Fair Credit Reporting Act - A Consumer Successfully Sues to Stop Her Filed from Being Mixed
On Friday, November 30, 2007, an Orlando jury entered a $2.9 million verdict against Equifax and in favor of Angela Williams after five days of testimony. The plaintiff was a consumer whose credit file had been mixed up with another person with a similar name and social security number (the last two digits were reversed). The mixing was first discovered in 1994 and Equifax was repeatedly notified in dispute after dispute that there were many false and derogatory accounts that were on Mrs. Williams’ credit report but they did not belong to her.
Over the course of the next 13 years, Equifax would remove the derogatory collection, charge-off and repossession accounts only to later include them and others on Mrs. Williams’ credit report given to her existing and prospective creditors. The reporting of approximately 25 false accounts over the years resulted in repeated denials of credit, lost opportunity to receive credit, economic loss, damage to her reputation, loss of self-esteem, invasion of privacy, interference with her normal and usual activities, and emotional distress. To make matters even worse, Equifax reported Mrs. Williams account information on the credit reports released to the creditors of the other lady, including debt collectors.
In August 2003, Mrs. Williams retained me and Robert Sola of Portland Oregon. Suit was filed in September 2003. In the lawsuit, Equifax’s representatives took the position that their policies were followed, their policies were reasonable and they had no intention of changing them. Indeed, Equifax even denied that there was evidence of inaccurate information being included on Mrs. Williams’ credit file. Equifax resisted producing certain documents even in the face of a court order. As a result, the Honorable George Sprinkel struck Equifax's answer and entered a 20 page Order setting forth the factual findings supporting the Order. The Order details other recent instances where Equifax was warned by federal judges in Virginia not to engage in such conduct or it would risk severe sanctions.
The evidence at trial was that Equifax violated numerous provisions of the Fair Credit Reporting Act. The jury heard over a full day of testimony from the plaintiff as to how false accounts were repeatedly reinserted onto her credit report after Equifax had said they were deleted. Yet Equifax’s representative at trial claimed that Equifax had not reinserted any false accounts on Mrs. Williams’ credit reports. In addition, Equifax kept placing Mrs. Williams’ private account information on the other lady’s file for at least three years after the lawsuit was filed.
A reasonable view of the evidence was that Equifax had abused its power, it was careless and did not comply with the Fair Credit Reporting Act as a matter of course. For example, the jury learned that Equifax had notice of a mixed file problem as early as 1992 but had not implemented sufficient procedures to address the problem. In 1992, there was an Agreement of Voluntary Assurances with the Florida Attorney General and many other state attorney generals relating to mixed files and other issues relating to the credit bureau's grave responsibility to follow reasonable procedures to assure maximum possible accuracy. In 1994, there was a similar FTC consent order. In 1996, the FCRA was strengthened. Each of these actions should have placed Equifax on notice to correct its policies and procedures.
In addition, Equifax was notified by Mrs. Williams or her mother repeatedly from 1994 through 2007 that she was being mixed. Despite all of this notice about the problem of mixed files, the jury heard evidence that Equifax merely took steps to make the investigation it was required to do cheaper and less effective. By 2002, it had fired many of its investigators in Atlanta and its reinvestigations were outsourced to Jamaica and later the Phillipines. In 2002, Equifax even merged one of Mrs. Williams’ many files with another file and changed the identity of the owner of the file to the other person.
Evan Hendricks, an author and expert on credit reporting and credit scores, assisted in the case by describing to the jury the history of credit reporting, how investigations were conducted and recommended improvements to make reinvestigations reasonable. Equifax at times suggested that there were limitations with using the industry standard but the other major credit bureaus either did not mix Mrs. Williams with someone else or corrected the problem shortly after being notified that it had mixed her. In addition, Mr. Hendricks testified that Equifax had significant influence over the organization that decided the industry standards.
The testimony from Equifax’s representatives was that it was able to reduce the cost of the reinvestigations to about $2.00 per dispute by automation and by not providing furnishers (debt collectors, creditors, prospective creditors, public record vendors, etc.) with a consumer’s supporting documentation submitted with disputes to Equifax such as driver’s licenses and social security cards. Incredibly, Equifax did not even tell its furnishers that Mrs. Williams had previously been mixed with a person with a similar name and social security number. Indeed, Equifax even submitted some disputes in the name of the person with whom Mrs. Williams was mixed.. Testimony also suggested that more and more “reinvestigations" were conducted without any person from Equifax being involved and that furnishers were only asked to match two of four fields rather than conduct an investigation as to whether the false accounts belonged to someone of a similar name and social security number.
Equifax defended the case by admitting very little. It admitted that it had destroyed important records and it had a policy of doing so even if litigation was filed. It denied any inaccuracies after the consumer filed suit. Throughout the years of litigation, Equifax said it did nothing wrong, had no regrets and its policies worked as intended. On the last day of trial, however, Equifax changed course and suggested that there may have been "human error" and that Equifax may have “dropped the ball" but it came four years after the lawsuit was filed and was contradicted by much of the deposition testimony.
The jury’s verdict is a victory for consumers. Justice was achieved. The jury’s verdict is also a recognition as to how important someone’s reputation can be and was an implicit rejection of Equifax’ suggestion that a verdict of $37,000 for compensatory damages was appropriate. The jury appropriately sought to punish and deter Equifax and others in the future by awarding punitive damages. Equifax's net profits over the last five years were approximately 1.1 billion. During this time, Equifax’s net worth had almost quadrupled. The jury awarded $219,000 for compensatory damages and $2.7 million for punitive damages. The punitive damages amount is one percent of Equifax's 2006 profits.
It is hoped that the verdict will lead to a change in the policies of Equifax. Congress enacted the FCRA and said that the credit bureaus had a grave responsibility to follow reasonable procedures to assure maximum possible accuracy of the information reported on consumers. There were many other provisions of the FCRA that were violated. The system has worked and it is hoped that Equifax will get the message.