What damages can I get when I sue under the FCRA for false credit reporting?


What damages can I get when I sue under the FCRA for false credit reporting?When you have a company (or companies) violate the Fair Credit Reporting Act (FCRA), you can get money damages but there are some twists and turns to it.

Let’s talk about the following:

  • Basic timeline of when you can file an FCRA case . . . the oddities of this law make it counter-intuitive
  • Compensatory (actual) damages . . . to make up for your loss
  • Punitive damages . . . to punish companies for breaking this law
  • Statutory damages . . . even if you can’t prove you were harmed
  • Attorney Fees . . . that the bad guys have to pay you
  • When your damages begin . . . as it is unusual under the FCRA

 

Basic timeline of when you can file an FCRA case . . . the oddities of this law make it counter-intuitive

So you have an error on your credit reports.  What do you do next?

[Note:  I’m ignoring the FDCPA (Fair Debt Collection Practices Act) which deals with debt collectors — including credit report errors by debt collectors.  We’ll keep this focused solely on the FCRA].

You cannot sue without first disputing the false information through the credit reporting agencies (Equifax, Experian, Innovis, SageStream, TransUnion, etc).

If it gets fixed after your first dispute, that’s the end of the matter under the FCRA.

But if it does not get fixed, and if the law has been violated, then you can sue.

So let’s use a quick example of a paid off debt.

This happens a lot, especially for folks who are looking to buy a house.

You owed Capital One $4,000.

You end up settling with Capital One (or whoever) for $3,000.

So how much do you owe?

Zero.

But Capital One lists you as owing $1,000 (the difference in $4,000 and the $3,000 payment).

So you dispute this through the credit reporting agencies.

They verify it — which means it is not being changed to a Zero balance.

Since this is false information and you did a proper dispute, you can sue under the FCRA.  We will focus this article on suing Capital One but it is also the same for suing the credit reporting agencies.

Compensatory (actual) damages . . . to make up for your loss

Having Capital One keep false information on you — even after you disputed — is incredibly frustrating.

So it is natural this will cause you mental anguish.

How frustrating to have a large company just refuse to fix the problem in a such a high handed way.  They settled with you but now they want to change the deal and blackmail you into paying them more money.

Outrageous.

So you could and would make a claim for mental anguish damages to compensate you for your frustration and what they put you through.

It is also natural this could cost you money in terms of higher interest rate or being rejected for a home loan.

You can also recover damages for any monetary loss.  So you pay more for your home mortgage — that would be damages.

You lose a job due to the credit reporting by Capital One — that can be damages.

Point is you can be compensated for both monetary and non monetary damages.

 

Punitive damages . . . to punish companies for breaking this law

If the bad conduct of the defendant was intentional or reckless, then you may can get punitive damages under the FCRA.

Punitive damages serve two critical functions:

  1.  Punish the defendant for very bad conduct
  2. Discourage the defendant (and others like the defendant) from ever doing this again

So the first one is simply to punish.  Someone cheats you or intentionally hurts you, they need to be punished.

The second one is to send a message to all companies who credit report — do not break the FCRA or you will face punitive damages.

 

Statutory damages . . . even if you can’t prove you were harmed

Like punitive damages, the statutory damages are designed to be used when the defendant (Capital One in our example) intentionally harms you or intentionally breaks the law.

You can get up to $1,000 per violation of the law.

This is so even if you were not hurt (compensatory damages), you can receive monetary damages.  It is to provide you an incentive to bring suit.

Why would the law encourage you to bring a lawsuit?

Because the federal government knows it can’t police all of these companies who break the law.  So it encourages consumers to bring lawsuits to help clean up the industry.

 

Attorney Fees . . . that the bad guys have to pay you

Another way the law encourages you to bring suit is the company you sue may have to pay your attorney fees.  This makes it easy for you to sue because your lawyer will be paid for by the bad guys.

Ironic isn’t it — they break the law and have to pay you, pay their own lawyers, and pay your lawyers.

This is to encourage you to bring suit and to encourage companies to do the right thing — simply follow the law.

