“This was an open-and-shut case. This was stupid,’’ said Pooler, who works as an executive chef. “First, they refused to take incorrect information off my report. The day of the court hearing I got a call … that they had taken everything off.”
Pooler is among thousands who have had their lives turned upside down because of persistent errors in reports by Equifax, TransUnion or Experian, the nation’s largest credit reporting agencies. The errors, consumers say in lawsuits, affected not just their credit, but their very livelihoods. Consumer attorneys can reel off the cases:
A Georgia woman lost out on a job opportunity after being mistaken for an armed robber in Florida. By the time the error was cleared up, the employer had filled the position.
A local man couldn’t get an apartment after he was confused with a child molester in South Carolina. He teetered on homelessness until the problem was corrected.
Another local man, an entrepreneur with an impeccable credit history, couldn’t secure financing because his identity was mixed up with that of a person with bad credit.
"There's a lot at stake when there's inaccurate information on your credit report,'' said Taylor L. Kosla, an attorney with the Agruss Law Firm in Chicago, which handles similar cases all over the country.
For all the attention given to Equifax’s 2017 data breach, credit report errors are the bigger problem for consumers. In the past three years alone, more than 4,000 federal lawsuits have been filed alleging that Equifax failed to follow federal law on fair credit reporting. Additional cases are filed each year in local and state courts by people, like Pooler, who don’t have an attorney to represent them. Credit reports were also the focus of 175,000 complaints filed with the Consumer Financial Protection Bureau from 2015-2017, with Georgia among the states with the most. As many as 65% of the CFPB complaints in 2017 had to do with incorrect information.
Federal law requires credit reporting agencies to fully investigate disputed information.
Still, the agencies have operated for decades with systems that make it nearly impossible to conduct a comprehensive investigation, attorneys and consumer advocates say. The law is so nuanced, they say, that credit bureaus can essentially wash their hands of meaningful review.
That’s what a North Carolina woman says happened after a creditor marked her as deceased. Equifax should have checked the Social Security death index, she says in a lawsuit filed in Atlanta, but instead sold reports showing she had died.
In court filings, Equifax says it has reasonable procedures to assure maximum possible accuracy and that any damages that result from wrong information weren’t caused by the company but by banks, credit card companies and others who provide it with consumer credit information. Equifax also argues that consumers could mitigate any damages with “reasonable diligence,” including keeping close tabs on charges and working with those who furnish information to assure accuracy.
Jacob Hawkins, a company spokesman, wrote in an email that Equifax doesn’t comment on litigation. He did not respond to the AJC’s request for an interview. TransUnion and Experian also declined to comment.
Many of the errors, attorneys say, result from the credit agencies mixing files of people with similar names, addresses or Social Security numbers.
That is because the criteria the agencies use to sort information don’t require an exact match, Kosla said.
It’s a problem that has plagued consumers over the last 40 years, according to court pleadings.
“We see a lot of mixed files when it’s father and son with the same name,” she said. “Maybe it’s Tom M. Smith and Tom R. Smith and their credit reports end up getting mixed, so there is a sharing of information in each of their reports.”
It can take months to resolve those cases through litigation. More complicated cases can take years to unravel.
Solutions have been in the works for decades. In 1992, Equifax assured attorneys general in 18 states that it would adopt methods to prevent mixed files by using a consumer’s full identifying information, such as full first and last names, middle initials and complete street addresses. In 1994, it told regulators that it put in place procedures to detect logical errors before placing information in a consumer’s file. More legislation and efforts to protect consumers followed.
If any of the mitigating efforts were put in place, nobody can tell, consumer advocates say. In 2013, the Federal Trade Commission said that one in every five American consumers had an error on a credit report.
As recently as 2015, Equifax told the New York Attorney General's Office in a settlement agreement that it would have "more experienced" personnel review mixed file cases. That year, all three nationwide credit reporting agencies struck a similar deal with 31 states, including Georgia, to change some business practices. Among other things, the deal called for a more intensive review process for complicated disputes, such as those where people's identities have been confused.
In 2016, the Mississippi attorney general announced a settlement with the major credit bureaus involving errors. Yet a few weeks ago, according to news reports, he urged consumers to call his office about continuing problems, saying he had struggled getting his own credit report corrected when some information was mixed with that of his deceased father.
Another frequent type of lawsuit is lodged by consumers who had filed for Chapter 13 bankruptcy protection, the AJC found in its review of cases in federal court in Georgia. Unlike a straight bankruptcy in which debts are wiped clean, consumers who file under the provision can agree to a plan that allows them to keep their homes and other valuables in return for paying all or part of their debts over time.
The lawsuits claim consumers can’t get their financial house in order because creditors keep the delinquencies on their accounts, which get picked up by the bureaus. In some cases, the AJC found consumers whose credit reports reflected a delinquency even though they had made timely payments.
