Credit scores play a crucial role in personal finance and have a significant impact on various aspects of our lives. An individual’s credit score can impact loan eligibility, housing rentals, insurance premiums, and even employment opportunities. So what happens when a company provides incorrect credit information on your behalf? Read on to learn more.
Consumer Rights and Credit: The Fair Credit Reporting Act
The Fair Credit Reporting Act (FCRA) is a federal law enacted in the United States that regulates the collection, dissemination, and use of consumer credit information. It promotes accuracy, fairness, and privacy in the reporting of consumer credit information by credit reporting agencies or credit bureaus.
The law was passed in 1970 and has been amended several times to adopt to changing technology and consumer needs. Key provisions of the Act include:
- Access to credit reports
- Accuracy of information
- Consumer consent and disclosure
- Notification of negative information
- Identity theft protection
- Adverse action notices
In addition to these provisions, institutions responsible for credit reporting are also required to maintain reasonable procedures to ensure the accuracy of information they collect, maintain, and report.
This requirement has led to recent litigation.
Class action Litigation over Inaccurate Credit Reporting
Recently, a class action lawsuit was settled against a company that sold credit reports to car dealers for providing false information.The lawsuit was filed in the Eastern District of California and claimed that the credit reporting company provided incorrect information to the car dealership, resulting in a denial of credit to purchase a car. The complaint alleges that the defendant failed to “follow reasonable procedures to assure maximum possible accuracy” required under the FCRA. A federal court granted a motion for preliminary approval of a $2.7 million settlement.
Class action litigation involving the FCRA is not limited to the accuracy of credit reporting. The healthcare giant Kaiser recently reached a $4M settlement to resolve a FCRA class action lawsuit alleging the company failed to obtain proper authorization for background checks through the disclosures required by the Act.
Consumers should be aware of their rights under the FCRA and monitor their credit as well as related reporting and what is shared with other institutions.
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