 

When your damages begin . . . as it is unusual under the FCRA

Let’s talk a minute about when damages can begin.

Here is the typical situation:

Bad credit reporting -> turned down for credit -> dispute -> does not get fixed

The FCRA says you only get damages after you dispute and the bad information is not fixed.  Not the damages that you suffered before you disputed it.

Like anything there are exceptions but this is the basic concept.

This is not anything to stress over, but you do need to understand this as you and your lawyer calculate your damages.  We often see consumers who don’t understand this bizarre way to figure damages and it can cause confusion.

We can work with the law to get you full compensation but just keep this in the back of your mind that there is this unusual starting point for FCRA damages.  [Note — this is different than other laws including the FDCPA].

Let us know if you would like any help

If you live in Alabama, we are happy to talk to you about your situation and see how we can help you answer all of your questions.

Give us a call at 205-879-2447 or fill out our contact form and we will be happy to help you.

Best wishes!

John Watts


16 Comments

  1. Lana says:

    CACH LLC purchased my credit card debt in 2008. They name a bank I’ve never done business with ( Maryland bank) as the original creditor. I told them to prove the debt and they sent a reassignment letter from Bank of America (correct original creditor). Every 1-3 years a different attorney or agency writes to me trying to collect. I disputed the amount as it has increased by more than $1,000. No one representing CACH ever responded to the disputed amount. Except for placing an “investigating” notation under IBM credit union. IBMCU actually provided the credit card but BofA was the card issuer. I contacted the collections manager at IBMCU who said they themselves have no business relationship with me and did not place that notation on my credit file.
    Yesterday, I received a letter from First National Collections Bureau claiming to represent CACH, which states the need for me to respond/dispute within 30 days…
    Note: I had never received a response to my dispute 3 years ago. CACH has chosen to not sue me since 2008 and this debt has passed the SOL. CACH also began addressing me by a different name, adding a Margaret as a middle name. I wrote to them saying this isn’t my name and to address me correctly. They submitted this conjured up name to the credit reporting agencies, though I don’t know how as the bad debt no longer was on my credit report. Can I sue them?

    • John Watts says:

      Lana,

      Whether you can sue CACH or any of the collectors CACH hires is a complicated question.

      Let me give you some thoughts.

      If you dispute to a debt collector (and CACH is considered a collector as this is their main business — collecting debts), then the collector needs to respond or do no further collection. But they can sell or assign or transfer the debt.

      A debt should not be on your report — talking about negative debts — more than 7 years after the first major delinquency. Typically 6 months of not paying. So if you defaulted in 2008, this should not be on your reports.

      I’m not clear if it is CACH or First National Collections Bureau reporting on you.

      Here’s my advice:

      Get with a consumer protection attorney in your state. Lay out the timeline of everything that has happened and include the documents. So the collection letters, the dispute letters, the credit reports, etc.

      For example, does your credit report show this debt is disputed?

      Does the collection letter you just received tell you it is too late to sue you? Does it warn you that if you pay, you may restart the statute of limitations?

      Then the lawyer can advise you on these types of options:

      1. Sue CACH
      2. Sue First National Collections Bureau
      3. Sue both
      4. Send a dispute letter to one or both
      5. Dispute with the credit reporting agencies (Equifax, Experian, TransUnion, etc)
      6. Call them

      There are options and it really depends on exactly what has happened so get you some good advice.

      If you are in Alabama call us at 205-879-2447 if you want to chat with us.

      Best wishes

      John Watts

  2. Dave Mock says:

    I paid off a loan with Wells Fargo early with no late payments and they reported to Eqifax only that I was delinquent of the pay off amount ($3592.00 – Feb. 2018). This error in reporting lowered my FICO score 42 points or 10 years of my good credit. Wells Fargo says it was a mistake and after I disputed the amount with Wells Fargo and Eqifax they did correct the error. I had an 831 FICO score for many years and after paying off this loan my FICO score went down 42 points to 789. I have been with Wells Fargo for almost 30 years and paid of many loans including home loans. With all depute corrected my FICO score still remains under 800. Is there anything I can do to retain my original FICO score? Is this something I can sue for punitive and/or statutory damages for?

