Michigan Collection Law Blog

Attorneys, when you file a complaint under the Fair Credit Reporting Act ("FCRA"), be sure that you can make the following allegations in good faith:

a. Your client posited its consumer dispute with the credit reporting agency (and not just the creditor/furnisher directly). You or your client's failure to notify the credit reporting agency of your client's dispute is fatal to your FCRA claim. You see, under the statute, a credit reporting agency's duty to conduct a reasonable reinvestigation does not begin until it receives notice of the dispute. Notifying the furnisher of the dispute is insufficient to trigger any duty to conduct a reasonable reinvestigation by the credit reporting agency.

b. Be sure to plead that that the credit reporting agency notified the furnisher of your dispute. If you are uncertain as to whether this happened, look for facts that would support a good faith believe to allege that this happened "upon information and belief." Under the FCRA, a furnisher's duty to conduct its reinvestigation is not triggered until the credit reporting agency notifies it of your client's dispute. Some courts do not require this to be pled in the complaint, but yet, some courts do. For example, Judge Avern Cohen who sits in the United States District Court for the Eastern District of Michigan requires this allegation in FCRA complaints. I just finished reading an opinion in which he dismissed the Plaintiff's complaint for failing to allege that the credit reporting agency notified the furnisher. I have a world of respect for Judge Cohen and his opinions. I can safely say that he is an incredibly intelligent man and history will undoubtedly remember him as an excellent jurist. BUT......if you are going to file an FCRA complaint in the Eastern District of Michigan and your case is assigned to Judge Cohen, be sure that you follow my advice.

I just came across a great article written by Consumer Reports. It talked about information other than credit data that is gathered by other agencies about you. For example, insurance claims that you have made are collected by a company called ChoicePoint. Insurance companies use this information when creating quotes for your home and auto insurance. You have a right to see what is in your file. Go to www.choicetrust.com to obtain your ChoicePoint file. This report is subjected to the Fair Credit Reporting Act, so you can obtain a free copy of your report, once a year.

Another repository of information about you is your health information at MIB Group. Its a consortium of 470 U.S. and Canadian companies that sell health, life and other insurance. They keep records related to insurance examination that you have had and prescription drugs that you have used in the past five years. This report is also subjected to the Fair Credit Reporting Act, so you can obtain a free copy of your report, once a year.

Your checking account is now monitored by consumer credit reporting agencies such as Telecheck and Chex Systems. Recently, my in laws purchased a condo in Florida and went to the local bank to open a checking account. They were astounded to learn that the bank pulled their consumer credit report with Trans Union as a condition to opening an account for them. I have come to learn that this is no isolated incident. I noticed that my bank is now pulling consumer credit reports on all new customers. Anyways, both Telecheck and Chex Systems reports are governed by the FCRA and you should pull your reports with those companies at least once a year.

Purchase Returns....yes stuff you buy and return is now being tracked by The Retail Equation. Some stores, before accepting a return, are running their customers' drivers licenses through this database. I don't believe that a store can deny someone the right to return something because that particular customer has a habit of purchasing and returning. You see, when you purchase something at a store, you are entering into a contract. If that contract allows you to return something within a specified period of time, and you comply, the store will just have to grin and accept the return. You can find out what your return profile looks like at www.theretailequation.com/consumers.

Your rental history is kept at First Advantage SafeRent. Its a database of 34 million records and is used to help landlords decide whether to lease an apartment or not. This is covered by the FCRA and you have a right to see whats in that file.

Moral of the Story - There is an incredible amount of information about you out there. Most of these databases did not exist ten years ago. Today, they not only exist, but as a consumer, you have a duty to yourself and your family, to know what information about you is floating around. You see, just because its all computerized does not mean that it is necessarily accurate. Congress, through the Fair Credit Reporting Act, has opened the door and given you a right to protect yourself. As a good consumer, its your job to walk through that passageway.

There was a great article in USA Today of Saturday, March 7, 2009. In that article, the reporter advises that banks are now closing lines of credit and credit card accounts that are inactive. Even people who have been making their payments timely are seeing a reduction in the LOC that the bank will extend. This is having the unintended consequence of lowering one's credit score. Like it or not, the FICO score is the most prevalent determinant in how much credit any grantor will give a consumer.

