The United States District Court for the District of Connecticut released an interesting new opinion on May 28, 2009. The case is Deborah Adams v. National Engineering Service Corporation and involves claims arising from a background check that contained errors and cost the plaintiff a new job.
Basically (and I do mean basically) what happened is that National Engineering Service Corporation ("NESC") was contracted by a potential employer of Adams to run a background check on Adams. NESC got a company called "Verifications" (who was also a defendant in the lawsuit) to run the background check. Verifications prepared the investigative consumer report which contained errors, namely several convictions that showed up under someone with the same name and date of birth as the plaintiff but was not the plaintiff. Verifications was provided the report by yet another company that was not a defendant but probably should have been. Due to the erroneous criminal record, Adams was not hired.
NESC first claimed that it was not subject to the FCRA because it claimed it was not a consumer reporting agency since it didn't prepare the report since Verifications did. The Court found that NESC is a consumer reporting agency because it "evaluated" the consumer report when its employee commented in an e-mail to the employer that the background check was "not good at all."
The Court then found that the Plaintiff presented sufficient evidence for her 15 U.S.C. 1681e(b) claim to survive. 1681e(b) requires consumer reporting agencies must follow reasonable procedures to assure maximum possible accuracy of the credit reports they create. Most courts (like this one) have held that whether reasonable procedures were used is almost always a question for the jury and thus not appropriate for summary judgment where there is evidence of an error on the credit report. In Adams, the defendants did not contest that the background check contained errors, so the Court found that the plaintiff's 1681e(b) claims survived.
The only claims of the plaintiff that were dismissed were some state law claims, primarily because the court found no evidence of malice on the part of the defendants (just evidence of stupidity, apparently). Since 15 U.S.C. 1681h(e) provides CRAs with qualified immunity from state law claims unless there is malice, the Court dimissed the state law claims for defamation and negligence. It dismissed the other state law claims on other grounds.
The only beef I have with the Court's ruling is that it did not consider all of 1681h(e). 15 U.S.C. 1681h(e) grants qualified immunity for certain state law claims if there is no malice but only for certain disclosures of consumer reports, i.e. disclosures made pursuant to 1681g, 1681h or 1681m. Disclosures pursuant to these sections only go to the consumer himself. Thus, disclosures made to third parties (i.e. Adams' potential employer) do not get the benefit of qualified immunity. In defense of the Court in this case, there are many other Courts that have also missed this point.
Overall, though, a great and informative decision.
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June 16, 2009
New FCRA case - Tobler v. Equifax and Auto Club Insurance Agency
District Judge Denise Page Hood issued a new opinion in a new Fair Credit Reporting Act case from the United States District Court for the Eastern District of Michigan, Southern Division. The case is styled Tobler v. Equifax and Auto Club Insurance Agency and was released on May 27, 2009.
This case makes clear yet again that it is foolish for consumers to represent themselves, especially in the complicated field of Fair Credit Reporting Act litigation. The pro se plaintiff (pro se means the plaintiff represented himself) filed a lawsuit against Equifax, ChoicePoint and Auto Club Insurance Agency (a.k.a. AAA). The claims against Equifax and ChoicePoint were for violating the FCRA for failing to correct errors on Tobler's credit report. The Court's opinion, however, focuses on Tobler's claims against Auto Club Insurance Agency, which Tobler claimed overcharged him based upon the erroneous credit reporting of Equifax and/or ChoicePoint.
The problem is that, even if the plaintiff's allegations agaisnt Auto Club Insurance Agency are 100% factually accurate, there still is no valid claim under the FCRA. The only duty of a user of a consumer report in relation to an adverse action is to give the required notice to the consumer who suffered the adverse action. This duty is found in 15 U.S.C. 1681m. Moreover, there is no private cause of action under 1681m because that right was taken away when the FCRA was amended a few years ago. Now, only certain governmental agencies have a right to sue for a violation of 15 U.S.C. 1681m. Consumers no longer have that right.
Thus, the plaintiff's claims against Auto Club Insurance Agency were doomed to fail, even if the plaintiff's last ditch effort to amend his complaint to add a claim under 15 U.S.C. 1681m had been granted. The Court correctly ruled that Tobler's claims against Auto Club Insurance Agency should be dismissed and granted Auto Club's motion to dismiss.
This case makes clear yet again that it is foolish for consumers to represent themselves, especially in the complicated field of Fair Credit Reporting Act litigation. The pro se plaintiff (pro se means the plaintiff represented himself) filed a lawsuit against Equifax, ChoicePoint and Auto Club Insurance Agency (a.k.a. AAA). The claims against Equifax and ChoicePoint were for violating the FCRA for failing to correct errors on Tobler's credit report. The Court's opinion, however, focuses on Tobler's claims against Auto Club Insurance Agency, which Tobler claimed overcharged him based upon the erroneous credit reporting of Equifax and/or ChoicePoint.
The problem is that, even if the plaintiff's allegations agaisnt Auto Club Insurance Agency are 100% factually accurate, there still is no valid claim under the FCRA. The only duty of a user of a consumer report in relation to an adverse action is to give the required notice to the consumer who suffered the adverse action. This duty is found in 15 U.S.C. 1681m. Moreover, there is no private cause of action under 1681m because that right was taken away when the FCRA was amended a few years ago. Now, only certain governmental agencies have a right to sue for a violation of 15 U.S.C. 1681m. Consumers no longer have that right.
Thus, the plaintiff's claims against Auto Club Insurance Agency were doomed to fail, even if the plaintiff's last ditch effort to amend his complaint to add a claim under 15 U.S.C. 1681m had been granted. The Court correctly ruled that Tobler's claims against Auto Club Insurance Agency should be dismissed and granted Auto Club's motion to dismiss.
June 15, 2009
A good site for consumer info
I stumbled across a new site with a lot of good consumer info. Its http://www.consumerworld.org/. Check it out.
15 U.S.C. 1681c - Part 1
In this post, I begin to explain 15 U.S.C. 1681c of the Fair Credit Reporting Act, which lists what types of information the consumer reporting agencies are prohibited from including in credit reports.
"15 U.S.C. 1681c. Requirements relating to information contained in consumer reports.
(a) Information excluded from consumer reports. Except as authorized under subsection (b) of this section, no consumer reporting agency may make any consumer report containing any of the following items of information:
(1) Cases under title 11 [United States Code] or under the Bankruptcy Act that, from the date of entry of the order for relief or the date of adjudication, as the case may be, antedate the report by more than 10 years."
[Thus, any bankruptcy that is older than 10 years is considered obsolescent and may not be included on a credit report.]
"(2) Civil suits, civil judgments, and records of arrest that from date of entry, antedate the report by more than seven years or until the governing statute of limitations has expired, whichever is the longer period."
[Therefore, any judgment, lawsuit or criminal record item can only stay on your credit report for seven years or, if the statute of limitations is longer than seven years (most are not), it can stay on for the length of the statute of limitations.]
"(3) Paid tax liens which, from date of payment, antedate the report by more than seven years."
[This is an interesting one. Paid tax liens can stay on your report for seven years from the date of payment. Unpaid tax liens (being adverse items as identified in 1681c(a)(5) can stay on your credit report seven years from the date the lien is created. Thus, if its already been seven years since the tax lien was created, it is potentially a bad idea to pay the tax lien because that can start the seven years all over again. Also, note that it says "paid" tax lien. If the tax lien is released without being paid (i.e. if the tax lien was simply released for some reason other than payment), then the seven years does not start anew. Instead, the tax lien is obsolete seven years after the date it was created, not after it was released (if it was not paid).]
"(4) Accounts placed for collection or charged off to profit and loss which antedate the report by more than seven years."
[Therefore charge offs and collections can only stay on your credit report for seven years from the date the account was originally charged off. This date does not change simply because the account change hands (i.e. when it is sold to a collection agency for debt collection). The date of charge off stays the same and thus the date the collection is due to fall off your credit report should not change. Some debt collectors engage in the illegal act of reaging the debt, which means they change the date of last activity (the industry word for the date the account was charged off) and thus allow the collection to stay on the consumer's credit report longer (and as a result increase their chances of actually collecting the debt). Reaging the debt violates the Fair Credit Reporting Act and is the subject of multiple lawsuits each year.]