    Thanx,

    Dave Mock

    • John Watts says:

      Dave,

      Under the FCRA it is almost always required that you dispute first, and then ONLY if the false information is not corrected can you sue under the FCRA.

      Sounds like it was fixed but your score has not returned.

      Were there other changes? Were credit limits lowered as a result of Wells Fargo error? That could lower your score also.

      I would pull your report now and compare it to how your report was before the WF error — see if you can find any differences. It might be you had some other consequences to the WF error and by contacting those companies showing them WF made an error (wouldn’t be the first time for those geniuses at Wells Fargo!!) they might put things back the way they were.

      You should also be able to get with a consumer lawyer in your state who does FCRA work to help you look at this at no charge. Here is a useful site to start looking for someone in your state: https://www.consumeradvocates.org/find-an-attorney

      Hope you can get this fixed ASAP!

      John Watts

  3. Yolanda B. says:

    I’ve been trying to get Nissan-Motor/Infiniti Corp (NM/IC) to correct a credit reporting error for three months now. I was leasing a vehicle and was contacted by the dealership in Jan 2019 to do an early-trade, to which I agreed to. Well after all the paperwork & agreements with NM/IC (completed end of Jan 2019), I discovered they reported me late for both the month of Jan 2019 & Feb 2019, thereby causing me to drop significantly in credit score which has resulted in the loss of my ability to qualify for financing on my new home (I was simultaneously trying to buy a home at the time and informed the dealership that this absolutely could not interfere with that process, they assured me it would not and even notated it on my financial account with NM/IC to which they also agreed). I’ve disputed all of this with all 3 credit bureaus, and we’re told until NM/IC sends corrections, the bureaus cant just auto-update. I’ve had numerous phone conversations with NM/IC; they addressed the Jan 2019 late, but still will not send anything regarding the Feb 2019 late error being reported. Again, this is affecting my livelihood altogether & my children & I need to find a home… Do I have a case to sue NM/IC and the bureaus? I live in Alabama. I appreciate any help you can provide.

    • John Watts says:

      Yolanda,

      I’m sorry you are dealing with this.

      Please call us at 205-879-2447 and ask for Randi.

      Short answer is we need to see what they do with the disputes — do they fix this or keep it?

      Be glad to walk you through your options.

      Thanks

      John Watts
      205-879-2447

  4. Tam P says:

    I recently received a letter from my mortgage company stating that they have reported my spouse with an active bankruptcy from 03/2013 through 11/2014 and will have it corrected within six weeks. Is there any recourse?

    • John Watts says:

      Tam,

      I would not trust a company that messed this up to then fix it. I’m assuming spouse is not really in bankruptcy, right?

      Your spouse can send a dispute letter to the credit reporting agencies (Equifax, Experian, TransUnion, etc) and if they don’t fix it, then sue.

      And if the mortgage company is a “debt collector” then you may want to look at suing under the FDCPA (Fair Debt Collection Practices Act) — 15 USC 1692e(8). (Here is a video on section 1692e if you are interested — https://youtu.be/ABG8Bk5m6fw)

      So you may have recourse if you (your spouse) can sue under the FDCPA or if your spouse disputes and it is not fixed under the FCRA.

      Best wishes!

      John Watts

  5. Arthur says:

    Help me understand here:

    Settled an account with Chase. Received completion letter in March 2018. They continued to report the difference as being owed. I disputed 4-5 times with each bureaus (did not provide letter as I didn’t think I needed to). The disputes always came back as verified and accurate. Finally called Chase and faxed in document 1.5 weeks ago as they had “no record of it.” Can I sue? They are still ‘investigating’ but how can they claim they had no record of it when they were the ones that sent me the letter in the first place? 1.3 years of inaccurate reporting???

    Thanks,
    Arthur

    • John Watts says:

      Arthur,

      Sounds like you have not been treated right if I’m understanding what happened.

