Significant percentages of consumer credit reports include serious errors. What happens if the error is a misinterpretation of a court document? What happens if a consumer settles a dispute in court, but a credit reporting agency instead reports that the consumer has a judgment entered against him? What happens if that error results in credit denials for the consumer?
That happened to Los Angeles resident Jason Dennis, as Molly Selvin reports in today's Los Angeles Times. Mr. Dennis had a dispute with a landlord that resulted in a settlement: he and his landlord agreed that no judgment would be entered if he paid a settlement amount. He paid that amount and the court file showed that the parties filed a Request for Dismissal and that the case was dismissed. No problems, right?
Wrong. When Mr. Dennis tried to get credit to start a new business, he discovered that Experian was reporting a judgment against him--a serious "ding" on anyone's credit report. He disputed with Experian, and asked Experian to fulfill its legal obligation to "conduct a reasonable investigation to determine whether the disputed information was inaccurate." But, even though the court file showed that Mr. Dennis was right, Experian refused to change his report. Worse, after Mr. Dennis sued, the trial court entered judgment in Experian's favor, finding that Experian had met its obligation to reinvestigate.
Yesterday the U.S. Court of Appeal vindicated Mr. Dennis. It reversed the trial court and told it to enter judgment in Mr. Dennis' favor because "no rational jury could find that [Experian] wasn't negligent." The Court said "this case illustrates how important it is for Experian, a company that traffics in the reputations of ordinary people, to train its employees to understand the legal significance of the documents they rely on."
Although this case affects only Mr. Dennis, it sends a hugely important message to Experian and the other credit reporting agencies. We can only hope that they will take the Court's advice and do a better job on consumers' credit reports.