The Fair Issac company invented the FICO score back in the 1950s or so. It was founded by some mathematical geniuses who put together some models of how to predict one's credit worthiness. They have done quite well ever since. Now, no one knows for sure what all exactly goes into the Fair Isaac credit score. We also don't know how much weight is attributable to each factor. Fair Isaac keeps its methodologies as a closely guarded secret (who knows, may be they know the formula for Coka-cola, too). However, we do know that the size of the lines of credit, and the percentage that those lines are used at the end of each month, are factors in determining your line of credit. The more of your line that is used at the end of the month, the more deleterious effect it has on your credit score. For example, if you have used $10,000 of a $40,000 line of credit and that is outstanding at the end of the month, that is one thing. But if the bank has cut your available credit down to $20,000. You are now going to be reported as using half your available credit. By cutting your credit score, your ability to get future credit is diminished.

I am now genius, but then it does not take a genius to see that all of us are in an economic downward spiral if those who have been fortunate enough to avoid job loss and the other economic atrocities of this economy are financially affected. Whats the solution? Ha ha...that answer does require a genius.

I would advise that if you have any inactive LOC, go ahead and use it. Pay it off as soon as you can, but go ahead and use it. You do not want the bank to close your LOC for want of use. Secondly, if your bank has cut your LOC, call your bank and see if you can get it to reverse it decision. Explain that economic consequences to the bank and how it will affect your credit score. Be nice, but firm. Your bank should not be hurting a good and loyal customer in today's market. These are rarities. Use your status as a rarity to make your bank return the favor.

The Law- Under the Fair Credit Reporting Act ("FCRA"), credit reporting agencies such as Transunion, Experian and Equifax, all have a duty to conduct an investigation into a consumer's dispute regarding the accuracy or completeness of an item appearing on a consumer's report. 15 USC 1681i. These items are frequently called "trade lines." But the sad truth is that when it comes to identity theft, none of the credit reporting agencies conduct a reasonable reinvestigation into the dispute, because they are simply do not have policies and procedures in place to do so.

Lately, I have sued two of the credit reporting agencies and a number of banks under the FCRA. You see, my clients all had their identities stolen by a family member who had access to my clients' names, address and social security numbers. The identity thief used these bits of information to obtain mortgages in my clients' names. Even though the id thief has confessed to his crimes, gave depositions admitting to his misdeeds and even went to prison for it, the banks and credit reporting agencies STILL did not remove the derogatory trade lines that were caused by the id thief, from my clients' credit reports. Pretty amazing, huh? Wait...it gets better.

The credit reporting industry is operating in the stone age. In order for a consumer dispute an item on his credit report, he has to place a dispute with the credit reporting agency. The consumer has to give the agency his name, address and social security and then identify the trade lines that he considers bogus or in error to the CRA. The CRA then has 5 days to pass that information on to the furnisher of that information ("Furnisher"). WIthin 30 days both the CRA and the Furnisher have to conduct their investigation into the consumers dispute or they have to remove the trade line from the consumer's credit report. Sounds simple right? Here is the RUB.....The CRA and Furnisher compare 3 and only 3 bits of data between just the two of them in order to verify or remove a trade line. They compare the name, address and social security number between in their respective files as those 3 bits of data appear in the other's records. If these bits of data compare favorably, then the trade line stays on the consumer's report. I was stunned to learn this.

