Lessons from $18 million credit-reporting suit
(MoneyWatch) Oregon resident Julie Miller tried very hard, for two solid years, to get Atlanta-based Equifax Corp. to correct errors in her credit report she discovered when she was was turned down for a loan in 2009. When the company failed to correct the errors, she sued and won a multimillion judgment.
The verdict puts credit reporting agencies on notice that a failure to follow the dictates of the Fair Credit Reporting Act could have costly consequences, says Justin Baxter, Miller's attorney. "Juries across the country have been returning multimillion-dollar verdicts like this," Baxter said.
It also is good news for consumers who understand their rights. Despite updates to the act, which require credit-reporting agencies to pay closer attention to accuracy, federal regulators say that more than one in five credit reports still contain errors. Many of these can affect a consumer's ability to get reasonably priced loans. However, the law not only gives consumers ways to fix their reports, but gives them the tools to fight back when their entreaties are ignored, as the Miller case makes clear.
Lenders are obliged to tell you whether a denial of credit is due to information on your credit report, as it was in Miller's case. The trouble was, the negative information belonged to another Julie Miller -- with a different birthdate, different Social Security number and different address.
Information about Julie Miller No. 2 was merged into the file of Julie Miller No. 1 file because they share a common name. An estimated 2 million to 4 million individuals have the same problem, says Baxter. Although it shouldn't be difficult to differentiate one consumer from another with the aid of personal details like an address or Social Security number, a common name or a namesake -- such as a child or parent who has the same name with a junior or senior attached -- may cause the merging of files. Identity theft or transcription errors may cause such mergers.
The Fair Credit Reporting Act sets up a simple procedure to detect and correct errors when they arise. First, the law requires that each of the three major credit-reporting bureaus provide every consumer a free copy of his or her credit report every 12 months. All you have to do is ask. Consumers are also allowed a free copy of a credit report when they've been denied credit based on report information or suspect they are a victim of identity theft. To get a free copy, go to www.annualcreditreport.com or call 1-877-322-8228.
Any inaccurate items -- such as loans mistakenly linked to you that are outstanding or incorrect addresses and identifying information -- should be corrected in writing with a formal letter or informally by simply noting the inaccuracies on a copy of the report. Simply put, you can circle the inaccurate items and explain what's wrong in the margins. If additional documentation is needed to prove your claim, it's wise to attach a copy of those documents, but you should always hang on to the originals.
Corrections and documentation should be mailed back to the credit bureau by certified mail (with a return receipt) so you have proof the agency received the correction request. The Federal Trade Commission even has sample letters on its website for consumers who need further instruction.
The credit-reporting agency is required to investigate the claim and respond promptly -- generally within 30 days. You can also request a corrected version of your report at the end of the investigation. The corrected report is also free.
Miller did everything right, attorney Baxter says. She identified the errors and provided numerous documents to prove her identity and demonstrate she was in no way connected to the other Julie Miller, who had run up bad debts. But Equifax failed to investigate or correct the report, Baxter says. (Equifax officials failed to return this reporter's phone calls and have publicly declined to comment about the case.) So when repeated requests for action by Equifax were ignored, Miller sued.
On Monday she won an award of $180,000 in compensatory damages and $18.4 million in punitive damages. "This was an egregious case, and the jury wanted to send a message," Baxter said.