“These are consumers who are trying to rebuild their lives. They are trying to make some payment and hold on to a house or a car,’’ said Chi Chi Wu, an attorney with the National Consumer Law Center in Boston. “The court said you can pay according to this plan and your creditor is supposed to accept those payments and not go after you, but they are still telling the credit bureau that you’re delinquent.”
Court records show one Gwinnett County woman had continued to make mortgage payments after a 2014 bankruptcy, but her credit report did not reflect some of payments. As a result, her credit score took a hit.
Other pleadings show consumers enduring harassment from collection companies due to credit reports that reflect charges wiped clean by a bankruptcy court. A Whitfield County woman got more than 120 calls to her cell phone and collection letters due to a mortgage debt to CitiMortgage, court records show. In 2016, she sued Equifax and TransUnion for failure to conduct a reasonable investigation.
The case was dismissed after the inaccuracies were corrected.
Lack of accountability
Often, the credit bureaus’ response to criticism is that they aren’t to blame. The Consumer Data Industry Association, which represents reporting agencies, told the AJC that the bureaus work hard to root out causes of errors and fix them. When problems persist, the association said, it’s up to consumers to file disputes and work with the bureaus and lender.
If the bureaus don’t resolve such disputes, a last resort for consumers is to sue them and creditors.
A 70-year-old disabled Vietnam War veteran sued multiple parties after an error almost cost him his home.
The problem started when the Lawrenceville man had emergency treatment at a hospital, but it failed to timely provide required forms to the U.S. Department of Veterans Affairs for coverage, his attorney said. As a result, his claim was denied. The hospital then sent the bills to a collection agency, which reported the debt to credit bureaus.
"We got it settled, but it wasn't simple,'' said Cliff Dorsen, the Atlanta attorney who handled the case for the veteran. "We just didn't call up and say, 'Hey, this is wrong, fix it.' "
Disputes also drag out because of this routine in which consumers continue to go back and forth to try to negotiate a deal with creditors, Wu said. “Both parties (furnisher and credit bureau) are culpable,” Wu said. “Now the problem is systemwide, and they haven’t done anything to deal with it.”
Dorsen said exasperated consumers who call his office about credit reporting errors take the issue very personally. “They will ask, ‘Why Is Equifax doing this to me? Why won’t they change?’”
However, it isn’t personal, Dorsen said; the issue is that the bureaus aren’t trying to do everything to maximize accuracy.
It's easy for the credit bureaus to be indifferent about consumers' concerns, said Matt Litt, consumer campaign director with U.S. Public Interest Research Group, which advocates on consumers' behalf.
That’s because the bureaus aren’t beholden to the consumer. Their customers are the banks, insurers, employers and lenders that pay for the sensitive information.
“We’re not their customers,’’ Litt said. “We are their product.”
Pooler, the chef who sued Equifax, said consumers are left with few alternatives.
“If you file the (complaint) paperwork, they never get back to you,” Pooler said.
You are entitled to a free credit report each year from each of the nationwide credit reporting agencies. You have to provide your name, Social Security number and date of birth to verify your identity. The three agencies have set up one website, AnnualCreditReport.com, where you can request the reports. You can also get a free report if you are denied credit, insurance or a job based on information in the report.
Federal law says that both the credit agency and the information provider are responsible for correcting inaccurate or incomplete information. Notify the credit reporting company, in writing, what information is inaccurate and include copies of documents that support what you say. The Federal Trade Commission recommends enclosing a copy of your report with the items in question circled. The letter should be sent by certified mail with return receipt requested, so you have proof that the company received it. Also notify the creditor or other company that provided the information to the bureaus. If you believe you are the victim of identity theft, notify the bureau and creditors immediately and file a report with police. The FTC website IdentityTheft.gov also has form letters to send to merchants, banks and others.
Credit reporting companies generally must investigate within 30 days, unless a dispute is considered frivolous. Many cases are resolved within six months, consumer advocates say. However, some disputes can take years to resolve.
The National Association of Consumer Advocates, which is made up of more than 1,500 lawyers and advocates who represent consumer interests, has links to attorneys and organizations that may help.
The Fair Credit Reporting Act has a provision that enables consumers who win disputes to have their attorney fees paid for by the credit bureaus.
You can also submit a complaint to the Consumer Financial Protection Bureau, which tracks problems and can ask companies to respond. File a complaint at www.consumerfinance.gov/complaint/
Georgia is among the top states in the number of marketplace challenges that consumers face, including problems with credit reports and debt collections, federal data show. All told, Georgia consumers reported 53,698 complaints from Jan. 1, 2015 through June 2018, according to the Consumer Finance Protection Bureau’s “Complaint Snapshot: 50 State Report.” The top complaints in 2017 involved credit or consumer reporting, with 65% about incorrect information on reports.