"(5) Any other adverse item of information, other than records of convictions of crimes which antedates the report by more than seven years."
[This is the catchall that requires all adverse items of information to be off the consumer's credit report no later than seven years after the information becomes adverse. So if a consumer is 30 days late on a bill and the account is marked with a 30 day late payment notation, that adverse item of information can only stay on the credit report for 7 years from the date that the account was 30 days late. The account itself can stay on the credit report for longer than 7 years, but after 7 years, the late payment must fall off the report.]
"(6) The name, address, and telephone number of any medical information furnisher that has notified the agency of its status, unless --
(A) such name, address, and telephone number are restricted or reported using codes that do not identify, or provide information sufficient to infer, the specific provider or the nature of such services, products, or devices to a person other than the consumer; or
(B) the report is being provided to an insurance company for a purpose rlating to engaging in the business of insurance other than property and casualty insurance."
[This means that a company that provides medically related information can not be listed with its name, address or telephone number unless such are disguised by codes or if the report is being provided to an insurance company for the business of insurance (rather than collecting a debt or about a job application) other than property or casualty insurance.]
I will continue with the explanation of 15 U.S.C. 1681c in part 2.
"15 U.S.C. 1681c. Requirements relating to information contained in consumer reports.
(a) Information excluded from consumer reports. Except as authorized under subsection (b) of this section, no consumer reporting agency may make any consumer report containing any of the following items of information:
(1) Cases under title 11 [United States Code] or under the Bankruptcy Act that, from the date of entry of the order for relief or the date of adjudication, as the case may be, antedate the report by more than 10 years."
[Thus, any bankruptcy that is older than 10 years is considered obsolescent and may not be included on a credit report.]
"(2) Civil suits, civil judgments, and records of arrest that from date of entry, antedate the report by more than seven years or until the governing statute of limitations has expired, whichever is the longer period."
[Therefore, any judgment, lawsuit or criminal record item can only stay on your credit report for seven years or, if the statute of limitations is longer than seven years (most are not), it can stay on for the length of the statute of limitations.]
"(3) Paid tax liens which, from date of payment, antedate the report by more than seven years."
[This is an interesting one. Paid tax liens can stay on your report for seven years from the date of payment. Unpaid tax liens (being adverse items as identified in 1681c(a)(5) can stay on your credit report seven years from the date the lien is created. Thus, if its already been seven years since the tax lien was created, it is potentially a bad idea to pay the tax lien because that can start the seven years all over again. Also, note that it says "paid" tax lien. If the tax lien is released without being paid (i.e. if the tax lien was simply released for some reason other than payment), then the seven years does not start anew. Instead, the tax lien is obsolete seven years after the date it was created, not after it was released (if it was not paid).]
"(4) Accounts placed for collection or charged off to profit and loss which antedate the report by more than seven years."
[Therefore charge offs and collections can only stay on your credit report for seven years from the date the account was originally charged off. This date does not change simply because the account change hands (i.e. when it is sold to a collection agency for debt collection). The date of charge off stays the same and thus the date the collection is due to fall off your credit report should not change. Some debt collectors engage in the illegal act of reaging the debt, which means they change the date of last activity (the industry word for the date the account was charged off) and thus allow the collection to stay on the consumer's credit report longer (and as a result increase their chances of actually collecting the debt). Reaging the debt violates the Fair Credit Reporting Act and is the subject of multiple lawsuits each year.]
"(5) Any other adverse item of information, other than records of convictions of crimes which antedates the report by more than seven years."
[This is the catchall that requires all adverse items of information to be off the consumer's credit report no later than seven years after the information becomes adverse. So if a consumer is 30 days late on a bill and the account is marked with a 30 day late payment notation, that adverse item of information can only stay on the credit report for 7 years from the date that the account was 30 days late. The account itself can stay on the credit report for longer than 7 years, but after 7 years, the late payment must fall off the report.]
"(6) The name, address, and telephone number of any medical information furnisher that has notified the agency of its status, unless --
(A) such name, address, and telephone number are restricted or reported using codes that do not identify, or provide information sufficient to infer, the specific provider or the nature of such services, products, or devices to a person other than the consumer; or
(B) the report is being provided to an insurance company for a purpose rlating to engaging in the business of insurance other than property and casualty insurance."
[This means that a company that provides medically related information can not be listed with its name, address or telephone number unless such are disguised by codes or if the report is being provided to an insurance company for the business of insurance (rather than collecting a debt or about a job application) other than property or casualty insurance.]
I will continue with the explanation of 15 U.S.C. 1681c in part 2.
Article about preventing identity theft
Despite what LifeLock and other "identity theft prevention" companies claim, there is no way to completely prevent your identity from being stolen. But there are some common sense steps you can take to limit the risk of identity theft. Here are some of those steps, as summarized by Joe Campana at the Identity Theft Examiner:
"Do not carry any identification or card in your wallet or purse that has your social security number printed on it. Yes, this means do not carry your social security card, Medicare card, and health insurance cards.
Minimize the number of credit cards that you carry. The more you carry the greater the risk that you will be a victim of existing account fraud should your wallet or purse be stolen. The more cards you carry the greater the potential financial damage and complexity of your case."
[Of course, illegal access or use of your existing accounts is not identity theft but is instead "account takeover", a completely different animal that is much easier to fix than the problems that result from true identity theft.]
"Shred all documents that contain your name, social security number, date of birth, or account numbers before you discard them. Check that junk mail doesn’t contain your personal information, and if it does, shred it first, especially those preapproved credit card offers and credit card checks. ...
Protect your outgoing and incoming mail. Outgoing mail, which can be stolen, often contains your account numbers and other sensitive information. It is best to deposit your outgoing mail inside of your local post office so there is no chance for it to be stolen from your residential mailbox or from U.S. Post Boxes. Never leave your outgoing or incoming mail unattended. ...
Monitor what is inside of your mail too. Do you see unexplainable charges or items on your credit card, bank and medical statements? If so, it may be a clue that someone is misusing your identity or account numbers. Take action quickly. ...
Don’t be lured. Be careful of email, phone calls and snail mail that request your personal information. Don’t fall for phishing or vishing scams or other social engineering schemes.
Use basic on-line computer security and safe-surfing techniques. Use hardware and software firewalls; use anti-virus, anti-spyware and anti-malware security software regularly and keep them up-to-date. Keep your operating system (Windows, MacOS) and software application security updates current. Never conduct e-commerce on a website unless it is secure. The website address should begin with "https://www. . . " The "s" means secure. Look for the closed lock on your browser's address bar."
All good tips from Joe Campana, but I like his last tip the best -
"Use common sense. Be aware, be careful and act sensibly."
For the rest of the article, see http://www.examiner.com/x-9215-Identity-Theft-Examiner~y2009m6d15-Identity-theftwise-up-with-prevention?cid=examiner-email.
"Do not carry any identification or card in your wallet or purse that has your social security number printed on it. Yes, this means do not carry your social security card, Medicare card, and health insurance cards.
Minimize the number of credit cards that you carry. The more you carry the greater the risk that you will be a victim of existing account fraud should your wallet or purse be stolen. The more cards you carry the greater the potential financial damage and complexity of your case."
[Of course, illegal access or use of your existing accounts is not identity theft but is instead "account takeover", a completely different animal that is much easier to fix than the problems that result from true identity theft.]
"Shred all documents that contain your name, social security number, date of birth, or account numbers before you discard them. Check that junk mail doesn’t contain your personal information, and if it does, shred it first, especially those preapproved credit card offers and credit card checks. ...
Protect your outgoing and incoming mail. Outgoing mail, which can be stolen, often contains your account numbers and other sensitive information. It is best to deposit your outgoing mail inside of your local post office so there is no chance for it to be stolen from your residential mailbox or from U.S. Post Boxes. Never leave your outgoing or incoming mail unattended. ...
Monitor what is inside of your mail too. Do you see unexplainable charges or items on your credit card, bank and medical statements? If so, it may be a clue that someone is misusing your identity or account numbers. Take action quickly. ...
Don’t be lured. Be careful of email, phone calls and snail mail that request your personal information. Don’t fall for phishing or vishing scams or other social engineering schemes.