      So let’s say you owed $5,000.

      You paid a total of $3,000 as settlement.

      Chase still reporting you owe $2,000?

      And you disputed multiple times with the credit reporting agencies and the account came back verified?

      Email me at john [at] wattsherring.com and I’ll be glad to take a look and see what thoughts I have for you.

      Or you can call at 205-879-2447 and ask Carolyn to set us up a phone call.

      Thanks

      John Watts

  6. Jessica says:

    Verizon Wireless allowed someone to open an account using my information. Of course, I found out once that account got sent to collections, and hit my credit score. I have since gotten it removed, but it took a while and they gave me the runaround. During that time my credit took a serious hit and companies lowered my credit limits, which gave me more problems of increasing my credit ratios. So even though I’ve gotten them to remove the collections now, it left me in a difficult spot. I’m debating on suing them, but I don’t know if that’s a wise choice financially. Realistically speaking, is this something that would benefit me or just cause a lot of stress, time, energy, and resources with very little to come out of it?

    • John Watts says:

      Jessica,

      It may be that you can sue the collector. A lot depends on how much notice you gave them, should they have known it was a bogus account, etc.

      If you are in Alabama give me a call at 205-879-2447.

      I understand your frustration as lowered limits mess up usage which lowers scores even though collection account is removed.

      I would say its worth it to look at especially if this has harmed you getting a loan, etc.

      Sorry having to deal with it.

      John

  7. Steve says:

    I am preparing to file a small claims lawsuit against Equifax CRA. Equifax has been inputting false negative information submitted by Chase Bank to my credit file over the last few months in order to downgrade my score. The negative changes include reporting timely payments as late, changing the status of currently open long-term accounts currently open to closed status on my file, inputting fraudulent address changes to my file. I have disputed their attempted defamation thru certified letters to Equifax. A couple of the previous payments falsely marked as late were corrected but then they falsely marked the next month as late. My score had been in the mid 700s prior to their defamation campaign; currently they are reporting a 594 score. My question is what section(s) of the FCRA would you recommend filing the lawsuit under? Thank you for whatever advice you can provide.

    • John Watts says:

      Steve,

      I’m sorry you are going through this non sense with Equifax.

      Here is my best advice to you: Do NOT file in small claims court.

      Here are the reasons:

      1. Equifax will almost certainly remove your case to federal court anyway.
      2. You may have limited your damages — in Alabama the most you can recover in small claims is $6,000.
      3. If you have proof of disputes and failure to correct, then your case is likely worth more than small claims limit.
      4. Get a lawyer in your state to help you — someone experienced in suing Equifax — as it will not cost you any money to hire a lawyer. Your lawyer will be paid out of the settlement but will very likely get you more than you can get on your own and the judge can make Equifax pay your attorney fees. If you don’t have an attorney, Equifax gets off the hook on that.

      You will be dealing with a lawyer for Equifax that this is all they do. They will know the tricks, etc and will try and beat you on procedural grounds in federal court.

      As far as the sections — this is one you want to start with — https://www.law.cornell.edu/uscode/text/15/1681i. 15 USC Section 1681i.

      The damages section is https://www.law.cornell.edu/uscode/text/15/1681o for negligence and https://www.law.cornell.edu/uscode/text/15/1681n for willful violations of the law.

      You may also want to sue Chase if they have not fixed false info that you disputed with the credit reporting agencies: https://www.law.cornell.edu/uscode/text/15/1681s-2

      Best wishes!!

      John

      PS — if you are in Alabama feel free to give us a call at 205-879-2447 ask for Carolyn and she’ll set us up a call. If outside of Alabama, here is a good place to start looking for a lawyer: https://www.consumeradvocates.org/find-an-attorney

  8. Alex says:

    So I have filed a dispute about my credit report mashing with somebody else for a credit card. They removed it but that was a few years ago now same thing with the same guy on a few different accounts and the credit agencies are refusing to remove it’s not me even the person at transunion said have never seen this I dont know what to do please help

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