Public Justice Fights For Your Right To Stop Credit Agencies From Lying About You
by Ellen Noble
Seneca Falls Fellow
On Wednesday, Public Justice, as part of our Access to Justice Campaign, filed a petition asking the Ninth Circuit Court of Appeals to rehear a dangerous decision that makes it nearly impossible for people to hold credit reporting agencies accountable and fix damaging errors in their credit reports. Three major credit reporting agencies make billions every year selling information about consumers—and consumers deserve justice when they spread lies. But under the Ninth Circuit’s new decision, victims of such harmful lies have no standing; the Court won’t even let them through the courthouse door, much less give them a chance to prove their case.
In two associated cases, Jaras v. Equifax Inc. and Green v. Experian Info. Sols., Inc., the Ninth Circuit held that when credit reporting agencies violate the Fair Credit Reporting Act by refusing to correct false, derogatory information in your credit report, you can’t sue them. Why? Because according to the Court, you haven’t suffered an injury. In fact, even if the inaccurate information in your credit report has already lowered your credit score, you still, apparently, have not been harmed. The Court says you have to wait until you can show that the inaccuracies have affected a specific transaction, like buying a car or signing a mortgage.
The problem is, that day may never come. Most people don’t even know when a third party has accessed their credit report, much less how third parties interpret information in their report. Creditors, employers, landlords, and utility and insurance companies may all change the terms of a deal with you—or refuse to do business with you at all—based on what they see in your credit report. But corporations use proprietary formulas to set interest rates and determine premiums based on information in your credit report, and landlords won’t tell you what, if anything, in your credit report led them to deny your application.
By the time you know a lender or employer is about to access your credit report that contains false, derogatory information, it’s too late to go to court and get the report fixed. You’ll get stuck with a higher interest rate, be charged a higher insurance premium, lose out on the apartment you wanted to rent, or even get turned down for a job. You shouldn’t have to pay the price for the careless, reckless practices that credit agencies profit from.
That’s why Congress passed legislation to protect you from inaccurate credit reporting. After countless hearings and testimony from expert witnesses, Congress passed the Fair Credit Reporting Act so that consumers never have to stand idly by while credit agencies spread lies that could be relevant to future lenders or employers. Congress created procedures to ensure accurate credit reporting and established a private right of action, empowering individuals to enforce their rights when credit agencies refuse to abide by the law. The Ninth Circuit’s decision disregarded Congress’s intent and gutted the Fair Credit Reporting Act.
Other statutes are at risk too. For example, in most privacy statutes—like the Wiretap Act, Stored Communications Act, Telephone Consumer Protection Act, and Video Privacy Protection Act—Congress gave individuals recourse against other intangible harms, like unauthorized access to their personal data. But under the Ninth Circuit’s decision, people who have had their personal information or communications illegally collected could be barred from court unless they can identify how the perpetrator might have used their information or communications to harm them in a specific way. In other words, if a corporation decides to share your video rental history with the rest of the world, that would no longer be considered an injury; you’d have to show specifically how that privacy violation caused you additional harm, like the loss of a job, before you could enforce your rights under the Video Privacy Protection Act.
Ultimately, millions of people could be affected by the Ninth Circuit’s decision. According to the Federal Trade Commission, more than one in five people have a potentially material error—an error that could affect their credit score—in one of their major credit reports. If this decision stands, there’s nothing they can do about it. That’s why we’re standing up, alongside Elliot Gale of Gale, Angel, Johnson & Pruett P.C. and Matthew Knepper of Knepper & Clark LLC, and asking the Ninth Circuit to reconsider these flawed and harmful decisions. Nobody should have to live at the mercy of for-profit credit reporting agencies.