Use basic on-line computer security and safe-surfing techniques. Use hardware and software firewalls; use anti-virus, anti-spyware and anti-malware security software regularly and keep them up-to-date. Keep your operating system (Windows, MacOS) and software application security updates current. Never conduct e-commerce on a website unless it is secure. The website address should begin with "https://www. . . " The "s" means secure. Look for the closed lock on your browser's address bar."
All good tips from Joe Campana, but I like his last tip the best -
"Use common sense. Be aware, be careful and act sensibly."
For the rest of the article, see http://www.examiner.com/x-9215-Identity-Theft-Examiner~y2009m6d15-Identity-theftwise-up-with-prevention?cid=examiner-email.
June 14, 2009
Article about medical identity theft
There was an article today on http://www.emaxhealth.com/ about a segment this morning on Good Morning America about medical identity theft. Here's part of the article:
"There are several tips to prevent it [medical identity theft] from happening. One is to safeguard your health insurance card and look for inconsistencies in your health insurance statements as well as in your medical records.
... Medical identity theft is the type of ID theft when someone steals your identity and either obtains health insurance in your name or uses your current medical insurance policy to obtain treatment or prescriptions. You can be denied health insurance coverage or lose your current health coverage because of false information placed in your medical record.
... When someone takes your healht insurance card an identity [thief] can receive treatment for an injury to his hand using a stolen identity. Now, the identity theft victim will receive letters demanding payment for drugs and services rendered to the thief. Inconsistencies in your health insurance bill should quickly reveal this type of situation and help you to take actions to protect your medical identity and records."
For the whole article, click here - http://www.emaxhealth.com/1/34/31720/safeguard-health-insurance-card-prevent-identity-theft.html.
"There are several tips to prevent it [medical identity theft] from happening. One is to safeguard your health insurance card and look for inconsistencies in your health insurance statements as well as in your medical records.
... Medical identity theft is the type of ID theft when someone steals your identity and either obtains health insurance in your name or uses your current medical insurance policy to obtain treatment or prescriptions. You can be denied health insurance coverage or lose your current health coverage because of false information placed in your medical record.
... When someone takes your healht insurance card an identity [thief] can receive treatment for an injury to his hand using a stolen identity. Now, the identity theft victim will receive letters demanding payment for drugs and services rendered to the thief. Inconsistencies in your health insurance bill should quickly reveal this type of situation and help you to take actions to protect your medical identity and records."
For the whole article, click here - http://www.emaxhealth.com/1/34/31720/safeguard-health-insurance-card-prevent-identity-theft.html.
Another phishing scam
The Pennsylvania Attorney General is warning about another phishing scam. Phishing is where identity thieves or other criminals try to get you to give them your private information (i.e. Social Security number, date of birth, etc.) so they can then use it to steal the consumer's identity or sell it to someone willing to steal the identity. This new scam involves text messages or automated calls to cell phones.
"Attorney General Tom Corbett urged consumers to be watchful for scam text messages or automated calls on their cell phones and urged consumers to never divulge personal information in response to an unsolicited message. Corbett explained that the Attorney General’s Bureau of Consumer Protection has been receiving a steadily increasing number of complaints about unwanted cell phone text messages – often claiming to be from consumers’ banks or credit card companies.
'These bogus ‘security alerts’ typically warn consumers that their bank or credit card account has been compromised and requests that they send a reply message or call a toll-free number to correct the problem,' Corbett said. 'Consumers who call the scam number are often asked to ‘confirm’ their account number, password or PIN – leaving them vulnerable to fraudulent charges or identity theft.'
Corbett noted that identity thieves are always looking for ways to disguise their scheme and reach out to new potential victims – especially young people, who are much more likely to use text message services. Messages that appear to come from banks, credit card companies or other legitimate businesses are the latest tools that thieves are using to trick consumers into giving up vital personal information. Corbett added that consumers are also reporting a growing problem with unwanted 'spam' text messages. These messages are typically unsolicited ads for prescription drugs or pornography and can be costly for consumers, who may be charged fees ranging from $.10 to $.50 per message that they receive.
Corbett offered the following tips for consumers interested in preventing unwanted 'spam' or scam text messages:
- Be careful when asked for your telephone number. Giving your phone number in response to contests or online promotions can lead to unwanted calls and messages.
- Never respond to unsolicited text messages – it only lets the sender know they’ve reached a working number and may lead to more messages in the future.
- If your wireless provider bills you for unsolicited messages, contact them and ask them to remove the charge or give you a credit for those fees.
- If your cell phone company will not waive fees for unsolicited text messages, file a complaint with the Attorney General’s Bureau of Consumer Protection.
- If you do not wish to receive any text messages, consider asking your cell phone provider to block all text message services for your phone.
- Report messages that are deceptive, offensive or advertise illegal products or services."
The rest of the article can be found here - http://www.gantdaily.com/news/11/ARTICLE/54229/2009-06-14.html.
"Attorney General Tom Corbett urged consumers to be watchful for scam text messages or automated calls on their cell phones and urged consumers to never divulge personal information in response to an unsolicited message. Corbett explained that the Attorney General’s Bureau of Consumer Protection has been receiving a steadily increasing number of complaints about unwanted cell phone text messages – often claiming to be from consumers’ banks or credit card companies.
'These bogus ‘security alerts’ typically warn consumers that their bank or credit card account has been compromised and requests that they send a reply message or call a toll-free number to correct the problem,' Corbett said. 'Consumers who call the scam number are often asked to ‘confirm’ their account number, password or PIN – leaving them vulnerable to fraudulent charges or identity theft.'
Corbett noted that identity thieves are always looking for ways to disguise their scheme and reach out to new potential victims – especially young people, who are much more likely to use text message services. Messages that appear to come from banks, credit card companies or other legitimate businesses are the latest tools that thieves are using to trick consumers into giving up vital personal information. Corbett added that consumers are also reporting a growing problem with unwanted 'spam' text messages. These messages are typically unsolicited ads for prescription drugs or pornography and can be costly for consumers, who may be charged fees ranging from $.10 to $.50 per message that they receive.
Corbett offered the following tips for consumers interested in preventing unwanted 'spam' or scam text messages:
- Be careful when asked for your telephone number. Giving your phone number in response to contests or online promotions can lead to unwanted calls and messages.
- Never respond to unsolicited text messages – it only lets the sender know they’ve reached a working number and may lead to more messages in the future.
- If your wireless provider bills you for unsolicited messages, contact them and ask them to remove the charge or give you a credit for those fees.
- If your cell phone company will not waive fees for unsolicited text messages, file a complaint with the Attorney General’s Bureau of Consumer Protection.
- If you do not wish to receive any text messages, consider asking your cell phone provider to block all text message services for your phone.
- Report messages that are deceptive, offensive or advertise illegal products or services."
The rest of the article can be found here - http://www.gantdaily.com/news/11/ARTICLE/54229/2009-06-14.html.
15 U.S.C. 1681b - part 5
In this installment, I'll finish explaining the permissible purposes section of the Fair Credit Reporting Act - 15 U.S.C. 1681b.
"(f) Certain use or obtaining of information prohibited. A person shall not use or obtain a consumer report for any purpose unless
(1) the consumer report is obtained for a purpose for which the consumer report is authorized to be furnished under this subsection; and
(2) the purpose is certified in accordance with section 607 [section 1681e] by a prospective user of the report through a general or specific certification."
[This is the section that makes it a violation to obtain or use a credit report for a purpose that is not permitted by the rest of 15 U.S.C. 1681b. The "or use" is very important so that a user cannot use the report for any purpose even if it was obtained using a permissible purpose.]
"(g) Protection of Medical Information
(1) Limitation on consumer reporting agencies. A consumer reporting agency shall not furnish for employment purposes, or in connection with a credit or insurance transaction, a consumer report that contains medical information (other than medical contact information treated in the manner required under section 605(a)(6)) about a consumer, unless --
(A) if furnished in connection with an insurance transaction, the consumer affirmatively consents to the furnishing of the report;
(B) if furnished for employment purposes or in connection with a credit transaction --
(i) the information to be furnished is relevant to process or effect the employment or credit transaction; and
(ii) the consumer provides specific written consent for the furnishing of the report that describes in clear and conspicuous language the use for which the information will be furnished; or
(C) the information to be furnished pertains solely to transactions, accounts, or balances relating to debts arising from the receipt of medical services, products, or devises, where such information, other than account status or amounts, is restricted or reported using codes that do not identify, or do not provide information sufficient to infer, the specific provider or the nature of such services, products, or devices, as provided in section 605(a)(6)."
