New York Consumer Law Blog

TransUnion will pay $60 million to consumers it mistakenly labeled as possible terrorists or drug dealers, under an order issued Tuesday by a federal jury.

 The decision stems from a 2012 class-action lawsuit that alleged the credit bureau failed to notify consumers who were reported to lenders as being included on a “blocked persons” list kept by the Treasury Department’s Office of Foreign Assets Control (OFAC). The list includes terrorists, narcotics traffickers, arms dealers and other criminals who are prohibited from doing business in the U.S.

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For March 2017, debt collection was the most-complained-about financial product or service by consumers identifying as over the age of 62. Of the 2,169 older consumer complaints handled in March, there were 496 complaints about debt collection. The second most-complained-about consumer product was mortgages, which accounted for 486 complaints. Credit reporting was the third most-complained-about financial product or service, accounting for 326 complaints.

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This is part three of a four-part series that looks at how inaccurate credit reporting is being fought by attorneys, the CFPB, and state AGs.

 CFPB Nails Credit Repair Doctors: The credit bureaus not only make mistakes, they fail to conduct adequate reinvestigations of disputes or remove inaccurate information. Instead of complying with these FCRA responsibilities, the bureaus have developed their own lucrative direct-to-consumer channel for selling credit monitoring and identity-theft services to concerned consumers. But, the credit bureaus are so sloppy they’ve also fomented (spawned) an entire add-on predatory industry -- last-dollar credit repair doctors -- that takes advantage of the heightened consumer interest in higher credit scores that’s been driven by the bureaus’ scare-tactic marketing of their own absurdly-priced monitoring products. This week, the CFPB announced penalties of $2 million against 4 California-based credit repair doctors that “charged illegal fees and misled consumers about their ability to fix their credit.

This is part three of a four-part series that looks at how inaccurate credit reporting is being fought by a attorneys, the CFPB, and state AGs. You may read Part 1 here and Part 2

This is part two of a four-part series that looks at how inaccurate credit reporting is being fought by a attorneys, the CFPB, and state AGGs. You may read Part 1 here.

On July 1, thanks to the efforts of a bi-partisan, multi-state enforcement effort by 31 state Attorneys-General, 12 million consumers will see their credit scores increase by up to 20 points; 700,000 of them will see increases of as much as 40 points as certain negative public records, including tax liens and court judgements, drop off their credit reports.

This is part one of a four-part series that looks at how inaccurate credit reporting is being fought by a attorneys, the CFPB, and state AGGs.

In the news this month are several successful efforts to improve credit report accuracy, compensate the victims of credit bureau malfeasance and also to bring some credit repair doctors to heel. Did it take a village? No, it took a combination of strong consumer laws, a strong CFPB, tough state attorneys general working on a bi-partisan basis and, finally, consumer attorneys engaged in private enforcement of the laws as another line of defense. For markets to work fairly, consumers need all these levels of protection.

In addition to demonstrating the importance of layered consumer protection and enforcement mechanisms, the cases also show that it is important to regulate the bureaus and hold them accountable, because despite their arrogant disregard for meeting the accuracy and reinvestigation standards of the law, they serve as gatekeepers to financial and employment opportunity.

About 12 million people will get a lift in their credit scores next month as the national credit reporting agencies wipe from their records two major sources of negative information about borrowers: tax liens and civil judgments.

The change stems from a lengthy crusade by consumer advocates and government officials to force the credit bureaus to improve the accuracy of their reports, which are often speckled with errors and outdated information. Those mistakes can limit borrowers’ access to credit cards, auto loans and mortgages, or saddle them with higher borrowing costs.

Starting July 1, the three major credit reporting companies — Equifax, Experian and TransUnion — will enforce stricter rules on the public records they collect, requiring each citation to include the subject’s name, address and either their Social Security number or date of birth. Nearly all civil judgments and at least half of the nation’s tax lien records do not meet the new standards, and will be eliminated from consumer credit reports.
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A jury in California last week awarded $60 million in statutory and punitive damages to more than 8,000 consumers who sued TransUnion, one of the three credit reporting agencies.

The consumers filed the class action, claiming that TransUnion violated the Fair Credit Reporting Act (FCRA) when it misidentified them in their credit reports as terrorists and drug traffickers. It turns out the real bad guys had names that were similar to the plaintiffs in the case.

The plaintiffs will each receive more than $7,300 as their share of the award, after they were wrongly identified in their credit reports as being engaged in criminal activity.

The FCRA requires credit reporting agencies to ensure that the information contained in consumers' credit reports is as accurate as possible.
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There is a new type of automated call sneaking up on American consumers: ringless voicemails, the quieter cousin of what some people call the “annoying robocall.” The messages go straight to voicemail, without ringing your phone.

"I've received at least a hundred of these voicemails," said Sue Merritt, president of Lenox Fit in Lenox, Massachusetts. And they often come from area codes where she has important contacts.

"I'm a cancer survivor, I still get calls from my hospital in Boston, so for example when a 617 area code comes up I feel very compelled to deal with that right away," Merritt told NBC News.
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The American economy has looked pretty robust of late — unemployment just hit a 16-year low, and stocks recently reached an all-time high. This makes it all the more curious that Americans have suddenly stopped paying off their credit-card bills at a rapid rate.

In the past two fiscal quarters, banks reported a steep rise in credit-card charge-offs — debt that companies can't collect from their customers — according to a report from Moody's.

The sharp increase, the largest since 2009, is especially unusual given how strong the US employment market has been, Moody's noted. It suggests that American consumers haven't fallen on hard times so much as banks have started to loosen their standards and issue credit more aggressively.
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