In the deposition of my clients' case, I asked both CRAs (who shall remain nameless), how in the world can they detect true identity theft by just comparing those bits of data, and each admitted that their procedures could not detect true identity theft involving a consumers actual name, address and social security number!. But wait, it gets better. Neither of the CRAs allow their investigators to use the internet, the telephone or a fax machine when conducting an investigation into a consumer dispute. That means that the CRA's investigators cannot go on line to see if there is any validity to a consumer's dispute that his identity was stolen. The CRA's investigator cannot check with court records on line or even call the consumer himself to get more details. Each CRA and many Furnishers actually prevent their investigators from conducting reasonable reinvestigations into consumer's disputes. Unfortunately this leads to only resolution for a consumer who is victimized by an identity thief and is again victimized by a bank and/or a credit reporting agency....litigation.. Hey, I am not just saying this because I am a lawyer who has litigated these cases. I am telling you this because the CRAs do not give their investigators enough resources in today's electronic age to do their jobs right. It may be because the CRAs get bombarded with disputes on a daily basis and only give their investigators a certain number of minutes to get through a dispute. I can't tell you why the CRAs do not just call Comcast and pay the $35 monthly fee and hook up their investigators. I can only tell you that the CRAs simply do NOT give their investigators these tools. Hence, until their investigators are provided these basic necessities, the only way to resolve an identity theft issue with the CRA is to file a lawsuit for damages and attorneys' fees.

Continue reading "OMG....The CRA's are sooooo F'ed Up when it comes to ID theft!!!!" »

In a great new case that was recently issued in a District Court the 6th Circuit in Ohio, Judge Carr wrote a great opinion reaffirming the fact that in order for Plaintiffs to obtain emotional damages under the Fair Debt Collection Practices Act ("FDCPA") and the Fair Credit Reporting Act ("FCRA"), they need not prove damages pursuant to stringent state laws. See Davis v Creditors Interchange, 2008 Lexis 94906. In Davis, the court was faced with the question of whether a federal court has to apply the state law standards when deciding the issue of emotional damages in the context of an FDCPA or and FCRA case. The court held that no, it does not need to draw on the state standards for deciding emotional damages. While this issue has still not been ruled on by the 6th Circuit Court of Appeals, this decision follows a number of District Court opinions in the 6th circuit holding that federal courts do not and should use state standards for determining emotional damages.

In holding that federal courts should not look to state laws when reviewing emotional damages under the FDCPA and FCRA, the court based its decision in Davis on several solid concepts:

First, Congress intended for the FDCPA to create a more effective weapon against abusive debt collection practices than provided by existing state law remedies. Second, Congress designed the FDCPA to create a uniform law governing debt collection. Third, the structure and purpose of the FDCPA closely track the Fair Credit Reporting Act and courts interpreting the FCRA have concluded that "actual damages for emotional distress can be proved independently of state law requirements" for intentional or negligent infliction of emotional distress.

The District Court then noted a number of other decisions out of other circuits that came to the same conclusion. However, like everything else in life, there are limits as to how relaxed this standard is. While state laws regarding intentional and negligent infliction of emotional distress require a Plaintiff to prove and quantify damages with a degree to certainty, while federal standards are not this stringent, there are standards. in fact, the FDCPA at 15 USC 1692k(a)(1) requires a Plaintiff to prove " definable actual damages" in order to recover anything beyond statutory damages. While this standard was not defined in the Davis case, it does prove that there is some standard by which a Plaintiff must show emotional damages, if not by the laws set forth by the state.

Conclusion - Plaintiff's attorneys should always allege emotional damages under both state law and under the FDCPA and FCRA when pursuing claims. While these damages under state law may ultimately denied to the Plaintiff, they may be recoverable in that same case under the federal statutes.

The Fair and Accurate Credit Transactions Act ("FACTA") was enacted in 2003 as an amendment to the Fair Credit Reporting Act ("FCRA"). According to Stuart King's Risk Management Blog, he noted that just yesterday, President Bush signed HS 4008 which states:

Except as otherwise provided in this subsection, no person that accepts credit cards or debit cards for the transaction of business shall print more than the last 5 digits of the card number or the expiration date upon any receipt provided to the cardholder at the point of the sale or transaction.

Mr. King noted that:

Any American consumer who purchases goods or services from an American based company has a right to take legal action if the receipt from a credit card transaction shows either more than the last 5 digits of the credit card number or the card expiry date. And there are quite significant fines at stake as well. According to this document, Costco, California Pizza Kitchen, FedEx Kinko's, IKEA, Wendy's, TGI Friday's, T.J. Maxx, and Radisson Hotels (among others) are all defending against FACTA class action lawsuits.