[A consumer reporting agency can only provide a credit report with medical information on it for an insurance transaction IF the consumer consents to it. A consumer reporting agency can only provide a credit report containing medical information regarding an employment or credit transaction IF the medical information to be provided is relevant to the transaction and the consumer consents in writing or if the medical information is restricted in such a way that the specific provider or nature of the medical treatment is not identified and can not be inferred. One way the CRAs do this is reporting the information using a code number instead of the name of the medical provider (i.e. #12345 instead of "Cancer Institute") which, in this example, keeps the recipient of the report from knowing the consumer has been treated for cancer.]
"(2) Limitation on creditors. Except as permitted pursuant to paragraph (3)(C) or regulations prescribed under paragraph (5)(A), a creditor shall not obtain or use medical information (other than medical contact information treated in the manner required under section 605(a)(6)) pertaining to a consumer in connection with any determination of the consumer's eligibility, or continued eligibility, for credit."
[This means that the recipient of the credit report can not use the medical information provided as a factor in the consumer's eligibility for credit (i.e. that the consumer may have cancer should not prevent him or her from getting a credit card, but non-payment of a medical bill can affect the consumer's eligibility to get a credit card).]
"(3) Actions authorized by federal law, insurance activities and regulatory determinations. Section 603(d)(3) shall not be construed so as to treat information or any communication of information as a consumer report if the information or communication is disclosed --
(A) in connection with the business of insurance or annuities, including the activities described in section 18B of the model Privacy of Consumer Financial and Health Information Regulation issued by the National Association of Insurance Commissioners (as in effect on January 1, 2003);
(B) for any purpose permitted without authorization under the Standards for Individually Identifiable Health Information promulgated by the Department of Health and Human Services pursuant to the Health Insurance Portability and Accountability Act of 1996 or referred to under section 1179 of such Act, or described in section 502(e) of Public Law 106-102; or
(C) as otherwise determined to be necessary and appropriate, by regulation or order and subject to paragraph (6), by the Commission, any Federal banking agency or the National Credit Union Administration (with respect to any financial institution subject to the jurisdiction of such agency or Administration under paragraph (1), (2), or (3) of section 621(b), or the applicable State insurance authority (with respect to any person engaged in providing insurance or annuities).
[In other words, publication of medical infrormation for underwriting of health or life insurance, or HIPAA compliant publications of medical information are not considered consumer reports.]
"(4) Limitation on redisclosure of medical information. Any person that receives medical information pursuant to paragrpah (1) or (3) shall not disclose such information to any other person, except as necessary to carry out the purpose for which the information was initially disclosed, or as otherwise permitted by statute, regulation, or order."
[So even if the recipient has a permissible purpose for receiving the medical information, he or she can not disclose it to others unless it is necessary for carrying out the purpose that the information was originally (and permissibly) obtained to do or as permitted by law.]
"(5) Regulations and Effective Date for Paragraph (2)
(A) Regulations required. Each Federal banking agency and the National Credit Union Administration shall, subject to paragraph (6) and after notice and opportunity for comment, prescribe regulations that permit transactions under paragraph (2) that are determined to be necessary and appropriate to protect legitimate operational, transactional, risk, consumer, and other needs (and which shall include permitting actions necessary for administrative verification purposes), consistent with the intent of paragraph (2) to restrict the use of medical information for inappropriate purposes."
[This section requires each Federal banking agency and the National Credit Union Administration to propose regulations that allow creditors, in certain circumstances, to use the medical information on credit reports for credit eligibility decisions.]
"(B) Final regulations required. The Federal banking agencies and the National Credit Union Administration shall issue the regulations required under subparagraph (A) in final form before the end of the 6-month period beginning on the date of enactment of the Fair and Accurate Credit Transactions Act of 2003."
[Subsection (B) just puts a deadline on the regulations required by subsection (A).]
"(6) Coordination with other laws. No provision of this subsection shall be construed as altering, affecting, or superseding the applicability of any other provision of Federal law relating to medical confidentiality."
[This section just makes it clear that 15 U.S.C. 1681b(f) does not alter, affect or supersede any other federal law regaridng medical confidentiality. In other words, it does not make something disclosable if it is otherwise non-disclosable or confidential.]
That's it for the explanation of 15 U.S.C. 1681b. I will start explaining 15 U.S.C. 1681c in the next installment.
"(f) Certain use or obtaining of information prohibited. A person shall not use or obtain a consumer report for any purpose unless
(1) the consumer report is obtained for a purpose for which the consumer report is authorized to be furnished under this subsection; and
(2) the purpose is certified in accordance with section 607 [section 1681e] by a prospective user of the report through a general or specific certification."
[This is the section that makes it a violation to obtain or use a credit report for a purpose that is not permitted by the rest of 15 U.S.C. 1681b. The "or use" is very important so that a user cannot use the report for any purpose even if it was obtained using a permissible purpose.]
"(g) Protection of Medical Information
(1) Limitation on consumer reporting agencies. A consumer reporting agency shall not furnish for employment purposes, or in connection with a credit or insurance transaction, a consumer report that contains medical information (other than medical contact information treated in the manner required under section 605(a)(6)) about a consumer, unless --
(A) if furnished in connection with an insurance transaction, the consumer affirmatively consents to the furnishing of the report;
(B) if furnished for employment purposes or in connection with a credit transaction --
(i) the information to be furnished is relevant to process or effect the employment or credit transaction; and
(ii) the consumer provides specific written consent for the furnishing of the report that describes in clear and conspicuous language the use for which the information will be furnished; or
(C) the information to be furnished pertains solely to transactions, accounts, or balances relating to debts arising from the receipt of medical services, products, or devises, where such information, other than account status or amounts, is restricted or reported using codes that do not identify, or do not provide information sufficient to infer, the specific provider or the nature of such services, products, or devices, as provided in section 605(a)(6)."
[A consumer reporting agency can only provide a credit report with medical information on it for an insurance transaction IF the consumer consents to it. A consumer reporting agency can only provide a credit report containing medical information regarding an employment or credit transaction IF the medical information to be provided is relevant to the transaction and the consumer consents in writing or if the medical information is restricted in such a way that the specific provider or nature of the medical treatment is not identified and can not be inferred. One way the CRAs do this is reporting the information using a code number instead of the name of the medical provider (i.e. #12345 instead of "Cancer Institute") which, in this example, keeps the recipient of the report from knowing the consumer has been treated for cancer.]
"(2) Limitation on creditors. Except as permitted pursuant to paragraph (3)(C) or regulations prescribed under paragraph (5)(A), a creditor shall not obtain or use medical information (other than medical contact information treated in the manner required under section 605(a)(6)) pertaining to a consumer in connection with any determination of the consumer's eligibility, or continued eligibility, for credit."
[This means that the recipient of the credit report can not use the medical information provided as a factor in the consumer's eligibility for credit (i.e. that the consumer may have cancer should not prevent him or her from getting a credit card, but non-payment of a medical bill can affect the consumer's eligibility to get a credit card).]
"(3) Actions authorized by federal law, insurance activities and regulatory determinations. Section 603(d)(3) shall not be construed so as to treat information or any communication of information as a consumer report if the information or communication is disclosed --
(A) in connection with the business of insurance or annuities, including the activities described in section 18B of the model Privacy of Consumer Financial and Health Information Regulation issued by the National Association of Insurance Commissioners (as in effect on January 1, 2003);
(B) for any purpose permitted without authorization under the Standards for Individually Identifiable Health Information promulgated by the Department of Health and Human Services pursuant to the Health Insurance Portability and Accountability Act of 1996 or referred to under section 1179 of such Act, or described in section 502(e) of Public Law 106-102; or
(C) as otherwise determined to be necessary and appropriate, by regulation or order and subject to paragraph (6), by the Commission, any Federal banking agency or the National Credit Union Administration (with respect to any financial institution subject to the jurisdiction of such agency or Administration under paragraph (1), (2), or (3) of section 621(b), or the applicable State insurance authority (with respect to any person engaged in providing insurance or annuities).
[In other words, publication of medical infrormation for underwriting of health or life insurance, or HIPAA compliant publications of medical information are not considered consumer reports.]
