Author Archives: Credit Report Law Group

Consumer Financial Protection Bureau (CFPB), Credit Report Errors, Credit Reports, Deceptive Acts and Practices

CFPB’s Multibillion-Dollar Settlement with Credit Repair Firms

Posted on by Credit Report Law Group

On August 28, 2023, the Consumer Financial Protection Bureau (CFPB) announced that it had reached a $2.7 billion settlement with Lexington Law and CreditRepair.com to resolve allegations that the companies have been violating federal law with their telemarketing practices. As the nation’s two largest “credit repair” companies, the companies earned approximately $388 million in revenue in 2022 alone.

In March 2023, a federal district court ruled that Lexington Law and CreditRepair.com had both violated a provision of the Telemarketing Sale Rule. This rule requires that credit repair companies cannot bill clients until six months after they have provided customers with the documentation that proves they have successfully helped with the customers’ credit complaints.

The court found that “it is undisputed that Heath (doing business as Lexington Law) charges fees to clients every month, without waiting six months and without providing a consumer report at the six-month mark showing results have been achieved.” The court also concluded that CreditRepair.com was also doing these same illegal practices. The companies also allegedly conducted other additional deceptive practices. For example, Lexington Law suggested that attorneys would assist its clients, but the vast majority were never allowed to contact a lawyer.

Following the court’s ruling, the companies filed bankruptcy, saying they’d shut down 80 percent of their companies and laid off 900 employees.

To resolve the case, the CFPB and the defendants agreed to the following, pending court approval:

  • Lexington Law and CreditRepair.com must pay $2.7 billion for the victims of its schemes
  • The companies must bay another $64 million in penalties
  • The companies are both banned from doing any telemarketing for the next ten years
  • The companies are prohibited from working with certain marketing agencies that assisted them in the violations
  • The companies must notify all telemarketing customers of the lawsuit and their ability to cancel the services

While this is a major victory, these two firms are by no means the only credit repair companies that are taking advantage of American consumers. These “credit repair” companies often bill them for services they do not receive, mislead them in terms of what they will do to address problems with their credit, and more.

The reality is that American consumers can monitor their own credit by obtaining free credit reports, and if they discover any errors, the credit reporting companies are required by law to resolve them. If they fail to do so, you can sue them for damages.

That’s why, if you have had any issues with incorrect information on your credit report, don’t hire a credit repair firm. Instead, contact an attorney as soon as possible. The Credit Report Law Group can help you correct your credit record and obtain compensation for any damages you have sustained.

Background Check Errors, Consumer Financial Protection Bureau (CFPB), Credit Report Errors, Credit Reports, Credit Scores, Debt Collection and Harassment

Harmful Data Broker Practices—What Can Be Done to Protect American Consumers

Posted on by Credit Report Law Group

As many as 40 million Americans have errors on their credit reports—and errors on credit reports can cause havoc on someone’s financial well-being, leading them to have potentially higher interest rates on credit cards, mortgages, and car loans. It can even impact their ability to rent an apartment or get a job.

Meanwhile, despite the fact that the credit reporting industry’s entire reason for existing is to transmit accurate data, these millions of errors haven’t seemed to have hurt the industry. According to IBIS World, the credit rating industry made more than $14 billion in 2022, up from $9.1 billion just 12 years ago.

Realizing that data brokers are profiting from the sale of unauthorized and inaccurate data, Rohit Chopra, Director of the Consumer Financial Protection Bureau (CFPB), recently gave a speech addressing what can be done to protect Americans from data brokers’ harmful practices.

According to Chopra, the CFPB is developing new rules to limit data brokers’ misuse or abuse of data—particularly in light of the dangers that could arise from the rapid adoption of artificial intelligence.

While the CFPB considers other rules, Chopra highlighted two pending proposals.

The first would be that regulations could redefine data brokers as “consumer reporting agencies.”

