1.3.2 FCRA Litigation
Since many consumers are harmed by incomplete and inaccurate consumer reports, any remedies provided by the Act should be explored. For example, consumer reports may make it difficult for consumers to pull themselves out of poverty. A creditor may review reports and raise the interest rate on a loan if a negative item shows up on a borrower’s report, furthering the consumer’s debt load. Landlords with available apartments may rely on consumer reports before agreeing to rent to a new tenant. Prospective employers often use consumer reports to determine whether to hire a job applicant, even when filling jobs that do not involve the handling of money or other valuables. Consumers often need automobile insurance to get to decent jobs, but they are often denied insurance or forced to pay excessive rates for it because of unfavorable consumer reports. Given the importance of credit histories, and the high error rates which abound, it is not surprising that the amount of FCRA litigation is significant.
The FCRA gives a consumer the right to learn what information is contained in a consumer report, including the right to a free report annually,46 and to dispute the accuracy of that information. If the consumer questions the accuracy of information in the file, the CRA must take separate steps to correct the misinformation or, if it decides no correction is merited, must permit the consumer to add their own brief statement to the file.47 If these self-help remedies are not sufficient, an attorney may seek limited judicial remedies on behalf of a client. Advice on litigating FCRA cases is provided in Chapter 11, infra.
Practitioners need to be alert to the power of a bad credit report when they litigate a debt on behalf of a consumer. A common problem confronting consumer attorneys is that although they may effectively argue valid defenses or counterclaims to a creditor’s collection action, the creditor has already damaged the consumer’s reputation by reporting the unpaid obligation to a CRA. One solution is to specify in any settlement of the dispute that the agencies and creditors take steps to correct and protect the consumer’s credit record. If a settlement does not protect a client’s credit history, the consumer will probably continue to be plagued by the disputed debt. Settlement negotiations should always address what the creditor will report to a CRA.48 Model settlement language is set out in Appendix K, infra.
Nonetheless, the FCRA is full of gaps and weaknesses. In some instances, the wrongs suffered by consumers are not addressed by the Act. In other instances, the Act imposes protections, but does not provide consumers with a private remedy to seek redress when these protections are violated. Furthermore, the Act is drafted somewhat poorly and is difficult to understand in places, leading courts to disagree over some fundamental questions. One of the chief objectives of this treatise is to save practitioners time by enabling them to quickly discover whether or not the Act will be useful. If the Act does apply, this treatise will then assist the attorney in preparing the case.