I just thought you should know.

I confess...I loooove Zombie movies. George Romero is one of my all time favorite directors. He produced Night of the Living Dead, Day of the Living Dead and other classic brain eating films. Its great to see it on the silver screen. Its horrible when a debt that was discharged in bankruptcy or had been previously paid, re-appears on your credit report. This kind of reappearing debt is now called "Zombie Debt." The culprits behind this voodoo are credit card companies that sell off this debt and collection agencies that love to re-age the debt. Bad debts must be removed from your credit bureau after seven years. Collection agencies re-age the debt so that, like a social disease, it always stays with you for life or until you pay it. Take heart (and don't let the mad scientist at the banks and collection agencies rip it out of you) and know that you have rights under the Fair Debt Collection Practices Act ("FDCPA") and the Fair Credit Reporting Act ("FCRA").

If a little zombie re-appears on your credit report, file an online dispute with the credit reporting agency such as Experian, Equifax or Transunion ("credit reporting agencies).. Its very easy to do and its far less painful than having your credit rating affected by the little creature. The credit reporting agency then has 30 days to verify the zombie with the credit furnisher (e.g. the creditor). If the debt is not verified within that time period, the CRA has to remove the zombie from your credit report. "BUT WHAT IF THE DEBT IS VERIFIED AND IS NOT REMOVED?" you might ask. Hire a law firm to file a lawsuit under the FDCPA and the FCRA as the debt is not yours. When you prevail on your claim or settle it, the zombie debt can actually make you some money and it will cause the credit reporting agencies and/or the credit furnisher to pay your attorneys fees.

Don't let Zombie debt devour your credit rating. Instead, use it to your advantage.

On more than on occasion, I have advised you to get your free credit report as is your right under the Fair Credit Reporting Act. Once a year, you can obtain your free credit reporting by visiting www.annualcreditreport.com.

I have also advised you to check it out and to make sure that it is accurate because more than 80% of all credit reports contain inaccurate information. I have been remiss because, until now, I have not told you HOW to go about disputing an item on your credit report. This is very easy to do; here's how:

1. Visit www.annualcreditreport.com. This is the official website sponsored by Experian, Equifax and Transunion. These are the big three credit reporting agencies. Be prepared to answer come key questions about recent credit transactions in order to obtain your credit report. Don't have a computer? No problem. You can call the annualcreditreport.com people at 877-322-8228.

2. Read the credit report. OK, its not going to read quite as easily as you may like. But, if you were smart enough to get to this step, you are smart enough to spend a few minutes to read the instructions about how to understand your credit report. Let me give you some key ideas about reading your report.

Key idea 1 - Make sure all of the reported accounts actually belong to you. One of the biggest mistakes that the credit reporting agencies make on credit reports is called "mis-merging." If someone else has a name that is similiar to yours, a credit reporting agency may report that other person's debt on your credit report. Be vigilant and review your credit report to make sure that all of the credit grantors who are reporting anything about you are actually YOUR credit grantors. This happens more frequently than you might guess.

Another way for an account to find its way to your bureau that should not is when you are merely an "authorized" user of an account rather than the one who owns the account. For example, Rachel gets a visa credit card. She calls her bank and asks for an additional card for Jonah. Jonah racks up a bill on Rachel's account. That account should not be reported on Jonah's credit bureau because he is not responsible for that bill. Frequently, however, the credit card companies will report the bill to both Rachel and Jonah's account. If you are Jonah and the credit entry is not good, then dispute it and get it off your credit report.

Key idea 2 - Check the validity of late payments reported on your credit report. Nothing drags your FICO score down as quickly or frequently as a late payment. Credit grantors frequently report payments as current, late 30 days, late 60 days, late 90 days, etc. Read those payment reports. See if any late payment has been reported about you. Sometimes a credit grantor will report you as a late payment when you have not been late. For example, some years, ago, American Express had reported me as having failed to pay my bill altogether....until I faxed them the cancelled check. I could not believe that they had screwed up that bad. Nevertheless, the lesson is plain....credit reporting agencies screw up all the time. If they do, it is your responsibility to make sure that they have their facts right.