This would more accurately reflect the type of consumer data these companies collect, such as consumers’ payment history, income, and criminal records. The change would also mean these entities would fall under credit reporting requirements. For example, the companies would then have to maintain accurate data and create effective dispute procedures to correct consumers’ information.

The second proposal would address “credit header data.” Currently, data brokers use personal identifier information from the major credit reporting companies, but this use isn’t considered to be a credit report. The CFPB is considering clarifying that this credit header data is a credit report because that change would limit the reporting companies’ ability to share sensitive data.

While this is important progress, creating regulations is a slow process. The CFPB isn’t planning on releasing draft regulations for public comment until 2024, and it’s unknown how long it would take to implement an adopted regulation.

That’s why, if you have had any issues with incorrect information on your credit report or other data broker issues, don’t wait for regulations to change before you defend yourself. Instead, contact an attorney as soon as possible. The Credit Report Law Group can help you correct your credit record and obtain compensation for any damages you have sustained.

Credit Report Errors, Credit Reports, Deceptive Acts and Practices, Identity Theft

The Pitfalls of “Credit Repair”

Posted on by Credit Report Law Group
Credit History

In June 2023, the New York Times Sunday Magazine looked inside the chaotic world of “credit repair” companies. The feature tells the story-after-story of how bad credit can ruin people’s financial lives—pushing them to the brink, financially and psychologically. It reveals how credit scores have ties to serious racial and sociological inequity. It explores how the credit industry has largely evaded efforts to be limited or regulated in its ability to make money off selling American consumers’ information—sales that Americans have essentially little control over, while the bureaus financially benefit by hurting Americans’ financial well-being.

All of that is gut-wrenching, but what is perhaps the most stunning is the article’s portrayal of the “credit repair” industry—how individuals who seek help with credit problems are being exploited and robbed by the very people who are pretending to help them.

As the article explains, even those well-intentioned individuals who genuinely want to help people struggling with bad credit seem to have little-to-no training or expertise in accounting, document management, or even how to challenge credit reports. Yet they charge people already struggling with debt $100 or more monthly for credit services.

But things rapidly go downhill from there.

The article also reveals how many of the “credit repair” companies are, unbeknownst to their clients, using illegal tactics to address credit reports—such as falsifying statements to law enforcement as a way to challenge clients’ data.

Further, some of these companies are nothing more than scammers, defrauding clients and even stealing their data —committing identity theft when they were supposed to protect clients from it.

As the article addresses, there are various cases before federal agencies and some members of Congress discussing the need for reform. But there seems to be negligible progress on that front. In the meantime, individuals need to realize that the credit repair firms are not credentialed, unregulated, and—after all that, they aren’t even good at fixing someone’s credit.

That’s why it is so crucial to get competent representation from law firms such as The Credit Report Law Group.

The Credit Report Law Group is led by experienced licensed attorneys who are leaders in the credit reform community. They understand a consumer’s legal rights, so they can legitimately address errors in credit reports, debt harassment, identity theft, and more.

Another example of how unscrupulous “credit repair” companies operate is that they charge upfront without guaranteeing success. Legitimate advocates do not charge upfront. For example, the Credit Report Law Group takes most of its cases on a contingency basis, so clients don’t need to pay any money upfront—they only pay after a successful result.

While, as the New York Times reported, many credit repair companies rely on boilerplate complaints and deception to serve their clients, the Credit Report Law Group will carefully review your specific issues and develop a sound, effective legal strategy that best reflects your situation and needs.

That’s why, if you have had any issues with identity theft or other issues with incorrect information on your credit report, don’t risk a credit repair company. Instead, contact an attorney as soon as possible. The Credit Report Law Group can help you correct your credit record and obtain compensation for any damages you have sustained.

Credit Report Errors, Credit Reports, Credit Scores, Debt Collection and Harassment, Legislation, News

What If My Child Has Debt on Their Credit Report?

Posted on by Credit Report Law Group

There’s no law or policy that establishes that children must reach a minimum age before the national credit bureaus begin compiling a credit file on them. (That’s why children can be the victims of identity theft—because fraudsters can use their identities to open bank accounts and credit cards in their names.) So what if a child has debt on their credit report? What then?

