A recent proposed class action has accused a Pennsylvania-based consumer reporting agency (CRA) of violating the Fair Credit Reporting Act (FCRA). The suit alleged that the CRA failed to ensure maximum accuracy with its consumer reports. The eleven-page-long lawsuit included another accusation: It did not reconcile conflicting data obtained from other CRAs. This failure led to inaccuracies in the consumer reports it delivered.

The Lawsuit

According to the lawsuit, the CRA compiled and published reports with inconsistent information. It also sold these inaccurate reports to customers. These actions happened despite the FCRA requiring CRAs to have procedures for ensuring accuracy. CRAs must consistently follow these established processes to ensure they assemble, compile, and sell accurate information only.

The plaintiff is a New Jersey resident who said he applied for a mortgage in 2021. He paid off the outstanding balance of $2,147 before applying. A credit account wrote this payment as charged-off. Afterward, the defendant prepared a consumer report using information acquired from other CRAs. However, the defendant’s report had inaccurate information about the plaintiff’s credit account. 

According to the lawsuit, one mistake in the report stated that the charged-off account had a past-due balance of $2,147. It also claimed that the defendant should have recognized the inaccuracies with the charged-off account. The account had a balance of zero. Therefore, it could not have a $2,147 past-due balance. 

The CRA had falsely reported that the account required a $64 monthly payment for the incorrect past-due balance. The complaint states that the defendant should have realized that a paid-off account would not require future payments. It also alleged that the defendant received conflicting information from three other CRAs on the charged-off credit account. Two CRAs had correct data, confirming it did not have a past due amount. Regardless, the defendant chose not to reconcile the obtained information.

The Effects

The plaintiff claimed that the incorrect reporting damaged his reputation and creditworthiness. The inaccuracies were a substantial factor in his decreased borrowing capacity, which led to his inability to obtain a mortgage on favorable terms. The suit also accused the CRA of acting with “grossly negligent disregard” for its obligations under the FCRA and the rights of its customers. 

The lawsuit intends to represent people in the U.S. or its territories affected by the defendant’s actions. It addresses how the defendant merged account information with different balances from several CRAs into a report for the affected. It also condemns the CRA for selling the data to a third party from November 16, 2018, through the present time. The people represented would include those whom the CRA falsely reported to have balances owed or a past due amount for charged-off accounts. 

This case shows the importance of complying with the FCRA. Failure to do so can result in fines, penalties, and lawsuits. Complying with the FCRA is as essential for background checks as credit reports. The best way to ensure accurate background checks that comply with the FCRA and other employment laws is to partner with a trusted background check company.

Background checks are made easy with JDP. Ask any questions you may have and learn more by contacting a sales rep today.

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The Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB) recently took action against a rental screening company. This company is a subsidiary of a major consumer reporting agency (CRA) and allegedly violated the Fair Credit Reporting Act (FCRA). According to the suit, the company failed to ensure the accuracy of rental background checks provided to landlords.

Furthermore, the rental screening company kept the identity of the third parties from renters. These third parties allegedly provided inaccurate information, harming the renters’ opportunities and image. The FTC and CFPB have requested a federal court to have the CRA pay $15 million to cover the FCRA violations. They also asked for improvements to how the CRA reports evictions.

Complaint Details

The joint complaint explained that the rental screening company repeatedly failed to ensure they delivered up-to-date reports. Failing this, the CRA revealed it did not use recent public records, missing dismissed evictions. As such, it reported several entries for the same eviction case and included sealed records.

Furthermore, the rental screening company refused to disclose who provided the inaccurate information. Instead, it claimed the criminal or eviction records came from the jurisdictions where the proceedings occurred. If true, the affected individuals had to contact third-party vendors to correct this inaccurate information. However, the company failed to share this information with the renters.

The CRA must pay $8 million for falsely informing consumers that it promptly placed or removed security freezes or locks. Though the CRA claimed it completed the requests to place or remove freezes or locks, it added the requests to a backlog. The law requires CRAs to promptly fulfill an individual’s request to place or remove security freezes or locks. It also mandates the CRAs to provide this service for free.

Another mark against the rental screening company concerns pre-screened offers. CRAs must keep active-duty military personnel off these lists. This requirement reduces the risk of identity theft for such personnel, especially when they travel overseas for long periods.

What Could Happen

If the court enters the order the CFPB and FTC have proposed, the CRA and its subsidiary would pay consumers $11 million. They would also stop the illegal tenant screening practices, such as not reporting more than one filing for a single eviction case. They must also refrain from reporting eviction cases without a final outcome. The company would also pay a $4 million penalty to the CFPB’s victims’ relief fund.

As for the $8 million, $3 million of it would go to consumers, and the remaining $5 million would go to CFPB’s victims’ relief fund. The CFPB also requested that the CRA find and correct its technology problems to prevent further consumer harm. They must fix these issues to ensure compliance when placing or removing security freeze and lock requests.

This case shows the importance of complying with the FCRA. Failure to do so can result in lawsuits, fines, and penalties. The best way for businesses to ensure compliance with the FCRA in their screening processes is to partner with an experienced background-checking company.

Keep your business compliant with new laws and regulations with JDP’s reliable background checks. Contact a sales rep today.

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A major consumer reporting agency (CRA) faces a proposed class action lawsuit over alleged violations of the Fair Credit Reporting Act (FCRA). In response, it filed a memorandum of law with the court disputing the basis of the allegations. The memorandum questions the “threadbare” allegations of the named plaintiff. Based on the complaint’s allegations, the agency did not violate the FCRA.

The named plaintiff filed on behalf of a class of individuals impacted by the CRA. This class requested that the CRA reinvestigate alleged mistakes in their reports or disclose the files to them. The plaintiff explained that the issue began with the bank they refinanced an auto loan. 

According to the complaint, it refused to accept payments due to system errors. Though corrected later, the error reported the plaintiff as months behind in payments. The bank then furnished this information to the CRA, harming the plaintiff’s credit score. In response, the plaintiff’s attorney filed a dispute.

The CRA deemed this request “suspicious” and requested the plaintiff verify his identity. After confirmation, the CRA contacted the bank, which claimed the information accurate. This result led the plaintiff to file this lawsuit.

This complaint outlined three alleged violations of the FCRA. First, the CRA violated Section 1681i because the statute has no exception for verifying “suspicious mail.” However, the CRA claimed a settled case law proved that CRAs may adopt identity verification procedures to guard against threats like identity theft.

Secondly, the plaintiff claimed the CRA did not perform a reasonable investigation. The CRA’s rebuttal pointed to a case law, which established that “[a]ccurate reporting by a credit reporting agency is a complete defense to claims under… 1681i(a).” It also claimed accurate reporting based on the undisputed fact that the plaintiff never paid on the loan. As such, claims concerning the bank’s system failures that led to declined payments did not involve the CRA. Instead, the CRA held no obligation to resolve such legal disputes.

Third, the plaintiff claimed the CRA violated the FCRA by reporting information it could not verify. However, the plaintiff acknowledged that the CRA forwarded the dispute and received accuracy verification from the bank. The CRA countered this claim and requested dismissal without leave to amend because it did not believe it violated the FCRA.

As this case illustrates, FCRA compliance is a must, and this is true for all types of consumer reporting, including background checks for employment. The best way to ensure employment screening programs remain FCRA compliant is to partner with a background check provider experienced with FCRA compliance.

Background checks are made easy with JDP. Ask any questions you may have and learn more by contacting a sales rep today.

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