Key idea 3 - Check the expiration date of any derogatory information on your credit report. Bad debts that are yours can only stay on your credit report for 7 years. Bankruptcies can only stay on your report for 10 years. Any debt older than these dates must come off your report. Frequently, they do not. Simply follow the dispute instructions below to remove expired debts.

Key idea 4 - Check out the Public Records. This includes judgments, tax liens. Since these items are filed by name and not by one' s unique social security number, it is very likely that someone with even a somewhat common name may have an items appear on his or her credit bureau. Make you are not one such victim.

HOW TO MAKE YOUR DISPUTE

1. On line. Its a piece of cake. With your credit reporting sitting on your monitor, there is a unique identifying number next to each item on your credit bureau. You can click the DISPUTE button next to each such item that you dispute. Then a pull down list of REASONS FOR THE DISPUTE will appear. Select the appropriate reason. It is just that simple.

2. By mail - In your letter that you will have to address to the particular credit reporting agency that is reporting the offending entry, be sure to put your name, address, telephone number and social security number on the letter. Also put the identifying information about the credit report you are disputing. (e.g. my credit report of September 15, 2007. Report number. xxxx -x-x---xx). Then, make sure that you report the name of the credit grantor and the identifying number of the entry in your letter. Finally, state why are you disputing that item.

WHAT HAPPENS NEXT?

As soon as the credit reporting agency receives your dispute, it is required to present your dispute to the credit grantor. The credit grantor then has 30 days to either verify that the debt is being properly reported or to remove it. By default, if the credit grantor does not verify the debt within that 30 day period, the item must be removed from your credit report. But note, that if the credit grantor subsequently verifies that debt as being reported accurately, it can have that debt placed back on your credit report.

THE CREDIT GRANTOR IS STILL REPORTING THIS DEBT ON MY CREDIT REPORT WHEN IT SHOULD NOT

You then have two options. Option 1 - sue the credit grantor. Note that you cannot sue the credit grantor until you have gone through the dispute process above. If you file a lawsuit without having gone through this process, you will get kicked out of court. Better yet, hire an attorney who will guide you through the litigation process. The attorney will or should cost you nothing out of pocket since under the Fair Credit Reporting Act, you are entitled to attorneys' fees if you prevail on your case. Note that most of these kinds of cases settle anyway and if you are in the right, you will likely get a favorable settlement.

Option 2 - You can put up to 100 words on your credit report to inform people of your side of the story. This rebuttal option will not fix any damage done to your FICO score on account of the creditor's reporting you as a late pay. It will give a reader, however, an idea of why this item is being reported as it is. This is not my favorite option because the damage done to your credit is not fixed with this option.

There, I feel better. You now know how to dispute items on your credit report. Now, I can go back to preaching to the world "Pull your credit report every year." I can now tell the world, "Go dispute whatever is incorrect with your report. It's easy and I have told you how to do it."

Under the Fair Credit Reporting Act ("FCRA"), soliciting lenders are able to give search criteria to credit reporting agencies. The agencies then provide a list of persons by name and address who meet those criteria to the soliciting lender. Fear not, as these lenders are not provided with your social security number. Moreover, the furnishing of your name and address to these lenders does not leave a foot print on your credit report as an inquiry into your credit by a lender with whom you have applied for credit would. These soliciting creditors

Then, the soliciting enders may make offers of credit to the persons on this list. However, under the FCRA, these offers must be "firm offers of credit" which means that the lender must be ready to close that loan on the terms that it offers.

Some people get bombarded with telephone calls, letters, and now emails by lenders asking to for their refinance business. If you are one of those persons that constantly receives such solicitations, you can opt out by visiting www.optoutprescreen.com. It's the official website of the Consumer Credit Reporting agencies and it will prevent your name from going to these soliciting lenders. Opting out is easy. Just follow the link on the blog and fill out the information requested. Then, go live in peace.

It is time to get your free credit report. Note that you have a right under the Fair Credit Reporting Act to get a free copy of your credit report, once a year. Be careful. There are a number of companies that use this as bait to get you to buy their credit monitoring services for a monthly fee. You do NOT have to sign up for any of these credit monitoring services to get your free credit report.