The Age of Majority

Under New York law, minor children cannot enter into a legally binding contract before they reach “the age of majority,” which, in most states, including New York, is 18 years old. Therefore, if a child signs a contract when they are still underage, the contract can be nullified, and they cannot be required to pay a debt that they acquired when they were underage.

In other words, according to New York law, minors are not responsible for debts they incur while underage.

That means underage children cannot file for a credit card or other account in their name. This causes some confusion because parents can get a child a credit card to carry. That is true, but the child is only an authorized user. They are not the account owner. The credit card remains solely the parent’s account, and it’s the parent’s responsibility to pay all the charges. So if a parent’s credit card is reported on the child’s credit report, that’s an error.

Similarly, a parent could co-sign or otherwise approve an underage child’s entering into a contract. But this means the parent, not the child, would be responsible for the debt.

The Right to Learn and Challenge Information

To find out if there is any debt on a child’s account, parents should review their children’s credit report—which is accessible by using their children’s Social Security Number—to discover what may be there.

To do that, they can obtain free credit reports for their kids just as they can ask for their own reports. And it’s important to note that parents and legal guardians have the right to contest any errors on their child’s report, just as they can challenge any errors on their credit information.

If you have had any issues with the national credit bureaus, including misreporting of your child’s credit information, contact an attorney specializing in representing clients like you. The Credit Report Law Group can not only help you correct your credit record, but the firm can also help you obtain compensation for any damages you have sustained.

Credit Report Errors, Credit Reports, Credit Scores, Debt Collection and Harassment, News

What Do I Do If One Debt Is Listed Multiple Times on My Credit Report?

Posted on by Credit Report Law Group
Senior & Junior Mixed Credit

Having debt on your credit report is a fact of American financial life. But what happens if the same debt is listed multiple times on your report?

As the Consumer Finance Protection Bureau (CFPB) has explained, this is not a “harmless error.” That’s because credit bureaus don’t recognize all these entries as duplicates showing the same debt. Instead, the credit bureaus presume that each debt is legitimate and unrelated to the others. And so, when determining your credit score, the credit bureaus will add up all the debts listed on your account—including any duplicates—to determine your total financial liability.

Therefore, just like any other error on your credit report, those duplicates can lower your credit score and end up costing you money in higher interest rates on credit cards and loans.

How Do Duplicate Entries Occur?

The national credit bureaus receive data from countless sources, and this information is compiled into a credit file on an automated basis. (No one is checking to ensure the information they receive is correct.) The bureaus pull data from major vendors, banks, and others who have first-hand, direct relationships with you—such as credit card companies. And the bureaus also get data from other data compilers and third parties such as debt collectors.

Given that, it’s possible that multiple sources are reporting the same information, and there is just enough variance in each entity’s description of the debt that the credit bureaus’ automated systems perceive all these entries as unrelated debts.

Another way that multiple entries can appear is if a debt has gone to debt collection. Large companies often assign a single debt to more than one debt collector. Since debt collectors also report accounts to the credit bureaus, their competing reports can make it look like you have multiple outstanding debts, even though they all relate to the same credit.

And it’s always possible there was some error, either in the submission or processing of the data. A computer glitch causes a double entry, the vendor submits the same information twice, and so on.

No matter what the cause, the effect is the same. Your credit report has errors, and this can hurt your ability to get credit, even hurt your ability to get a job, rent an apartment, or buy a home.

And no matter why it happened, you have the right to challenge the error, and the credit bureaus are required to fix your credit report.

If you have had any issues with the national credit bureaus, including duplicate entries on your credit report, contact an attorney specializing in representing clients like you. The Credit Report Law Group can not only help you correct your credit record, but the firm can also help you obtain compensation for any damages you have sustained.