"(4) Limitation on redisclosure of medical information. Any person that receives medical information pursuant to paragrpah (1) or (3) shall not disclose such information to any other person, except as necessary to carry out the purpose for which the information was initially disclosed, or as otherwise permitted by statute, regulation, or order."
[So even if the recipient has a permissible purpose for receiving the medical information, he or she can not disclose it to others unless it is necessary for carrying out the purpose that the information was originally (and permissibly) obtained to do or as permitted by law.]
"(5) Regulations and Effective Date for Paragraph (2)
(A) Regulations required. Each Federal banking agency and the National Credit Union Administration shall, subject to paragraph (6) and after notice and opportunity for comment, prescribe regulations that permit transactions under paragraph (2) that are determined to be necessary and appropriate to protect legitimate operational, transactional, risk, consumer, and other needs (and which shall include permitting actions necessary for administrative verification purposes), consistent with the intent of paragraph (2) to restrict the use of medical information for inappropriate purposes."
[This section requires each Federal banking agency and the National Credit Union Administration to propose regulations that allow creditors, in certain circumstances, to use the medical information on credit reports for credit eligibility decisions.]
"(B) Final regulations required. The Federal banking agencies and the National Credit Union Administration shall issue the regulations required under subparagraph (A) in final form before the end of the 6-month period beginning on the date of enactment of the Fair and Accurate Credit Transactions Act of 2003."
[Subsection (B) just puts a deadline on the regulations required by subsection (A).]
"(6) Coordination with other laws. No provision of this subsection shall be construed as altering, affecting, or superseding the applicability of any other provision of Federal law relating to medical confidentiality."
[This section just makes it clear that 15 U.S.C. 1681b(f) does not alter, affect or supersede any other federal law regaridng medical confidentiality. In other words, it does not make something disclosable if it is otherwise non-disclosable or confidential.]
That's it for the explanation of 15 U.S.C. 1681b. I will start explaining 15 U.S.C. 1681c in the next installment.
Article about yet another case where Equifax mixed two consumers' files together
Yesterday in the Atlanta Journal-Constitution, there was an article about yet another case where Equifax's faulty matching logic caused two people's credit files to be merged together, creating a mixed file where the bad credit history of one person lands on the good credit report of another person. The case in the article involves twins, where Equifax places the brother's bad credit on his twin sister's credit report and refuses to fix the errors despite numerous disputes and proof provided by the sister.
Here's a quote from the article:
"For more than two years Robyn Mueller has been battling credit reporting giant Equifax, which mixed her twin brother’s data into her file, then failed to correct the errors, records show.
Mueller sent Equifax repeated dispute letters beginning in 2006 — and even copies of each sibling’s driver’s licenses, pay stubs and other records — to prove they are different people. But the problem wasn’t fixed until last summer when she sued the Atlanta-based credit bureau.
For two years the errors saddled Mueller with an Equifax credit report so troubled she had no credit score, according to Mueller and records she’s assembled as part of a federal lawsuit.
'You don’t understand how much torture I went through,' said Mueller, 39, who lives in Sugar Hill. 'All the credit bureaus, they control your life. … It’s not fair for them to steal your identity.'
...
Federal law is supposed to protect consumers from such problems, mandating that credit reporting agencies investigate and promptly correct any errors consumers report to them.
But consumer watchdog groups say the system for disputing credit report errors is badly broken and can have a devastating impact on an individual’s ability to get loans, housing, insurance and jobs. They say credit bureaus do little to investigate alleged errors and use an automated system that reduces a consumer’s complex dispute letter and supporting documents to a two- or three-digit code.
When credit bureaus refuse to correct errors, the Fair Credit Reporting Act allows consumers to bring suit to enforce the law and collect damages and attorneys fees if they prevail.
The Consumer Data Industry Association, a trade group for the credit bureaus, said the dispute system, with its electronic coding, quickly corrects errors most of the time. Serious, lingering problems are rare, said Stuart Pratt, the association’s CEO."
FYI - the CDIA is an organization that is comprised of the credit bureaus and major furnishers of credit information (credit card companies, mortgage companies, etc.). The CDIA is actually responsible for coming up with the credit bureaus' terrible procedures for "investigating" consumer disputes by merely asking the company that provided the wrong information to begin with whether it was right or not, and then, no matter what the answer, going with the answer of the furnisher and never siding with the consumer if the consumer's position contradicts that of the furnisher.
First of all, Mr. Pratt, serious, lingering problems with Equifax and the other CRAs Experian and Trans Union are not only not "rare" but are common place. I see them every day.
And, in Ms. Mueller's case, the problem is not only Equifax's complete failure to properly investigate her disputes, but also Equifax's matching logic, which fails to require an exact match of a Social Security number on an account to the consumer before placing the account on the consumer's credit report. This caused the brother's bad credit, reported to Equifax with the brother's name and Social Security number, to land on the sister's credit report under her name and Social Security number.
This is a problem that Equifax has known about since the early 1990s and has even promised to fix in order to extricate itself from a lawsuit filed against it by 18 States and again when it was sued for this same mixed file problem by the FTC. Both times, Equifax agreed to fix its matching logic to use full identifying information, including full Social Security number, but both times Equifax failed to do what it promised, to the detriment to consumers like Ms. Mueller. Good luck in your lawsuit.
Here's a link to the full article - http://www.ajc.com/feeds/content/metro/stories/2009/06/14/spotlight_credit.html?cxtype=rss&cxsvc=7&cxcat=13.
Here's a quote from the article:
"For more than two years Robyn Mueller has been battling credit reporting giant Equifax, which mixed her twin brother’s data into her file, then failed to correct the errors, records show.
Mueller sent Equifax repeated dispute letters beginning in 2006 — and even copies of each sibling’s driver’s licenses, pay stubs and other records — to prove they are different people. But the problem wasn’t fixed until last summer when she sued the Atlanta-based credit bureau.
For two years the errors saddled Mueller with an Equifax credit report so troubled she had no credit score, according to Mueller and records she’s assembled as part of a federal lawsuit.
'You don’t understand how much torture I went through,' said Mueller, 39, who lives in Sugar Hill. 'All the credit bureaus, they control your life. … It’s not fair for them to steal your identity.'
...
Federal law is supposed to protect consumers from such problems, mandating that credit reporting agencies investigate and promptly correct any errors consumers report to them.
But consumer watchdog groups say the system for disputing credit report errors is badly broken and can have a devastating impact on an individual’s ability to get loans, housing, insurance and jobs. They say credit bureaus do little to investigate alleged errors and use an automated system that reduces a consumer’s complex dispute letter and supporting documents to a two- or three-digit code.
When credit bureaus refuse to correct errors, the Fair Credit Reporting Act allows consumers to bring suit to enforce the law and collect damages and attorneys fees if they prevail.
The Consumer Data Industry Association, a trade group for the credit bureaus, said the dispute system, with its electronic coding, quickly corrects errors most of the time. Serious, lingering problems are rare, said Stuart Pratt, the association’s CEO."
FYI - the CDIA is an organization that is comprised of the credit bureaus and major furnishers of credit information (credit card companies, mortgage companies, etc.). The CDIA is actually responsible for coming up with the credit bureaus' terrible procedures for "investigating" consumer disputes by merely asking the company that provided the wrong information to begin with whether it was right or not, and then, no matter what the answer, going with the answer of the furnisher and never siding with the consumer if the consumer's position contradicts that of the furnisher.
First of all, Mr. Pratt, serious, lingering problems with Equifax and the other CRAs Experian and Trans Union are not only not "rare" but are common place. I see them every day.
And, in Ms. Mueller's case, the problem is not only Equifax's complete failure to properly investigate her disputes, but also Equifax's matching logic, which fails to require an exact match of a Social Security number on an account to the consumer before placing the account on the consumer's credit report. This caused the brother's bad credit, reported to Equifax with the brother's name and Social Security number, to land on the sister's credit report under her name and Social Security number.
This is a problem that Equifax has known about since the early 1990s and has even promised to fix in order to extricate itself from a lawsuit filed against it by 18 States and again when it was sued for this same mixed file problem by the FTC. Both times, Equifax agreed to fix its matching logic to use full identifying information, including full Social Security number, but both times Equifax failed to do what it promised, to the detriment to consumers like Ms. Mueller. Good luck in your lawsuit.
