gavel over money istockLast week an Oregon jury awarded a whopping 18.4 million in punitive damages against Equifax, one of the three national credit reporting agencies. The plaintiff in the lawsuit, Julie Miller, had tried to untangle her credit file for two years (Equifax had mixed her information with that of another Julie Miller) – but she  hit a brick wall . . . until she sued.

Trying to Untangle “Mixed Files” in Your Credit Report: Are You Facing a Brick Wall?

Mistakes in credit reports are common.  Up to 25% of credit reports contain errors. Some errors are severe enough to cause consumers to be declined for loans or credit cards or suffer other negative credit consequences. (See my previous blog post on this issue, FTC Report: 1 in 4 Credit Reports Have Errors.)  While the Consumer Reporting Act requires credit reporting agencies (CRAs) like Equifax to follow certain procedures to correct errors once disputed by a consumer, those procedures don’t always work. (To learn how to dispute credit report errors, visit Nolo’s Cleaning Up Your Credit Report topic area.)

As a recent New York Times article on the Miller verdict points out, when consumers try to fix “mixed files” errors (where the credit reporting agency includes information from one consumer on the report of another, often because they share the same or similar name) they don’t often get results. This is because the CRAs like to deal with disputes using automation – and mixed files can’t be untangled that way.

Does Equifax Care?

The 18.4 million award to Julie Miller is reportedly the largest ever seen in this type of case. But lawsuits against credit reporting agencies are common. Some consumer lawyers say that large verdicts, such as this one, are just a cost of doing business for Equifax. They don’t see this case as changing behavior. Others say this might catch Equifax’s attention.

The CFPB:  The Knight in Shining Armor?

The newly minted Consumer Financial Protection Bureau (CFPB) has the responsibility of overseeing the largest CRAs, and Equifax falls into that category. Along with taking measures to collect information from consumers and field complaints about CRAs, the CFPB also has the power to issue rules governing CRAs.

Consumer lawyers have been making a stink about problems with the CRAs’ procedures for a long time (I recall working on this issue as early as 1995.). But despite those efforts, the CRAs have changed little in the way they do business.  If the CFPB gets involved, however, the credit reporting agencies may be faced with a rude awakening. Time will tell.

What Can You Do?

In the meantime, if you have a complaint about a CRA, be sure to lodge it with the CFPB. It wants to hear from consumers. And the more complaints the CFPB receives about a particular problem, the more likely it will be to focus energy on addressing it.

You can file an online complaint with the CFPB by visiting its website at www.consumerfinance.gov and clicking on “Submit a Complaint”.

(You can learn more about credit reports, credit scores, disputing errors, and rebuilding credit in Nolo’s Credit Repair topic area.)