Correcting Your Credit Report Before, During, and After Litigation
Our Pittsburgh litigation lawyers defend consumers sued for allegedly failing to pay credit card debt (and other loan obligations).
We excel at getting debt collection cases dismissed or negotiated down significantly. However, two questions often linger before, during, and after litigation:
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- How will the dispute appear on my credit report?
- Can I sue a consumer reporting agency (or others) for causing errors on my credit report?
Never fear, a federal statute will appear! Help arrived, as amended in 2003. Let’s answer the first question, first:
How Will the Dispute Appear on my Credit Report?
The Fair Credit Reporting Act (FCRA)
On December 4, 2003, Congress passed — and President George W. Bush signed into law amendments to the Fair Credit Reporting Act (FCRA). The Federal Trade Commission’s main page describes FACTA as:
.. giving consumers the right to one free credit report a year from the credit reporting agencies, and consumers may also purchase, for a reasonable fee, a credit score along with information about how the credit score is calculated. . . . The Act also adds provisions designed to prevent and mitigate identity theft . . .
All that is nice.
But the real “teeth” embodied in FCRA appear in a separate FTC article:
• You have the right to dispute incomplete or inaccurate information. If you identify information in your file that is incomplete or inaccurate,. . . the agency must investigate . . . See www.consumerfinance.gov/learnmore for an explanation of dispute procedures.
• Consumer reporting agencies must correct or delete inaccurate, incomplete, or unverifiable information. Inaccurate, incomplete, or unverifiable information must be removed or corrected, usually within 30 days.
OK, but so what?
Your Rights as a Consumer
First, you should (a) exercise your right for a free credit report, then (b) challenge virtually every blemish on your credit report. But why? Remember, if the creditor fails to verify the debt, the consumer reporting agency “must correct or delete” the information. But won’t the creditor just verify the debt? Yes, they might, but only if they have financial incentive to do so. And they don’t get paid money to verify debt.
So you should challenge every negative blemish on your credit report. Because, for example, how do you know that it is 100% accurate? Otherwise, you — and the credit reporting agency — are assuming the accuracy of the exact date of “default” and the exact calculation of the amounts owed, which are always questionable. So make the creditor verify the alleged debt.
But be aware of one thing: the timing.
The Timing: When to Challenge Marks on Your Credit
If a debt collection case against you is still in litigation, for example, the plaintiff-creditor may have a financial incentive to verify the debt. For example, the creditor suing you might believe that a blemish on your credit report — if verified — might entice you to drop your defense to the suit and settle it, to clean up your credit.
But after the credit card (or other) debt lawsuit terminates (via settlement or otherwise), the creditor no longer has a financial incentive to communicate with any consumer reporting agency about you. Plus, many settlement agreements provide: “neither party is admitting any fact.” Thus, post-settlement or trial, you should immediately contest any related blemish placed on your credit report.
It’s Free, So Don’t Get Ripped Off
It’s 100% free and easy to challenge any blemish on your credit report. Thus, you don’t need to pay anyone — much less a credit report “cleaning company” of any kind — to help “fix your credit.”
2. Can I Sue For False Information on my Credit Report?
Yes.
Your Claim Against the Credit Reporting Agency and Others
If, after you dispute a mark or blemish on your credit report, the FCRA creates a claim on your part for damages against the credit reporting agency — and other businesses and individuals — responsible for the false information.
The Key Section is 15 U.S.C. §1681
One particular section — §1681n — of the FCRA forces the Defendant to pay the consumer’s actual damages – meaning the defendant must compensate you for changes to your reputation or loss of economic opportunity. However, this requires something more than a technical violation, as discussed below. Plus, normally, litigants in court pay their own attorney fees. However, §1681n is a “fee-shifting statute,” meaning, the Defendant must pay your attorney fees and costs if you prevail.
For willful misconduct by the Defendant, the penalties are more severe. There, the Defendant must pay
- Your actual damages (as described above) — or statutory damages of not less than $100 and not more than $1,000 for each willful violation of the Fair Credit Reporting Act, and
- “Such amount of punitive damages as the court may allow.”
15 U.S.C. §1681 Casts a Wide Net
Claims are not limited to ones on the credit reporting agency, however. In Dietz v. Chase Home Finance, LLC, 41 A.3d 882 (Pa. Super. Ct. 2012), PA’s Superior Court cited the FCRA (15 U.S.C. §1681t(b)(1) and §1681s-2)), which provides:
“A person shall not furnish any information relating to a consumer to any consumer reporting agency if the person knows or has reasonable cause to believe that the information is inaccurate.” 15 U.S.C. § 1681s-2(a)(1)(A).
Here is how the FTC describes consumer rights:
You may seek damages from violators. If a consumer reporting agency, or, in some cases, a user of consumer reports or a furnisher of information to a consumer reporting agency violates the FCRA, you may be able to sue in state or federal court.
Contact a Pittsburgh lawyer at our consumer protection firm for more information.
Making Claims Against Others (Beyond the Credit Reporting Agency)
If you see an error on your credit report — whether it’s in regard to a creditor suing you or not — it’s possible you’re not alone. In fact, a class action could already exist against the credit reporting agency and others responsible for the mistake.
In fact, these cases are so common that the American Bar Association (ABA) provides free information to businesses sued via a class action, for alleged FCRA violations. You can always try this link for a list of active class action lawsuits. There, you’ll find a section devoted to FCRA violations.
Limitations on FCRA Claims
Need For Actual Damages
As a practical matter, you will need to prove actual damage in most instances: some specific way you suffered harm from the FCRA violation. The same applies to amendments to the FCRA, called FACTA (the Fair and Accurate Credit Transactions Act of 2003), which creates a claim against merchants who list too much of your private information on sales receipts, for example.
In BUDAI v. COUNTRY FAIR, INC., 2023 P.A. Super 85 (Pa. Super. Ct. 2023), a Plaintiff who alleged only a mere technical violation by a retailer (absent other substantial evidence of immediate and actual harm) lacked standing to bring a FACTA lawsuit.
Preclusion (or Preemption) of State Court Tort Claims
Generally speaking, no consumer may bring a claim for defamation, invasion of privacy, or negligence pursuant to state law, when bringing an FCRA claim. This is true for two reasons: (1) the federal FCRA preempts state law and (2) the FCRA expressly prohibits various state court tort claims in an FCRA action, absent a clear intent to harm the consumer. Here’s the exact language in 15 U.S.C. §1681h(e):
[N]o consumer may bring any action or proceeding in the nature of defamation, invasion of privacy, or negligence with respect to the reporting of information against any consumer reporting agency, any user of information, or any person who furnishes information to a consumer reporting agency, based on information disclosed pursuant to section 609, 610, or 615 [15 USCS § 1681g, 1681h. . . except as to false information furnished with malice or willful intent to injure such consumer.
Let’s Get Started!
Contact a consumer protection lawyer at our Pittsburgh law firm today! We focus on defending debtors sued for the nonpayment of debt-related claims. Contact us today!
412.342.0992