Here's a link to the full article - http://www.ajc.com/feeds/content/metro/stories/2009/06/14/spotlight_credit.html?cxtype=rss&cxsvc=7&cxcat=13.
June 12, 2009
Even attorneys can fall for scams
I received the below information from the Mississippi Bar today. I have received multiple e-mails similar to what the Mississippi Bar describes. Luckily, I did not fall for it.
"An internet scam targeting attorneys in states around Mississippi and across the country is prompting warnings from bar associations and federal authorities. Please exercise extra diligence when presented with circumstances similar to those noted below.
The scam works like this: a law firm receives a referral from someone posing as an out-of-state attorney to enforce a simple contract dispute or collect a debt from a local corporation owed to a foreign company. The firm, believing it is exercising due diligence, confirms that the prospective client is a real company, then enters into a fee agreement. It sends a demand letter, and later receives a cashier's check made payable to the law firm. The client is pleased and directs the law firm to wire the money, after deducting its fees and costs. The law firm deposits the money in its client trust account, waits for the check to clear the local bank, and wires the money to the client.
Things fall apart when the bank on which the check is drawn notifies everyone that the check is a counterfeit fraud - by which time it is too late to stop the wire transfer, and the law firm's client trust account is now out the proceeds, which the firm has to replace. The scam works because the law firm erroneously believes that the check is good when it clears the law firm's bank. That is not the case. The first clearance is only provisional. The bank on which the check is drawn has additional time under the law to verify the check.
If you suspect you have encountered a similar situation, independently verify the names and contact information provided to you and do not disburse the deposited funds until the bank on which the cashier's check is drawn clears the check. To report a scam, contact your local FBI office."
"An internet scam targeting attorneys in states around Mississippi and across the country is prompting warnings from bar associations and federal authorities. Please exercise extra diligence when presented with circumstances similar to those noted below.
The scam works like this: a law firm receives a referral from someone posing as an out-of-state attorney to enforce a simple contract dispute or collect a debt from a local corporation owed to a foreign company. The firm, believing it is exercising due diligence, confirms that the prospective client is a real company, then enters into a fee agreement. It sends a demand letter, and later receives a cashier's check made payable to the law firm. The client is pleased and directs the law firm to wire the money, after deducting its fees and costs. The law firm deposits the money in its client trust account, waits for the check to clear the local bank, and wires the money to the client.
Things fall apart when the bank on which the check is drawn notifies everyone that the check is a counterfeit fraud - by which time it is too late to stop the wire transfer, and the law firm's client trust account is now out the proceeds, which the firm has to replace. The scam works because the law firm erroneously believes that the check is good when it clears the law firm's bank. That is not the case. The first clearance is only provisional. The bank on which the check is drawn has additional time under the law to verify the check.
If you suspect you have encountered a similar situation, independently verify the names and contact information provided to you and do not disburse the deposited funds until the bank on which the cashier's check is drawn clears the check. To report a scam, contact your local FBI office."
Experian's dislike of LifeLock is finally explained
I finally figured out why Experian, who is not normally on the side of anyone but itself, was willing to take on LifeLock, which, like Experian, is not on the side of consumers either. I figured at first it was just that LifeLock made Experian's life hard by requesting fraud alerts for its clients regardless of whether the customer ever even claimed to be a fraud victim.
But, while checking the ads appearing on my own blog, it all finally became clear. As you can possibly still see at the top of the blog (although I'm trying to block their ads from appearing), there is an ad for http://www.protectmyid.com/. This company markets to the same audience as LifeLock, i.e. those scared of identity theft and thinking there is some magic bullet that can easily protect them. When I went to http://www.protectmyid.com/, I found that http://www.protectmyid.com/ is part of a family of online sites that belong to consumerinfo.com, which is owned by.... you guessed it, Experian. So Experian is attacking LifeLock in an effort to hamper and/or eliminate the competition for one of its websites. Figures, huh?
But, while checking the ads appearing on my own blog, it all finally became clear. As you can possibly still see at the top of the blog (although I'm trying to block their ads from appearing), there is an ad for http://www.protectmyid.com/. This company markets to the same audience as LifeLock, i.e. those scared of identity theft and thinking there is some magic bullet that can easily protect them. When I went to http://www.protectmyid.com/, I found that http://www.protectmyid.com/ is part of a family of online sites that belong to consumerinfo.com, which is owned by.... you guessed it, Experian. So Experian is attacking LifeLock in an effort to hamper and/or eliminate the competition for one of its websites. Figures, huh?
June 11, 2009
White collar fraud up due to recession
According to Robert Rahn, President of Management Resources LTD of New York , the amount of white collar fraud being committed has risen due to the recession. Below is a quote from a recent press release from Mr. Rahn.
"Robert Rahn, President of Management Resources LTD of New York - an Orange County civil and criminal investigative firm - has seen a leap in regional white-collar fraud. In the past 12 months his firm has been retained to conduct over 300 mortgage fraud investigations, a 100% increase from 2007. Whether these cases are a result of 'hard fraud' (for profit) or 'soft fraud' where applicants fudge numbers to meet requirements for loan applications, the trend is not a good one.
'Unfortunately this is nothing new. As the economy goes downhill, the crime rate historically rises,' says Rahn, a former NYPD Lieutenant, whose 20 year law enforcement career includes a stint as a homicide detective. Per Rahn, the situation is so bad that the FBI is now, for the first time since 9-11, assigning Federal agents to look into mortgage frauds across the country.
When retained for a mortgage fraud investigation, Rahn's team conducts borrower interviews, looking at basic information verification, including: the applicant's job data, their income and bonuses, assets or liabilities, as well as onsite property inspections. According to Rahn, whose firm also regularly works with businesses, attorneys and private clients, consumers ultimately pay for fraud through higher premiums, so it's not just the insurance companies who are suffering (from fraud losses)."
Read the full press release here - http://www.prweb.com/releases/private-investigators/mortgage-fraud/prweb2482024.htm.
"Robert Rahn, President of Management Resources LTD of New York - an Orange County civil and criminal investigative firm - has seen a leap in regional white-collar fraud. In the past 12 months his firm has been retained to conduct over 300 mortgage fraud investigations, a 100% increase from 2007. Whether these cases are a result of 'hard fraud' (for profit) or 'soft fraud' where applicants fudge numbers to meet requirements for loan applications, the trend is not a good one.
'Unfortunately this is nothing new. As the economy goes downhill, the crime rate historically rises,' says Rahn, a former NYPD Lieutenant, whose 20 year law enforcement career includes a stint as a homicide detective. Per Rahn, the situation is so bad that the FBI is now, for the first time since 9-11, assigning Federal agents to look into mortgage frauds across the country.
When retained for a mortgage fraud investigation, Rahn's team conducts borrower interviews, looking at basic information verification, including: the applicant's job data, their income and bonuses, assets or liabilities, as well as onsite property inspections. According to Rahn, whose firm also regularly works with businesses, attorneys and private clients, consumers ultimately pay for fraud through higher premiums, so it's not just the insurance companies who are suffering (from fraud losses)."
Read the full press release here - http://www.prweb.com/releases/private-investigators/mortgage-fraud/prweb2482024.htm.
June 10, 2009
15 U.S.C. 1681b - part 4
Lets continue with the explanation of 15 U.S.C. 1681b with subsection (e).
"(e) Election of consumer to be excluded from lists.
(1) In general. A consumer may elect to have the consumer's name and address excluded from any list provided by a consumer reporting agency under subsection (c)(1)(B) in connection with a credit or insurance transaction that is not initiated by the consumer, by notifying the agency in accordance with paragraph (2) that the consumer does not consent to any use of a consumer report relating to the consumer in connection with any credit or insurance transaction that is not initiated by the consumer."
[This is the section that gives consumers the right to opt out of promotional lists distributed by the consumer reporting agencies. If you want to stop getting so much junk mail, you should do this. But this will also eliminate the majority of "preapproved" credit card offers that you receive.]
"(2) Manner of notification. A consumer shall notify a consumer reporting agency under paragraph (1)
(A) through the notification system maintained by the agency under paragraph (5); or
(B) by submitting to the agency a signed notice of election form issued by the agency for purposes of this subparagraph."