Consumer Financial Protection Bureau (CFPB), Credit Report Errors, Credit Reports, Credit Scores, Debt Collection and Harassment, Legislation, News

Government Investigating Equifax Compliance with Reporting Requirements

Posted on by Credit Report Law Group

Consumers are used to Equifax scrutinizing their credit activity and using the information to generate credit reports and credit scores that impact so much of their lives—from the interest rates credit card companies charge to the ability to get a job. And studies by the Consumer Financial Protection Bureau (CFPB) found that, unfortunately, many consumers are also accustomed to Equifax getting information wrong. But now the shoe is on the other foot:

The CFPB is investigating Equifax, examining its records to see if it is Equifax is complying with the Fair Credit Reporting Act (FCRA), a federal law that mandates how credit bureaus collect and maintain their data.

Equifax Filings Illuminate Ongoing Investigation

According to Bloomberg News, Equifax revealed, in its most recent Form 10-Q report to investors, that, in July 2023, the CFPB had sent the credit bureau a civil investigative demand (CID), asking Equifax to produce information that relates to whether it is complying with FCRA’s requirements for handling of consumer disputes. Notably, this is the third CID Equifax has received from the CFPB.

Equifax had previously disclosed that the CFPB had issued its first CID in December 2021. In that earlier CID, the CFPB sought information on whether Equifax was following the FCRA requirements for handling consumer disputes. The CFPB then sent a second CID in January 2023, relating to Equifax’s problem with calculating credit scores following a migration to new computer servers.

And in July 2023, the CFPB sent this third CID, requesting information relating to Equifax’s Workforce Solutions business unit. The largest of Equifax’s business segments, Workforce Solutions, is the branch of Equifax that supplies verification data to employers—such as employment histories, licensure status, and other information. It also provides companies with ongoing services relating to payroll, security screenings, taxes, immigration, and other compliance issues.

While Equifax hasn’t identified the information it must produce, it’s likely to pertain to how Equifax responds to consumer complaints regarding errors on credit reports, mixed files, and other issues.

What Does This Mean for Equifax and Consumers?

While we don’t know the possible allegations against Equifax, it’s noteworthy that the CFPB has already issued recommendations to the national credit bureaus regarding changes to the administration of credit information. So the investigation suggests the CFPB may want to file a federal lawsuit against Equifax, which could result in structural changes in Equifax’s practices depending on its outcome. And it could even result in compensation for impacted consumers.

While this is an important development, the reality is that any redress from a CFPB investigation would be years away.

That is why, if you have had any issues with Equifax or the other national credit bureaus relating to errors on your credit report, don’t wait. Contact an attorney who specializes in representing clients like you. The Credit Report Law Group can not only help you correct your credit record, but the firm can also help you obtain compensation for any damages you have sustained.

Credit Report Errors, Credit Reports, Credit Scores, Cybercrime, Debt Collection and Harassment, Deceptive Acts and Practices, Fraud, News

Four Ways AI Scams Can Impact Your Credit Score

Posted on by Credit Report Law Group

For all of the hoopla there has been about how ChatGPT and other Artificial Intelligence (AI) applications can increase efficiencies and create terrific new content, there’s another darker side to AI. It can also help fraudsters and identity thieves be more effective, too. Let’s review four ways that AI scams can impact your credit score.

Voice Scams—Faking an Emergency

“Voice scams” are on the rise. The Federal Trade Commission recently warned about these scams, where an unsuspecting person receives a voice message or call from a family member or friend who claims to be in urgent distress and needs money immediately. This is an old email scam, but generative AI can create a realistic enough voice that the person believes the caller is genuine, so they give them the money.

As if being a victim of such a scam isn’t upsetting enough, there’s a secondary injury beyond losing the money: It can hurt your credit score because it is partly based on how much cash you have on hand. Your suddenly lower bank balance will likely lower your credit score.

Voice Scams—Your Voice Is the Fake

Scammers are robocalling people to collect their voice samples. AI can synthesize someone’s voice with as little as a three-second clip. With another piece of information, identity thieves can use the person’s fake voice to call vendors, credit card companies, and more to get credit in their name. (Or they can use that fake voice to call their family members and ask for money.)

