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

Leave a Comment