[The FCRA gives you two ways to notify the consumer reporting agency that you want to be left off promotional lists that they sell. One is through the national notification system required by subparagraph (5). The other is by using a written notice of election form that the CRAs can provide.]
"(3) Response of agency after notification through system. Upon receipt of notification of the election of a consumer under paragraph (1) through the notification system maintained by the agency under paragraph (5), a consumer reporting agency shall
(A) inform the consumer that the election is effective only for the 5-year period following the election if the consumer does not submit to the agency a signed notice of election form issued by the agency for purposes of paragraph (2)(B); and
(B) provide to the consumer a notice of election form, if requested by the consumer, not later than 5 business days after receipt of the notification of the election through the system established under paragraph (5), in the case of a request made at the time the consumer provides notification through the system."
[After a consumer tells the consumer reporting agency that he or she is opting out of the preapproved/promotional lists, the consumer reporting agency must tell the consumer that his or her opt out status is only effective for 5 years and must provide the notice of election form mentioned in 15 U.S.C 1681b(e)(2)(B) if it is requested by the consumer.]
"(4) Effectiveness of election. An election of a consumer under paragraph (1)
(A) shall be effective with respect to a consumer reporting agency beginning 5 business days after the date on which the consumer notifies the agency in accordance with paragraph (2);
(B) shall be effective with respect to a consumer reporting agency
(i) subject to subparagraph (C), during the 5-year period beginning 5 business days after the date on which the consumer notifies the agency of the election, in the case of an election for which a consumer notifies the agency only in accordance with paragraph (2)(A); or
(ii) until the consumer notifies the agency under subparagraph (C), in the case of an election for which a consumer notifies the agency in accordance with paragraph (2)(B);
(C) shall not be effective after the date on which the consumer notifies the agency, through the notification system established by the agency under paragraph (5), that the election is no longer effective; and
(D) shall be effective with respect to each affiliate of the agency."
[This subsection just explains when the opt out period begins, which is typically 5 days after notification and is good for either 5 years or until the consumer changes his or her mind and notifies the consumer reporting agency that they want back on the lists.]
"(5) Notification System.
(A) In general. Each consumer reporting agency that, under subsection (c)(1)(B), furnishes a consumer report in connection with a credit or insurance transaction that is not initiated by a consumer, shall
(i) establish and maintain a notification system, including a toll-free telephone number, which permits any consumer whose consumer report is maintained by the agency to notifiy the agency, with appropriate identification, of the consumer's election to have the consumer's name and address excluded from any such list of names and address provided by the agency for such a transaction; and
(ii) publish by not later than 365 days after the date of enactment of the Consumer Credit Reporting Reform Act of 1996, and not less than annually thereafter, in a publication of general circulation in the area served by the agency
(I) a notification that information in consumer files maintained by the agency may be used in connection with such transactions; and
(II) the address and toll-free telephone number for consumers to use to notify the agency of the consumer's election under clause (I)."
[This just means that a consumer reporting agency must have a toll free phone number for consumers to call to opt out and that they must publicize at least once a year the fact that they use consumer reports may be used to generate promotional lists and the address and toll free number that consumers can use to opt out.]
"(B) Establishment and maintenance as compliance. Establishment and maintenance of a notification system (including a toll-free telephone number) and publication by a consumer reporting agency on the agency's own behalf and on behalf of any of its affiliates in accordance with this paragraph is deemed to be compliance with this paragraph by each of those affiliates."
[This means that a consumer reporting agency that utilizes affiliate companies (i.e. small, regional CRAs) can use one notification system that allows the primary CRA and all affiliates to comply with this subsection.]
"(6) Notification system by agencies that operate nationwide. Each consumer reporting agency that compiles and maintains files on consumers on a nationwide basis shall establish and maintain a notification system for purposes of paragraph (5) jointly with other such consumer reporting agencies."
[Subsection (6) means that the big three CRAs (Experian, Equifax and Trans Union) must have a joint notification system, which means that a consumer only has to notify one CRA to be opted out of all three's promotional lists.]
I will finish the explanation of 15 U.S.C. 1681b in part 5.
"(e) Election of consumer to be excluded from lists.
(1) In general. A consumer may elect to have the consumer's name and address excluded from any list provided by a consumer reporting agency under subsection (c)(1)(B) in connection with a credit or insurance transaction that is not initiated by the consumer, by notifying the agency in accordance with paragraph (2) that the consumer does not consent to any use of a consumer report relating to the consumer in connection with any credit or insurance transaction that is not initiated by the consumer."
[This is the section that gives consumers the right to opt out of promotional lists distributed by the consumer reporting agencies. If you want to stop getting so much junk mail, you should do this. But this will also eliminate the majority of "preapproved" credit card offers that you receive.]
"(2) Manner of notification. A consumer shall notify a consumer reporting agency under paragraph (1)
(A) through the notification system maintained by the agency under paragraph (5); or
(B) by submitting to the agency a signed notice of election form issued by the agency for purposes of this subparagraph."
[The FCRA gives you two ways to notify the consumer reporting agency that you want to be left off promotional lists that they sell. One is through the national notification system required by subparagraph (5). The other is by using a written notice of election form that the CRAs can provide.]
"(3) Response of agency after notification through system. Upon receipt of notification of the election of a consumer under paragraph (1) through the notification system maintained by the agency under paragraph (5), a consumer reporting agency shall
(A) inform the consumer that the election is effective only for the 5-year period following the election if the consumer does not submit to the agency a signed notice of election form issued by the agency for purposes of paragraph (2)(B); and
(B) provide to the consumer a notice of election form, if requested by the consumer, not later than 5 business days after receipt of the notification of the election through the system established under paragraph (5), in the case of a request made at the time the consumer provides notification through the system."
[After a consumer tells the consumer reporting agency that he or she is opting out of the preapproved/promotional lists, the consumer reporting agency must tell the consumer that his or her opt out status is only effective for 5 years and must provide the notice of election form mentioned in 15 U.S.C 1681b(e)(2)(B) if it is requested by the consumer.]
"(4) Effectiveness of election. An election of a consumer under paragraph (1)
(A) shall be effective with respect to a consumer reporting agency beginning 5 business days after the date on which the consumer notifies the agency in accordance with paragraph (2);
(B) shall be effective with respect to a consumer reporting agency
(i) subject to subparagraph (C), during the 5-year period beginning 5 business days after the date on which the consumer notifies the agency of the election, in the case of an election for which a consumer notifies the agency only in accordance with paragraph (2)(A); or
(ii) until the consumer notifies the agency under subparagraph (C), in the case of an election for which a consumer notifies the agency in accordance with paragraph (2)(B);
(C) shall not be effective after the date on which the consumer notifies the agency, through the notification system established by the agency under paragraph (5), that the election is no longer effective; and
(D) shall be effective with respect to each affiliate of the agency."
[This subsection just explains when the opt out period begins, which is typically 5 days after notification and is good for either 5 years or until the consumer changes his or her mind and notifies the consumer reporting agency that they want back on the lists.]
"(5) Notification System.
(A) In general. Each consumer reporting agency that, under subsection (c)(1)(B), furnishes a consumer report in connection with a credit or insurance transaction that is not initiated by a consumer, shall
(i) establish and maintain a notification system, including a toll-free telephone number, which permits any consumer whose consumer report is maintained by the agency to notifiy the agency, with appropriate identification, of the consumer's election to have the consumer's name and address excluded from any such list of names and address provided by the agency for such a transaction; and
(ii) publish by not later than 365 days after the date of enactment of the Consumer Credit Reporting Reform Act of 1996, and not less than annually thereafter, in a publication of general circulation in the area served by the agency
(I) a notification that information in consumer files maintained by the agency may be used in connection with such transactions; and
(II) the address and toll-free telephone number for consumers to use to notify the agency of the consumer's election under clause (I)."
[This just means that a consumer reporting agency must have a toll free phone number for consumers to call to opt out and that they must publicize at least once a year the fact that they use consumer reports may be used to generate promotional lists and the address and toll free number that consumers can use to opt out.]
"(B) Establishment and maintenance as compliance. Establishment and maintenance of a notification system (including a toll-free telephone number) and publication by a consumer reporting agency on the agency's own behalf and on behalf of any of its affiliates in accordance with this paragraph is deemed to be compliance with this paragraph by each of those affiliates."