Fake Companies, Fake Investments

Scammers are using AI to create sophisticated profiles of companies that don’t exist to entice people into investing in these fake companies. With these, scammers may seek to get someone’s money. And they are also looking to acquire banking and other investment information that legitimate companies use to verify investors, but the scammers can then use that to forge new credit accounts.

Better Quality Phishing

You often used to be able to recognize an email scam because of obvious errors in the email—such as typos or poor grammar. However, scammers are using AI to clean up these solicitations, sending fake offers for new credit cards and more. In these emails, the scammer may not even ask for your credit information. Instead, they’ll ask for passwords and other verification information they can use to access—and then steal—your real accounts.

If you have had any issues with identity theft, been a target of scammers, or have other financial crime issues, contact an attorney as soon as possible. The Credit Report Law Group can not only help you correct your credit record, but the firm can also help you obtain compensation for any damages you have sustained.

Credit Report Errors, Credit Reports, Credit Scores, Debt Collection and Harassment, Legislation, News

How Will the End of Student Loan Forbearance Impact Debtors’ Credit

Posted on by Credit Report Law Group

At the height of the Covid pandemic, the Department of Education gave all those who held federal student loans an automatic forbearance. Debtors were not charged interest on their loans and were not required to repay them during the pandemic. However, interest on student loans will begin to accumulate again, starting September 1, 2023, and payments are set to resume in October. While it’s obvious that the restart of student loan payments will impact people’s cash-on-hand, it’s equally important to recognize that it may also impact your credit score. Let’s briefly consider how that might happen.

Pre-pandemic Delinquencies

During the pandemic, the credit bureaus didn’t just remove any negative credit information about student loans after the freeze on loans. As the New York Times explained, they also removed existing reports of student loan delinquencies. That meant people received an increase in their credit scores, which enabled them to take on new debt, from buying cars to getting credit cards.

These earlier debts will likely return to people’s credit scores once repayments resume. This would reduce someone’s credit back to their lower pre-pandemic score, but—depending on the new liabilities they accumulated during the pandemic—they could see their score drop even further than that.

When New Payments Coming Due

Once federal repayments have resumed, if you’re more than 90 days past due on a student loan payment, that can show up on your credit report—and it will stay there for up to seven years. (Keep in mind that private loans may be reported to the credit bureaus at an even faster rate—as soon as 30 days after a missed payment.)

VantageScore estimates that as many as 76% of borrowers won’t pay that first payment on time. And that first missed payment, the firm estimates, will result in a credit score decline between 1 point and 9 points. And VantageScore warns that those who don’t resume payments at all could see as much as an 82-point drop in their credit scores.

But it’s not all bad news. For those who resume on-time payment of loans, their credit scores should increase by about eight points.

The only way you’ll know for sure, however, is if you regularly examine your credit report to see if there are any mistakes present.

If so, the credit bureaus are required to fix them. But if you need help having your information corrected, contact an attorney who specializes in representing clients like you. A lawyer can not only help you repair your record, but they can also help you obtain compensation for any damages you sustained.

Background Check Errors, Credit Report Errors, Credit Reports, Credit Scores, Fraud, Mixed Case File, News

What You Need to Know about Child Identity Theft

Posted on by Credit Report Law Group

While many parents will get a Social Security Number for their child, it may be many years before the child uses their identification for financial purposes (e.g., opening a bank account). In the intervening time, the dormancy of children’s information makes kids an ideal target for identity thieves. The children’s underlying data is real, but there isn’t any competing activity that could interfere with the thieves’ use of the information. And theft of a child’s identity can have long-term effects years down the road, from interfering with the ability to obtain student loans to getting a job or an apartment.

So here are some things to be aware of regarding child identity theft.

What Thieves May Use the Data For

The Federal Trade Commission warns that identity thieves will use a child’s name, Social Security Number, date of birth, and home address. They may use this information to fraudulently apply for government benefits, credit cards, or loans. They might even rent an apartment and have their utilities under a child’s name.

