California Credit Law Blog

In 2008, clients Jayni and Dan Fontaine applied for life insurance from New York Life Insurance Company. To be approved, they had to pass medical exams. As part of the exam process, they provided their personal identifying information. Their information and that of over 100 other persons went into a computerized database accesible by New York Life representatives. Two identity thieves in Sacramento then hacked into the database stealing the Fontaine's personal information.

The identity thieves ordered merchandise and opened accounts in the Fontaine's names and others. Victims in Davis, California, complained to the police; after obtaining a search warrant, the police found incriminating evidence in the fraudsters' apartment. The FBI and U.S. Attorney later took over the case and filed criminal complaints against the pair. Both have pled guilty.

California law requires any company that suffers a databreach of personal information to promptly notify the victims. The Fontaine complaint, which was filed in Sacramento County Superior Court, alleges that New York Life Insurance did not promptly notify the victims. The Fontaines allege that the delay resulted in their credit being ruined.They are suing for damages.

Equifax has a judgment against it for more than a million dollars to a Bay Area man whose identity was stolen. While the consumer was hospitalized, an impostor used his identity to open fraudulent accounts. He found the fraudulent accounts on his credit reports from Experian, Equifax and TransUnion and disputed them. (See my blog on why to dispute in writing, Certified Mail, Return Receipt.)

Equifax went to trial. The identity theft victim told the jury about trying to get Equifax to correct his report. Other witnesses testified about his damages. His expert explained why Equifax's procedures fail to meet the requirements of the Fair Credit Reporting Act.

The jury agreed with the identity theft victim. It awarded him over $6,000 for economic damages, $315,000 for non-economic compensatory damages and $700,000 for punitive damages. The consumer does not have to worry about paying his attorney either. The Fair Credit Reporting Act makes Equifax liable for all his attorney's fees and court costs.

Equifax made post-trial motions to get out from under this verdict, but the trial court denied them all.

As I said before, mixed file and identity theft cases can be great cases. The verdict here proves that. If you have such a claim, give me a call.

Frequently people ask me how they can get the credit bureaus to correct inaccurate information on their credit reports. I always tell them to dispute inaccurate credit reports via letter sent Certified Mail, Return Receipt. Why do that, you ask, when I can dispute on-line or by phone? If you look at their websites, you know the credit bureaus encourage consumers to phone or email. It is almost impossible to find an address to mail a written dispute letter to.

There are COMPELLING REASONS to do your disputes in WRITING, Certified Mail, Return Receipt. If you have put it in writing and kept a copy and obtained a receipt you can prove exactly what information you provided and that they received it.

You want to provide the credit bureau with as much information as possible so it can conduct a thorough investigation. If you have names and phone numbers of people they should contact, provide them. If you have documents that prove your claims, enclose copies.

Sending a written dispute letter does not guarantee that they will fix your report, but if they don't you at least have solid evidence to support your lawsuit. Phone conversations and emails are hard to prove. You don't have as good a record and the credit bureaus can dispute what you said. Emails get lost. You don't get any proof that they received them.

Please keep copies of everything you sent with the dispute letter, including all enclosures and a copy of your signed letter. (Sometimes it is important for them to have your signature so they can compare it to the signature on the fraudulent account you are disputing.) Your file copy of the dispute letter should be an exact duplicate of what you placed in the envelope to the credit reporting agency.

If Experian, Equifax or TransUnion are reporting accounts that are not yours -- either mixed files or fraudulent accounts -- and they will not correct it, give me a call. Those are good cases.

In 2003, Mrs Pintos sued a debt collector that had used her credit report to collect a tow company's bill for towing her car from a San Francisco street. Her claim is that the debt collector violated the Fair Credit Reporting Act because it lacked a permissible purpose to look at her credit report. The FCRA forbids persons who are not creditors from looking at consumers' credit reports. Mrs. Pintos also sued Experian, the credit bureau that furnished the report to the collection agency. Our law firm represents Mrs. Pintos in the case.

Both sides appealed the trial court's rulings. The U.S. Court of Appeals agreed with Mrs Pintos that the debt collector lacked a legally proper reason to obtain her credit report. The Court also agreed that Experian should not have furnished Mrs Pintos's report to the collection agency. It sent the case back to the district court for a trial.

Last summer Experian asked the U.S. Supreme Court to review the case. Recently we filed our brief in opposition to Experian's petition for certiorari.

The Pintos case establishes that a debt collector is not allowed to look at the consumer's credit report unless the "debt" arose out of a credit transaction involving the consumer. What this means is that collection agencies cannot pull credit reports to use in collecting all debts. Only those debts that arose out of a credit transaction that the consumer entered into voluntarily give the collector a 'permissible purpose' under the Fair Credit Reporting Act.

Today, the WSJ reports that consumer's medical bills, even disputed ones, are hurting their credit scores. One example is a woman in Texas had two erroneous $11 doctor bills on her credit reports that stopped her from refinancing her home. The bills had been sent to a collection agency. Her credit score dropped from 757 to 680. The lender said she would have to pay an additional $14,000 to get a 5.5% interest rate.

A mortgage bank calls medical debt the single biggest roadblock for would-be refinacers. "People have no idea that they still owe small amounts which later end up on their credit report."

Some 14 million Americans have errors on their credit report because of medical collections, according to a nonprofit mentioned in the article.

A bill in Congress would provide relief for homeowners with medical-debt troubles. The Medical Debt Relief Act, which passed the House this fall and is now in the Senate, would remove settled medical debt from credit reports after 45 days, instead of the customary seven years.

Such stories are all the more reason consumers should check their credit reports and promptly dispute any inaccuracies by writing to the credit reporting agencies.

A new report by West Point prof Gregory Conti urges the military to reform its practices to protect service members from identity theft. Conti reports that service members and their families are burdened with a work environment that shows little regard for their personal information resulting in frequent theft of their identities.

The Navy and Marines have recently made efforts to limit the use of social security numbers. Military ID cards no longer include the number. But Conti the situation had not really dhanged: “The farther you get away from the flagpole at headquarters, those policies get overturned by operational realities.”

Social security numbers are useful to identity thieves because they serve as crucial identifiers interfacing with banks and credit card companies. The thieves open accounts in the service members names leading to ruined credit reports and problems for military personnel getting security clearances or promotions.

Javelin Strategy and Research, which tracks identity theft, looked at identity theft in the military in 2006, finding that 3.3 percent of active military personnel had been victims of such fraud that year, slightly below the 3.7 percent in the public at large.