Note that you are entitled to a free credit report annually. You are not entitled to see your credit score for free. That you have to purchase.

To order your free annual report from one or all the national consumer reporting companies, and to purchase your credit score, visit www.annualcreditreport.com, call toll-free 877-322-8228, or complete the Annual Credit Report Request Form and mail it to: Annual Credit Report Request Service, P. O. Box 105281, Atlanta, GA 30348-5281.

There is an excellent chance that there is something erroneous with your credit report that is dragging your credit score down. Indeed at least 70% of all credit reports have some sort of erroneous information. This can include data that does not belong to you. Derrogatory information that should have fallen by the way side (7 years for a late payment, 10 years for a bankruptcy). It costs you nothing to look at your credit report. Disputing and removing errors, however, can save you a fortune.

I just came across a funky blog that had a great article entitled "Another Simple Way to Understand your Credit Report. This blog post was excellent. It talked about how someone with an excellent credit score can go down 100 points in one day with a single late payment. The author also spoke about how people with differing credit scores can end up purchasing the same asset and yet get financed quite differently resulting in one paying far more interest than the other.

This article should be read in light of the Fair Credit Reporting Act. ("FCRA"). You see, while FCRA is the basis for many of the issues raised in this blog post, many of the points made by the author do not relate to anything in FCRA specfically. For example, the late payment will penalize someone with a high FICO score far more than one with a mediocre FICO score. I recommend this article, highly.

I just read an excellent article by Elizabeth Fisher entitled You Have a Right to Dispute Your Credit Report. It is a quick and highly informative read. Ms. Fisher notes that her credit bureau contained a pile inaccuracies that painted her as a deadbeat. Clearly, she is not. She is not alone. Approximately 80% (yup..you read that right...80%) of all credit reports contain errors.

As consumers, we are so daunted and bullied by big business and their computers, we simply take it for granted that what they are telling our potential credit grantors MUST be accurate. I am here to tell you, that it ain't all true and it is affecting your financial condition. Here are some of the most common errors:

1. Mismerge - Your name is Jim Smith. The credit bureau might merge another Jim Smith's informaiton into your bureau. Forget that he has a different social security number. If he has derogatory information on his bureau, it gets posted to yours.

2. Debts that are out of statute. - You may have debts that are no longer collectible because they are out of statute. The credit bureau may still report this debt as owed even though it is not supposed to do so. Bad debts can be reported for up to 8 years. Prior bankruptcies are reported for up to 10 years.

3. Late payments that were not late.

Disputing these debts is easy. You can dispute any debt on your bureau on line with the credit reporting bureau. Once you dispute the debt, the bureau has 30 days to verify the debt with the credit reporter. If the bureau is unable to get verification of the debt, then it must remove the debt from your bureau. If the bureau gets a confirmation of the debt from the credit reporter, you can then sue both the credit reporter and the credit bureau. DO NOT LET THE CREDIT BUREAUS bully you into thinking its a long and arduous hassle to get a debt removed from you bureau because it is not. They are governed by the Fair Credit Reporting Act and the recent update called Fair and Accurate Credit Transactions Act (FACTA).

You have credit and you have rights. Don't be afraid to use either of these.

I just read a great article about changes coming to FICO scores this September. Pat Earnhard reports that the practice of using someone else's credit score to boost one's own will be curbed by the Fair Isaac Company, the progenitor of the omniscient FICO score. Most credit grantors use the FICO score to determine whether your loan will be granted or not.

Piggy backing was originally intended to be used by parents helping their children establish credit. The parent would add the adult children to his or her credit accounts and the child would get the benefit of the parents credit score. In recent years, Piggy Backing has been abused. Credit repair companies would pay individuals with excellent credit a sum of money to add their clients to the person's account. The piggy backing exception has resulted in a great deal of piggy back abuse. Naturally, the individual with the artificially inflated credit score obtains credit that he cannot handle. When a debt goes bad, we all pay. The ride will soon be over.

