Parroting, Credit Report Disputes, and Other Credit Report BS

An interesting lawsuit was filed by a consumer in Alabama against Select Portfolio Servicing, Jared Galleria of Jewelers, Prestige Financial Services, Experian, Equifax, and Trans Union.

What is interesting about the suit is the description of the broken and defective credit report dispute process of inaccurate information. Many of us have experienced such issues firsthand.

The complaint says, “Unfortunately, the data furnisher almost always performs its investigation based only on this 2 or 3 digit code and quickly verifies its previous data to the CRA’s [Credit Reporting Agencies] without performing any real investigation. In fact, these investigations are often conducted in under three minutes by low level back office employees who are often compensated based upon the number of disputes they can process per day.”

And it is no surprise credit report disputes often go into a black hole. Years ago one person who worked at a bank told me she didn’t want to waste time doing disputes so she marked them all verified.

And if it holds up during the case, you can understand why valid credit report disputes can often lead nowhere. The complaint says, “This investigation method is known as “parroting” and no independent analysis, evaluation or reasonable investigation is ever performed by the CRAs”

I’ll let you read the alleged reported facts from the suit.

FACTUAL ALLEGATIONS

20. Credit-reporting agencies collect information from furnishers like SPS, Jared, Prestige, other creditors, governmental entities, collection agencies and third-party intermediaries. They generally collect data every month, and they typically update their credit records within one to seven days after receiving new information. To facilitate the collection process and to reduce reporting costs, the CRAs have implemented procedures to have data submitted in a standard format, the so-called Metro format. Data may be submitted through various media, including CD-ROM and electronic data transfer. Furnishers like SPS, Jared and Prestige submit information voluntarily. No state or federal law requires them to report data to the CRAs or to use a particular format for their reporting. As a result, the completeness and frequency of reporting by furnishers can vary.

21. A credit score is a number that summarizes credit risk, based on a snapshot of a consumer’s credit report at a particular point in time. Credit bureau based scores have been available since 1989 when Fair Isaac and Company, installed its first “FICO” score at Equifax. Credit scores summarize the information on a consumer’s credit report. The score is designed to be predictive of credit risk and is used by lenders and insurance companies. FICO scores, which are the industry standard, are calculated from different credit data variable groups.

22. Every day thousands of consumer disputes are received and processed by the National CRAs: Equifax, Trans Union and Experian. These disputes are received via phone, mail or online through the Internet. Each credit-reporting agency is obligated by the FCRA to conduct a reasonable investigation of the disputed item(s).

23. The bureaus and the data furnishers are obligated under the FCRA to ensure that they have reasonable procedures in place to ensure maximum possible accuracy of the credit file data.

24. When a consumer contacts the credit bureaus, the bureau will typically send an Automated Consumer Dispute Verification form (hereafter “ACDV”) electronically through a system called e-Oscar, to the data furnisher for verification of the item in question.

25. The e-Oscar system was developed by Equifax, Experian, Innovis and Trans Union and purports to be an “Online Solution for Complete and Accurate Reporting.”

26. Upon receiving the ACDV through e-Oscar, the furnisher is required to conduct its own investigation and send a response back to the CRAs. The dispute can be verified as reported, changed/updated or deleted.

27. The results of the investigation are then updated on the credit report by the CRAs and either mailed or emailed back to the consumer. This process can take up to 30- 45 days to complete but it typically takes less than 30.

28. Either because of time, cost, or volume of disputes, the CRA’s have adopted an investigation procedure that involves condensing a consumer’s dispute to a 2 to 3 digit code that is sent electronically to the data furnisher. Sometimes, the CRA’s also provide images of the actual dispute letter sent by the consumer to the CRAs.

29. Unfortunately, the data furnisher almost always performs its investigation based only on this 2 or 3 digit code and quickly verifies its previous data to the CRA’s without performing any real investigation. In fact, these investigations are often conducted in under three minutes by low level back office employees who are often compensated based upon the number of disputes they can process per day.

30. The CRAs then rely solely on the results of the data furnisher’s investigation without performing any independent investigation.

31. This investigation method is known as “parroting” and no independent analysis, evaluation or reasonable investigation is ever performed by the CRAs.

32. SPS, Jared and Prestige are “furnishers” and regularly furnish informationabout consumers, including the Plaintiff, to CRAs including, Equifax, Experian, Trans Union and Innovis.

33. Within two years prior to the filing of this lawsuit, Plaintiff repeatedly requested and received copies of the credit file of the Plaintiff compiled and maintained by Equifax, Experian and Trans Union.

34. Each credit report received by the Plaintiff contained errors and each CRA furnished Plaintiff’s credit reports to 3rd party credit granting entities after receiving her disputes.

a. EXPERIAN INACCURACIES

35. Two of the most egregious inaccuracies reported by Experian were furnished by SPS and Jared.

36. The inaccuracy furnished by SPS and reported by Experian was that Plaintiff had an open mortgage loan with a balloon payment of $220,580.00 due in 2036. This information was inaccurate because Plaintiff satisfied and paid in full this account as part of a sale transaction on or about November 30, 2015.

37. Plaintiff disputed the SPS inaccuracy with Experian multiple times. Plaintiff’s letters disputing this inaccuracy were either mailed or faxed to Experian.

38. Experian’s response to Plaintiff’s first and second dispute letter was to simply inform her that the information had been verified as accurate.

