Most people entering adulthood will eventually come to familiarize themselves with their credit scores. This is simply part of growing up. Whether it is related to getting approved for loans, mortgages, tenancy, or even job opportunities – people want to know whether you are capable and have history of paying off your debts. As such, it is extremely important to ensure that the information on your credit report is complete and accurate. Fortunately, the Fair Credit Reporting Act (FCRA) regulates how credit reporting agencies collect, distribute, and manage your information. The FCRA also gives people an avenue of relief when these agencies commit violations.
Common FCRA Violations
The FCRA’s underlying purpose is to encourage that your credit information is accurate and private. Unsurprisingly, many credit reporting agencies often make various mistakes on credit reports, causing people financial hardship – including loss of financial opportunity. Some of the more common violations include:
- Reporting inaccurate information: This can happen in many ways, including:
- Misstating due balances;
- Reporting payments as late when they were actually paid on time; or
- Misstating you as a debtor on a particular account when you were merely an authorized user.
- Reporting old (outdated) information: Chapter 13 bankruptcy filings must cease to be reported after seven (7) years. Chapter 7 and Chapter 11 bankruptcies must cease after ten (10) years. Likewise, adverse civil judgment rendered against you must cease to be reported after 10 years.
- Mixing files: This often happens when two people have the similar names and/or background information. One person’s credit file will then be mixed with the other, causing both to be inaccurate.
Understanding Your Rights: The Fair Credit Reporting Act
Credit bureaus are not the only entities subject to the FCRA requirements – employers who use one’s credit report for employment purposes are also bound by the FCRA. Employers who commit FCRA violations often do it on a large scale involving numerous employees, subjecting themselves to class action lawsuits.
Recently, a class action lawsuit was filed against Chipotle Mexican Grill for FCRA violations (Mejia v. Chipotle Mexican Grill Inc., et al., Case No. 5:15-cv-01911). According to Top Class Action, the lawsuit alleges, “Chipotle has violated the Fair Credit Reporting Act in their application documents by asking applicants to sign their consent for background checks embedded and essentially “hidden” within a general consent agreement.”
The FCRA can be very problematic for employers because it focuses on technical nuances, requiring a detailed review of the Act for compliance.
Damages You Can Recover For An FCRA Violation
When a credit agency has committed an FCRA violation, there are different types of damages you may collect. For willful violations, you’re entitled to any actual damages that you are able to prove. There are also recoverable statutory damages from $100 to $1,000. Where someone has lied to obtain your credit report, you are entitled to a $1,000 flat fee and any damages you can prove up in addition. Where an agency has negligently committed an FCRA violation, you may be entitled to actual, provable damages and your attorneys’ fees.