An article in Bank Lawyer's Blog talks about piggybacking credit being "the latest and greatest" way to improve one's FICO score. With Piggybacking, someone with a subprime score ("a Subprime Risk") can become an authorized user of someone else's credit without actually being authorized to incur credit on the better credit risk's ("BCE") accounts. The subprime Risk then gets the benefit of BCE's credit score and resultantly, it raises the Subprime Risk's FICO score. This is called Piggybacking. It is neither the latest nor the greatest.

Piggybacking has been allowed for a number of years. This exception to the Fair Credit Reporting Act was designed to allow an adult child to build credit using the benefit of the parent's credit score. It has, unfortunately, been abused. Indeed, there are companies that will pay hundreds if not thousands of dollars to BCE's for the benefit of leasing their better FICO scores to Subprime Risks. This loophole to allow a young adult to build credit has been hijacked by those who are, for whatever reason, just plain poor credit risks. Common sense would tell you that Piggybacking results in deception to credit grantors and the granting of credit to those who are simply unable or handle or manage the credit responsibly. When this happens, the credit grantor is the first one to eat these losses. However, these losses are ultimately bourne by the consumer.

Fair Isaac, the company that invented the FICO score back is wise to this perceived industry abuse. There is talk in the industry that Fair Isaac is in the process of re-tooling the FICO score to close this exception to the general rule that everyone's credit must be a reflection of one's own credit history. Unfortunately, like any other war, there is collateral damage. In this case, it is our children.

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The Fair Credit Reporting Act ("FCRA") allows potential credit grantors to get your name and address from a credit reporting agency ("CRA") in order to send you a firm offer of credit, if you meet certain criteria. So just what is a firm offer of credit? In the 6th Circuit, that issue is not quite so clear.
Recently, Judge Cleland from the U S District Court for the Eastern District of Michigan held in Phinn v Capital One Auto Finance, that a firm offer of credit does not have to include terms of repayment including an interest rate.

Ken Phinn is a consumer that received a flyer from Capital One Auto Finance. In that flyer, Capital One offered to finance up to $25,000 in credit for an auto purchase to Mr. Phinn. The flyer did not discuss the interest rate, the term or the amount of repayment. Phinn contended that this was not a firm offer of credit as required by FCRA in order to go trolling through a CRA's records for his name. Judge Cleland held that the offer was firm enough to satisfy the requirements of FCRA and dismissed the case.

I don't think this case should give the consumer any reason for alarm. Potential credit grantors simply seek the names and addresses of consumers that meet certain criteria. CRAs only return names and address to the credit grantors. CRAs do not give the credit grantors any other information about the consumer. I think this case was more in the nature of a fund raiser for Mr. Phinn as even if there were a technical violation of the FCRA, so what? He was not harmed. The CRA's identifying him as an individual who met certain criteria did not lower is FICO score.
Again, Judge Cleland wrote another well reasoned and persuasive opinion.

The 6th Circuit has just decided, for the second time, Bach v First Union National Bank. I was very surprised to see the court of appeals cut the punitive damages awarded by an obviously outraged jury from $2.6 million down to $400,000. Ms.Bach obvious had a good case for violation of the Fair Credit Reporting Act against the bank because the jury awarded her $400,000 in damages. Equally obvious is the fact that she was treated maliciously by the bank as the jury also gave her punitive damages of $2.6 million. What is surprising is that the 6th Circuit took what I think is very extraordinary action. It reduced the jury's award of punitive damages of $2.6 million down to $400,000. The court reasoned that there were not enough aggravating factors to support a $2.6 million award. I think differently. I think that it took an incredible amount of nerve for the court to second guess a jury verdict based upon days and days of testimony and deliberation.

So why did the court really reduce a punitive damages verdict to 1/6th of its original value? I don't know. But I can tell you that courts are usually very reticent to supplant a jury verdict for their own. I do have to wonder, however, is this an omen of things to come in consumer litigation in our jurisdiction? Should consumers and their attorneys worry about whether this decision was simply a rogue opinion or is it the beginning of trend that will tend to route consumer rights? Time will tell.