[This means that a consumer reporting agency that utilizes affiliate companies (i.e. small, regional CRAs) can use one notification system that allows the primary CRA and all affiliates to comply with this subsection.]
"(6) Notification system by agencies that operate nationwide. Each consumer reporting agency that compiles and maintains files on consumers on a nationwide basis shall establish and maintain a notification system for purposes of paragraph (5) jointly with other such consumer reporting agencies."
[Subsection (6) means that the big three CRAs (Experian, Equifax and Trans Union) must have a joint notification system, which means that a consumer only has to notify one CRA to be opted out of all three's promotional lists.]
I will finish the explanation of 15 U.S.C. 1681b in part 5.
New FCRA case regarding 15 U.S.C. 1681e(b)
New case regarding the Fair Credit Reporting Act from the Federal Court for the District of Columbia. Wilson v. Prudential Financial, et al., 2009 U.S. Dist. LEXIS 26483 (D. DC March 30, 2009).
Defendant CARCO Group, Inc. (“CARCO”), a consumer reporting agency that does background checks on consumers, prepared a background report on Plaintiff Derek T. Wilson for Prudential Financial Services (“Prudential”) related to Plaintiff’s offer of employment with Prudential. The background report’s criminal history section listed a criminal charge as "pending". Based on the erroneous background report, Prudential withdrew the Plaintiff's job offer. CARCO amended the background report on Plaintiff and sent it to Prudential indicating that Plaintiff had no past or pending criminal charges but Prudential refused to re-extend the offer.
Plaintiff sued CARCO alleging that CARCO violated 15 U.S.C. 1681e(b) of the Fair Credit Report Act which requires consumer reporting agencies to use reasonable procedures to assure the maximum possible accuracy of the consumer reports they create. CARCO filed a motion for summary judgment seeking dismissal of the lawsuit because the Plaintiff had not provided sufficient evidence to establish the elements of his 15 U.S.C. 1681e(b) claim.
The court denied Defendant’s motion, finding that the Plaintiff had present sufficient proof that the Defendant failed to follow reasonable procedures to assure the maximum possible accuracy of the consumer report regarding the Plaintiff. Plaintiff's evidence created a material question of fact that only the jury could decide.
Overall, a good result and a well rationed opinion from the Court.
Defendant CARCO Group, Inc. (“CARCO”), a consumer reporting agency that does background checks on consumers, prepared a background report on Plaintiff Derek T. Wilson for Prudential Financial Services (“Prudential”) related to Plaintiff’s offer of employment with Prudential. The background report’s criminal history section listed a criminal charge as "pending". Based on the erroneous background report, Prudential withdrew the Plaintiff's job offer. CARCO amended the background report on Plaintiff and sent it to Prudential indicating that Plaintiff had no past or pending criminal charges but Prudential refused to re-extend the offer.
Plaintiff sued CARCO alleging that CARCO violated 15 U.S.C. 1681e(b) of the Fair Credit Report Act which requires consumer reporting agencies to use reasonable procedures to assure the maximum possible accuracy of the consumer reports they create. CARCO filed a motion for summary judgment seeking dismissal of the lawsuit because the Plaintiff had not provided sufficient evidence to establish the elements of his 15 U.S.C. 1681e(b) claim.
The court denied Defendant’s motion, finding that the Plaintiff had present sufficient proof that the Defendant failed to follow reasonable procedures to assure the maximum possible accuracy of the consumer report regarding the Plaintiff. Plaintiff's evidence created a material question of fact that only the jury could decide.
Overall, a good result and a well rationed opinion from the Court.
5 steps to dispute credit card charge
Bills.com has an informative article about how to dispute an erroneous credit card charge. Here are the five steps they recommend:
"1. Gather information. Collect data to explain specifically why you are disputing the charge. Is the amount incorrect? Is the charge for a purchase you did not receive? Or is the merchant unknown to you? Collect receipts, warranties or any other paperwork that supports the case.
2. Contact the merchant. If a server misread a tip amount or a store charged another customer's purchase to the card, many businesses are willing to correct the charge themselves. This solution is fastest and easiest.
3. Turn to the credit card issuer. When a merchant cannot or will not correct a transaction, the credit card issuer can help. Under the Fair Credit Billing Act (FCBA) [a sister act to the Fair Credit Reporting Act], customers must notify the credit card issuer that they are disputing a transaction within 60 days of the error. Notify the card issuer in writing to protect your legal rights, with a letter such as this sample dispute letter. (But to report unauthorized use, calling is acceptable -- and prudent, in order to stop potential fraud quickly.) Send correspondence via certified mail to obtain proof of delivery. The credit card company is legally required to correct the billing error within 90 days of receiving the written notice.
4. Know the rules. The FCBA only applies to revolving accounts without a set balance, such as credit cards. Installment loans -- such as loans to purchase a car or appliances -- do not qualify. Laws limit consumers' liability for unauthorized credit card use to $50, but most banks do not hold cardholders responsible for that amount. While a charge is being disputed, the customer does not need to pay the contested amount or interest that accrues on the charge. He or she must, however, pay for other charges and related interest as usual. If the dispute is denied, the credit card company can charge interest back to the dispute date, in addition to the charge itself.
5. Take serious action. If the dispute is denied, and you believe the decision is unfair, you have the option of filing a complaint with your state attorney general or the Federal Trade Commission. You also could file a lawsuit, but legal cases can be long and expensive. If you choose this route, consider seeking an attorney who will accept awarded damages as payment, in the event the case is longer and costlier than you anticipate."
The lawsuit number 5 talks about would most likely be brought pursuant to the Fair Credit Billing Act. However, erroneous credit card charges can also eventually make their way to your credit report, which could also lead to a lawsuit under the Fair Credit Reporting Act. Make sure you document everything, not only the proof you are sending to the credit card company, but also document each oral conversation and written communication you have with the credit card company and/or the credit bureau. Doing this makes your lawsuit much more likely to end in a good result for you.
The whole article can be found at http://www.prweb.com/releases/debt/creditcard/prweb2517954.htm.
"1. Gather information. Collect data to explain specifically why you are disputing the charge. Is the amount incorrect? Is the charge for a purchase you did not receive? Or is the merchant unknown to you? Collect receipts, warranties or any other paperwork that supports the case.
2. Contact the merchant. If a server misread a tip amount or a store charged another customer's purchase to the card, many businesses are willing to correct the charge themselves. This solution is fastest and easiest.
3. Turn to the credit card issuer. When a merchant cannot or will not correct a transaction, the credit card issuer can help. Under the Fair Credit Billing Act (FCBA) [a sister act to the Fair Credit Reporting Act], customers must notify the credit card issuer that they are disputing a transaction within 60 days of the error. Notify the card issuer in writing to protect your legal rights, with a letter such as this sample dispute letter. (But to report unauthorized use, calling is acceptable -- and prudent, in order to stop potential fraud quickly.) Send correspondence via certified mail to obtain proof of delivery. The credit card company is legally required to correct the billing error within 90 days of receiving the written notice.
4. Know the rules. The FCBA only applies to revolving accounts without a set balance, such as credit cards. Installment loans -- such as loans to purchase a car or appliances -- do not qualify. Laws limit consumers' liability for unauthorized credit card use to $50, but most banks do not hold cardholders responsible for that amount. While a charge is being disputed, the customer does not need to pay the contested amount or interest that accrues on the charge. He or she must, however, pay for other charges and related interest as usual. If the dispute is denied, the credit card company can charge interest back to the dispute date, in addition to the charge itself.
5. Take serious action. If the dispute is denied, and you believe the decision is unfair, you have the option of filing a complaint with your state attorney general or the Federal Trade Commission. You also could file a lawsuit, but legal cases can be long and expensive. If you choose this route, consider seeking an attorney who will accept awarded damages as payment, in the event the case is longer and costlier than you anticipate."
The lawsuit number 5 talks about would most likely be brought pursuant to the Fair Credit Billing Act. However, erroneous credit card charges can also eventually make their way to your credit report, which could also lead to a lawsuit under the Fair Credit Reporting Act. Make sure you document everything, not only the proof you are sending to the credit card company, but also document each oral conversation and written communication you have with the credit card company and/or the credit bureau. Doing this makes your lawsuit much more likely to end in a good result for you.
The whole article can be found at http://www.prweb.com/releases/debt/creditcard/prweb2517954.htm.
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