39. Experian’s response to Plaintiff’s third dispute letter was to actually add a past due balance of $25,806 and total balance owed of $329,928 to the account information included on the report.

40. Plaintiff disputed the SPS inaccuracy contained in the Experian report directly with SPS multiple times. Plaintiff disputed the SPS inaccuracy in the Experian report directly with SPS via a phone call on December 5, 2018. Plaintiff subsequently disputed the SPS inaccuracy in the Experian report directly with SPS again via email on December 5, 2018. SPS never responded to Plaintiff’s phone and email disputes.

41. SPS failed to correct the egregious inaccuracies it furnished to Experian.

42. The inaccuracy furnished by Jared in the Experian report was that Plaintiff had an unpaid charge off balance. The information furnished by Jared was inaccurate and misleading because it did not reflect that Plaintiff paid Jared directly and settled the account for less than the full balance on or about March 29, 2017.

[Note: The practice of reporting the amount of debt forgiven as a bad debt and charged off is a regular practice in settlements.]

43. Plaintiff disputed the Jared inaccuracy with Experian multiple times. Two of the letters Plaintiff sent disputing this inaccuracy were sent in June 2017 and November 2018.

44. Experian’s response to all three of Plaintiff’s disputes regarding the Jared inaccuracy was to simply inform her that the information had been verified as accurate.

45. Upon the Plaintiff’s request for verification and correction of the SPS and Jared inaccuracies, and in accordance with their standard procedures, Experian did not evaluate or consider any of Plaintiff’s information, claims or evidence and did not make any attempt to substantially or reasonably investigate the disputed inaccuracies.

46. It is alleged that that Experian failed to contact SPS and Jared. Alternatively, it is also alleged that Experian did forward some notice of the disputes to SPS and Jared and both SPS and Jared failed to conduct their own lawful investigations.

47. The SPS and Jared inaccuracies are damaging and derogatory items on the Plaintiff’s Experian credit report.

b. EQUIFAX INACCURACIES

48. Two of the most egregious inaccuracies reported by Equifax were furnished by Jared and Prestige.

49. The inaccuracy furnished by Jared and reported by Equifax was that
Plaintiff had an unpaid charge off balance. The information furnished by Jared was inaccurate and misleading because it did not reflect that Plaintiff paid Jared directly and settled the account for less than the full balance on or about March 29, 2017.

50. Plaintiff disputed the Jared inaccuracy with Equifax multiple times. Two of the letters Plaintiff sent disputing this inaccuracy were sent in June 2017 and November 2018.

51. Equifax’s response to Plaintiff’s first and second dispute of the Jared inaccuracy was to simply inform her that the information had been verified as accurate.

52. Equifax simply did not respond to Plaintiff’s most recent dispute of the Jared inaccuracy.

53. The inaccuracy furnished by Prestige and reported by Equifax was that Plaintiff had two delinquent Prestige accounts. This was inaccurate because Plaintiff only ever had one account with Prestige. The second account was an inaccurate duplicate.

54. Plaintiff disputed the Prestige inaccuracy with Equifax multiple times. The most recent dispute was mailed to Equifax in November 2018.

55. Equifax simply did not respond to Plaintiff’s most recent dispute of the Prestige inaccuracy.

56. Upon the Plaintiff’s request for verification and correction of the Jared and Prestige inaccuracies, and in accordance with its standard procedures, Equifax did not evaluate or consider any of Plaintiff’s information, claims or evidence and did not make any attempt to substantially, or reasonably verify the Jared and Prestige disputed inaccuracies.

57. It is alleged that Equifax failed to contact Jared and Prestige. Alternatively, it is also alleged that Equifax did forward some notice of the disputes to Jared and Prestige and both Jared and Prestige failed to conduct their own lawful investigations.

58. The Jared and Prestige inaccuracies are damaging and derogatory items on the Plaintiff’s Equifax credit report.

c. TRANS UNION INACCURACY

59. The most egregious inaccuracy reported by Trans Union was furnished by Jared.

60. The inaccuracy furnished by Jared and reported by Trans Union was that Plaintiff had an unpaid charge off balance. The information furnished by Jared was inaccurate and misleading because it did not reflect that Plaintiff paid Jared directly and settled the account for less than the full balance on or about March 29, 2017.

61. Plaintiff disputed the Jared inaccuracy with Trans Union multiple times. Two of the letters Plaintiff sent disputing this inaccuracy were sent in June 2017 and November 2018.

62. Trans Union’s response to all of Plaintiff’s disputes of the Jared inaccuracy was to simply inform her that the information had been verified as accurate.

63. Upon the Plaintiff’s request for verification and correction of the Jared inaccuracy, and in accordance with its standard procedures, Trans Union did not evaluate or consider any of Plaintiff’s information, claims or evidence and did not make any attempt to substantially, or reasonably verify the Jared disputed inaccuracy.

64. In the alternative to the allegation that Trans Union failed to contact Jared, it is alleged that Trans Union did forward some notice of the disputes to Jared and Jared failed to conduct its own lawful investigation.

65. The Jared inaccuracy is a damaging and derogatory item on the Plaintiff’s Trans Union credit report.

Read the Full Complaint

You can read the full complaint here.

Steve Rhode
Get Out of Debt GuyTwitter, Facebook

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This article by Steve Rhode first appeared on Get Out of Debt Guy and was distributed by the Personal Finance Syndication Network.