What to Do to Protect Your Child

To protect your child from identity theft, be as protective of their information as you would be of your own. Secure documents. Shred papers that you no longer need. Delete data from old computers or phones you are retiring. Don’t give out your children’s Social Security number, even to a school, without first finding out why someone is asking for it and how they will protect children’s data.

Ask if you can use a different identifier or supply just the last four digits of the Social Security number.

And, just as you should check your credit report for errors, you should monitor their credit. There shouldn’t be a credit report until they have an account or record in their name.

Warning Signs to Look Out for

Be on the lookout for warning signs that identity thieves are already misusing your child’s data. For example, if your child starts receiving solicitations in the mail for credit cards or other financial services. Or when you create an account, you are told that one already exists. Another clue is if you are denied credit or harassed for unpaid debts you didn’t know you had.

If you do suspect that your child’s identity has been compromised by identity theft, contact an attorney who specializes in representing clients like you. A lawyer can not only help you repair your and your child’s credit record, but they can also help you obtain compensation for any damages you sustained.

Background Check Errors, Credit Report Errors, Credit Reports, Credit Scores, Fraud, Mixed Case File, News

Why Having a Vietnamese Name Can Result in a Problem with Your Credit

Posted on by Credit Report Law Group

The traditions and symbolism behind Vietnamese names are profoundly meaningful, while individuals’ personal names are often beautiful and inspiring. But having a Vietnamese name in the United States can pose a unique challenge when it comes to someone’s financial security. Let’s explore why this is an issue and what you can do to protect yourself.

Common Vietnamese Surnames

As explained in the web magazine Atlas Obscura, the most common Vietnamese surname is Nguyen. Estimates are that as much as 40% of the Vietnamese population have Nguyen as their surname. Furthermore, people with one of the 14 most common surnames (Nguyen, Tran, Le, Pham, Hoang, Vu, Dang, Bui, Do, Ho, Ngo, Duong, and Ly) total more than 90 percent of the population. By contrast, if you added up all of the people in the U.S. with the 14 most common last names, you’d have named less than 6 percent of the U.S. population.

The reason that Nguyen is so popular is that, historically, in Vietnamese culture, surnames were less used to describe family relationships and more to reveal one’s ties to a political administration. From 1802 until 1945, Vietnam was ruled by the Nguyễn Dynasty, so many families took the Nguyen name to demonstrate their allegiance to the imperial family.

Common Names are More Likely to Result in Mixed Files

In the U.S., financial well-being is largely shaped by someone’s credit reports and credit scores maintained by the three largest national credit bureaus, TransUnion, Experian, and Equifax. These companies compile financial profiles on American consumers, collecting information such as banking accounts, student loans, mortgages, credit cards, and outstanding debts. But with files on more than 200 million consumers, errors in credit reports are common.

One of the most frequent types of errors is a “mixed file,” when a person’s file includes the credit information of someone with the same name. Mixed files are more common when for those who have common names. And they are more likely to occur between family members because they share their names and addresses.

Since most people of Vietnamese ancestry have one of 14 last names, they may be more likely to have a mixed credit file.

Other Vietnamese naming traditions—e.g., ordering the middle name before the personal name, giving siblings the same name, or personal names that are two words long—also may lead to errors in a credit file. For example, one person’s records may be mixed with a sibling, while another may have vital information missing because a second file was created under the latter half of their two-word name.

Given these issues, it’s important for those with Vietnamese names to monitor their credit reports. And if there are errors, make sure to correct them. Having errors on a credit report can lead you to pay higher interest rates and have difficulty obtaining credit cards and loans. It can even make getting a job or renting an apartment more difficult.

While the law requires that the credit bureaus fix any mistakes in your report, studies show that credit bureaus aren’t very good at responding to people’s complaints. That’s why, if you discover any errors with your credit report, contact an attorney experienced in representing clients like you. The Credit Report Law Group can only help you correct your credit record and obtain compensation for any damages you sustained.