Today, the 9th Circuit Court of Appeals issued an opinion in a FCRA case, Syed v M-I, LLC  that involves background reports employers obtain on prospective employees. The background reports are “consumer reports” like credit reports subject to the FCRA rules.  The FCRA requires employers to give applicants a written disclosure that they plan to obtain a background report. The purpose for the disclosure is to give applicants the opportunity to block the employer from obtaining a report, a matter of privacy. The disclosure must be consist “solely of the disclosure.”  The employer M-I tried to insulate it from FCRA liability by coupling the disclosure with a waiver of any liability for use or misuse of the background information. The Court held this was a violation of the FCRA and hence M-I was liable to the class representative and members of the class for statutory damages. The opinion is available on the court’s website.

This is the CFPB’s Announcement of a Very Significant Enforcement Action


Today the Consumer Financial Protection Bureau (CFPB) sued Navient, formerly Sallie Mae, the nation’s largest servicer of both federal and private student loans for systematically and illegally failing borrowers at every stage of repayment. For years, Navient has created obstacles to repayment by providing bad information, processing payments incorrectly, and failing to act when borrowers complained. Through shortcuts and deception, the company also illegally cheated many struggling borrowers out of their rights to lower repayments, which caused them to pay much more than they had to for their loans. The Bureau seeks to recover significant relief for the borrowers harmed by these illegal servicing failures.

The Consumer Financial Protection Bureau today announced it has taken action against Equifax and TransUnion for deceiving consumers about the usefulness and actual cost of credit scores they sold to consumers. The companies also lured consumers into costly recurring payments for credit-related products with false promises.

The CFPB said that from 2011 to March 2014, TransUnion and Equifax falsely represented that the credit scores they marketed and provided to consumers were the same scores lenders typically use to make credit decisions. In fact, the scores were not typically used by lenders. Plus, TransUnion and Equifax falsely claimed that their credit scores and related products were free or, in the case of TransUnion, cost only “$1.” In fact, consumers who signed up received a free trial of seven or 30 days, after which they were automatically enrolled in a subscription program. Unless they cancelled during the trial period, consumers were charged a recurring fee – usually $16 or more per month, a type of abusive billing, known as a “negative option.” Equifax also violated the FCRA by requiring consumers to first view advertising before they could get their free annual report.

The specific orders are as follows: has a report on how scammers manager to steal your smartphone identity. If your phone mysteriously goes dead and your service provider tells you someone purchased and activated a new iPhone under your account, you are a victim of SIM-swapping. This means a fraudster posed as you convinced your cell phone company your phone was lost. The company then gives the fraudster a new phone number and the fraudster gets access to your mobile banking, credit cards and other accounts.

Consumer Financial Protection Bureau filed a lawsuit in federal district court against the credit repair company Prime Marketing Holdings alleging it charged consumers illegal advance fees and misrepresented the cost and effectiveness of its services. CFPB is seeking an injunction and refunds of fees to consumers. This company used the names Park View Credit, National Credit Advisors, and Credit Experts.

The company lured consumers with misleading, unsubstantiated claims that it could remove virtually any negative information from their credit reports and could boost credit scores by significant amounts. The company charged consumers a variety of illegal advance fees such as a set-up fee of hundreds of dollars and monthly fees of $89.99 per month.

In sales calls, the company failed to disclose consumers would be charged a monthly. It advertised an illusory money-back guarantee. The company advertised it would be able to get negative entries on consumers’ credit reports removed when in fact they had no way of doing so. They falsely claimed their repair services would, or likely would, result in a substantial increase to consumers’ credit scores.

Bobby Allyn, a NPR reporter for station WHYY in Philadelphia writes in the Washington Post about his experience with Trans Union having mixed his identity with that of a criminal imprisoned in Tennessee. Mr Ally had applied to rent an apartment in Philadelphia. The landlord ran his name through Trans Union’s tenant screening service (called SmartMove). Unfortunately for Mr. Allyn, SmartMove reported he had a dozen criminal convictions on his rap sheet. Mr. Ally called Trans Union to complain about the error; a representative told him the records were from Rutherford County Circuit Court in Tennessee outside of Nashville where Mr Allyn used to live. Mr Ally called the court clerk who said they had records on a person named Bobby Allyn born in the same year as the reporter. The person with the criminal records was incarcerated and African American unlike reporter Allyn.

The landlord accepted Mr Allyn’s explanation and he got the apartment, but Mr Allyn points out that as an investigative reporter, he was better equipped than most people to deal with such a problem. Mr Ally also references studies on the credit reporting agencies’ error rates.

Checkbook publishes useful reports on consumer products and services. They have an updated report on using credit card chargebacks in cases of defective goods or fraudulent charges of any kind.

The Fair Credit Billing Act gives consumers the right to dispute charges and withhold payment for goods and services that you didn’t accept or that weren’t delivered as promised. Consumers must first try to work it out with a seller (be sure to put it in writing), but if that doesn’t work, consumers should go online to the credit card company and ask for a chargeback.

Checkbook asked its members to share their credit card chargeback stories; members sent more than 100 emails, almost all of them success stories. Some shared negative experiences with credit card issuers siding with sellers, even when sellers clearly were in the wrong.

There is good news for the 70 million U.S. consumers who are behind in their bills and being pursued by a debt collector. The federal Consumer Financial Protection Bureau has proposed new rules that apply to the debt collectors that collect bills for other creditors. The current rules are outdated and inadequate. For example, when existing law was enacted, there was no voicemail, email or text messages. Back when the debt protection laws were written, debt collectors were sending consumers postcards, collect calls and telegrams!

Here are the main new rules:

  1. Debt collectors would have to tell consumers they could no longer be sued on the “stale” debt because the statute of limitations has run.

Effective last month, collection agencies and debt buyers that report information to the credit bureaus must report the name of the original creditor and may not report debt that did not arise from a contract or agreement to pay, which includes parking fines, parking tickets, and involuntary towing fees.

Beginning September 1, 2016, the collection agencies and debt buyers will have a “full file” each month, meaning the agencies and buyers will have to report positive as well as derogatory information to the bureaus. Typically, agencies and buyers only now report derogatory information to the bureaus.

In September 2017, collection agencies and buyers will be barred from reporting medical collection items less than 180 days old and they must delete accounts being paid or were paid in full by insurance.

A report by the National Consumer Law Center entitled Past Imperfect: How Credit Scores and Other Analytics “Bake In” and Perpetuate Past Discrimination shows how past discrimination perpetuates low credit scores. Credit reporting and credit scoring are supposed to be objective, with no room for flawed tools such as human judgment and biases. Yet for years, study after study has found that African-American and Latino communities have lower credit scores as a group than whites and Asians. The report discusses how credit scores perpetuate racial and economic inequality. Eliminating the impacts of past discrimination may require treating disadvantaged groups differently. The report includes some policy reforms and a list of studies and other resources that could assist advocates working on reform.