, but investors who hired an attorney to perform a background check, which he farmed out to Equifax.  The contract between the lawyer and Equifax included an exclupatory clause that protected Equifax, and the trial court found (and the appeals court affirmed) that the clause protected Equifax against a suit by the investors.

In discussion, the appellate court stated the law as it appears to apply in most states:  courts will enforce most exculpatory clauses most of the time, but they will NOT do so if enforcement would harm the “public interest.”  Obviously that leaves a great deal of room for judicial discretion:  some courts could define “public interest” awfully broadly.

Some states (not all) use a six-factor test to inform judges’ discretion, which suggests that an exculpatory clause is against the public interest if it: (1) involves a regulated industry; (2) that provides a valuable public service; (3) to any member of the public; such that the party whom the clause benefits (4) has a decisive advantage in negotiations; (5) presents contracts of adhesion; and (6) makes the persons or property of those who request the service subject to the risk of the exculpated party’s negligence.

As written, those factors would seem to suggest that an exculpatory clause in favor of credit bureaus would harm the public interest.  But would that always be true?  I’ve been doing FCRA defense work long enough to know that some consumers (and some lawyers) will file quick-strike lawsuits against dozens of defendants (e.g., every creditor listed on a credit report) or against the same defendant multiple times.  Fighting these lawsuits is expensive, so defendants will often settle.  But if a plaintiff (or lawyer) gets enough small settlements, he or she can do very well.  Surely these consumers can waive their FCRA rights without harming the public interest.  Right?

Maybe judicial discretion isn’t such a bad thing after all.

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FCRA on Tuesday

January 4, 2011 Leave a comment

And so it begins.  I handle FCRA lawsuits because I find the issues they raise to be interesting.  We’ll see if anyone else out there agrees.

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