Fair Credit Reporting: 12.1.3.7 Background and Financial Information About Defendants
CRAs and other defendants will usually be unwilling to produce information on net worth.
CRAs and other defendants will usually be unwilling to produce information on net worth.
As with any putative class action that threatens a defendant with substantial liability, the defendant may make an individual offer of judgment161 or settlement to the proposed class representative in an attempt to moot their claim prior to certification of a class. In many instances, the offer is inadequate to satisfy even the class representative’s individual claim, in which case it will not moot that claim, let alone the class action.162
This chapter details how to obtain and examine a report of a consumer’s file kept by a consumer reporting agency (CRA).1 The chapter describes what information is generally in a file,2 the consumer’s right to a free or low-cost report of the contents of that file,3 and the mechanics of obtaining that report.4 The chapter also examines what information from the file must be reported to the consumer,
There will likely be significant variations in the credit scores provided by the three CRAs. One reason for this variation is that the information in a consumer’s file is different for each CRA. Another reason is that the credit score products sold by TransUnion and Experian may be based on their own in-house educational scoring system, on the VantageScore scoring system, or on the FICO scoring system.171 The existence of so much variability in credit scores can create confusion and frustration for consumers.
There are many reasons why a consumer or the consumer’s attorney would want to examine the consumer’s credit file. Consumers can review a report of the file contents to determine if there is inaccurate or incomplete information. Understanding the nature of negative information in the file also is an aid to improving the consumer’s credit profile. Disclosure of the consumer’s file is an essential first step to handling almost any problem relating to a consumer’s credit file and consumer reports related to the file.
Information in consumer reports is generally not obtained through personal interviews with friends, neighbors, business associates, or other third parties. If a consumer report contains any information obtained through an interview (whether in person or over the telephone), then the report is an investigative consumer report, a special type of consumer report to which additional procedures apply.
The FCRA generally does not limit the kind of information that can be gathered in a consumer’s file, except for the restrictions discussed in Chapter 5, infra, and the restrictions placed on the dissemination of investigative reports obtained by interview, discussed in
Each of the “Big Three” nationwide consumer reporting agencies operating in the United States, Equifax, TransUnion, and Experian (formerly TRW), keep files on about 200 million Americans.29 The information held in consumer files is updated constantly.
A consumer report is one “bearing on a consumer’s credit worthiness” and other factors.53 Consumer is defined in the FCRA as an individual54 and must, at a minimum, be “an identifiable person.”55 Therefore, a report on an anonymous computer username may not be a consumer report.56 One court held that a file that contains information on several persons who share a common name and state, and that does
Consumer files from the “Big Three” nationwide consumer reporting agencies traditionally contain:
Personal identification information includes the consumer’s name (and aliases), current and previous addresses, and Social Security number. Files may also contain dates of birth, present and previous employment information, telephone numbers, and a spouse’s name. This is sometimes known as “header” information.
The credit account information or “tradelines” detail the consumer’s payment history with certain creditors, including mortgage, auto loans, installment loans, credit cards, and retail store cards. For each creditor, the file contains the creditor’s name. The file also indicates whether the account has been sold to another creditor or whether another party is involved other than the nominal creditor. For example, the file might state “Walmart/Capital One” The average credit file contains thirteen past and current credit accounts.34
Public record information will be listed in a separate part of a report, obtained from public court files or other governmental sources. Public record information is always negative, such as tax liens, bankruptcies, court judgments (including default judgments), and foreclosures.
A consumer report will show “inquiries,” i.e., records of users who have requested the report within the last two years for employment purposes and within the past year for other purposes, such as applications for credit.55 There are two general types of inquiries: “hard” and “soft” inquiries.56 However, with one exception,57 this distinction is not set forth in the FCRA,58 but is instead a matter of industry
Reports sent to users (but not to consumers, unless specifically purchased) will also include a “credit score” or a numerical rating of a consumer’s so-called creditworthiness.66 This score is based on information in the report, which is tabulated according to formulas that vary for different CRAs and even different creditors.
The “Big Three” nationwide consumer reporting agencies obtain their information from three primary sources. First, they obtain the bulk of their information from furnishers,70 mostly creditors and others who provide current account information, generally on a monthly basis, in electronic format. Furnishers include banks, other lenders, retailers, insurers, landlords, and others. These entities are usually “subscribers” who both obtain consumer reports from the CRA, and regularly send the CRA information on the accounts of customers.
Specialty CRAs obtain a specific type of information on a consumer for particular purposes. One example is tenant screening services such as RealPage’s LeasingDesk product, marketed to landlords for use in considering prospective tenants.78 Information is culled from housing court and small claims court docket sheets, criminal court docket sheets, other CRAs, and third-party vendors.
One of the bedrock requirements of the FCRA is the consumer’s right to obtain a disclosure of the information in their files at a CRA. Section 1681g(a) requires CRAs “to clearly and accurately disclose all information in the consumer’s file” upon request, including the “sources of information.” The Supreme Court in Ramirez held that the provision of faulty disclosures in violation of § 1681g that are “formatting errors” alone is not sufficient for standing.331
The manner in which these credit monitoring products are sold has been questionable at best, and deceptive at worst. They are often promoted as “free” which seems inherently deceptive, and led to Congress adopting a mandatory disclosure for websites advertising free credit reports.329 Consumers also have reported difficulties in canceling the service or getting refunds.330
Credit monitoring services are often marketed as a way to prevent identity theft. Yet they are ineffective in detecting certain forms of identity theft, such as when a thief uses the consumer’s Social Security number, but not the consumer’s name, to obtain credit.333 The identity theft insurance products offered with credit monitoring have very low payouts, because they mostly cover out-of-pocket expenses related to restoring the consumer’s identity.334
Another problem is that, even if free, a consumer who enrolls in a credit monitoring product will be subject to mandatory arbitration provisions,337 a risk which should not exist if the consumer accesses a credit report through the centralized source.338 These arbitration provisions may require arbitration of claims, not only involving the credit monitoring product, but any claims against the CRA including for inaccuracies or failure to reasonably investigate a dispute
There have been a number of government enforcement actions over the sale of credit monitoring products. For example, in 2005, the FTC settled an enforcement action alleging that Experian Consumer Direct deceptively marketed free consumer reports by not adequately disclosing that consumers accepting the offer would automatically be signed up for a $79.95 monitoring service, if they did not affirmatively cancel within thirty days.340
A credit report that is provided via a credit monitoring service should qualify as a consumer disclosure under the FCRA. Section 1681g(a) simply states that, upon a consumer’s request, a CRA must “disclose to the consumer . . .
In most cases, the consumer’s file at one of the “Big Three” nationwide consumer reporting agencies—Equifax, Experian, and TransUnion—will be of most interest. These are the CRAs that provide most reports used by creditors, insurers, and even employers. Each of the “Big Three” nationwide CRAs has different systems to collect similar data. The actual information collected may be different in some cases, as not all furnishers provide information to each of the “Big Three” nationwide CRAs.
In addition to a free annual report, consumers have a number of other rights to obtain a consumer report from the “Big Three” nationwide CRAs. In general, there will be little difficulty in obtaining a paid report or purchasing one of the many other more expensive products that the nationwide CRAs sell. Going to their websites will provide easy access to all of these paid products. The consumer may have more difficulty obtaining information on how to request a free report other than an annual free report.