Disputing a Furnisher in a Credit Information Suit

California consumers should know the laws and obligations that protect them

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Seungtae Kim ran into a rather odd situation in 2013. An acquaintance of his somehow fooled an auto dealer and BMW Financial Services into thinking he was Kim—and they sold him a BMW. Several months later, Kim applied for credit and learned he had a report for a repossessed BMW within his credit file. He quickly filed a police report and notified the furnisher, BMW Financial Services.

To the Kim’s surprise, BMWFS refused to remove the inaccurate information and told Kim that he still owed money on the debt. Not only was Mr. Kim a victim of identity theft, but the furnisher was leveraging his misfortune to pay a debt he didn’t owe.

“For a creditor, like a bank or a debt collector or BMW Financial, the ability to credit report is the ability to destroy,” says Robert Brennan, Mr. Kim’s attorney. “The ability basically to harm someone so deeply economically that the person is forced to pay off a debt that they may not owe.”

Credit reporting agencies (CRAs) like Experian, Equifax and Transunion rely on others to provide accurate information for the credit files they maintain. These providers of credit information are labeled “furnishers” under the Fair Credit Reporting Act (FCRA) and can include:

  • Creditors
  • Landlords
  • Insurers
  • Employers
  • Debt collectors

Most consumers understand the role of the large CRAs, but the role of furnishers is just as important. The FCRA requires furnishers provide accurate information and correct inaccurate consumer information. If a consumer files an “indirect dispute” with one of the CRAs, the FCRA requires the furnisher of the disputed information to complete the following steps:

  • Conduct an investigation of the disputed information
  • Review all relevant information provided by the consumer
  • Report the results back to the CRA within 30 days

Furnishers have the same duties under a direct dispute from a consumer. If the investigation shows the consumer information to be inaccurate, incomplete, or unable to be verified, the furnisher must either:

  • Modify the information
  • Delete the information
  • Permanently block the reporting of that information

Brennan has practiced law in California for 30 years, and at least half of that time he has represented consumers in lawsuits against furnishers and CRAs. He has had success in suing furnishers and, unfortunately, sees little improvement in their conduct over the years. “The bureaus are trying to clean up their act but they can’t because it’s a garbage in, garbage out situation,” Brennan says. “They accept information from credible furnishers but they also accept information from not-so-credible furnishers.”

In the case of Seungtae Kim v. BMW Financial Services, the jury found in Kim’s favor with a $430,000 judgment. Much of the judgment was awarded for negligent violation of the FCRA in failing to remove the car loan from Mr. Kim’s credit report. The jury determined he suffered damages to his reputation and creditworthiness of $250,000. The remainder was awarded under California Identity Theft law for BMW Financial Services’ treatment of a debt due to identity theft as a valid debt.

As to the future, and if furnishers will get better at avoiding these situations, Brennan isn’t holding his breath. “False credit reporting is going to continue because the furnishers just have too great of an incentive to put derogatory information on peoples’ credit reports because that is right now the biggest leverage they have to make people pay debts.”

To protect yourself, Brennan suggests a practical, proactive approach. “Keep an eye on your credit reports and if there is something false, you need to dispute it,” he says.

Brennan advises to formally dispute the information in writing via certified mail with the bureaus. Don’t settle for the online dispute process offered by the CRAs because that does not provide a reliable record of the dispute.

If you don’t get the results you feel you should when disputing with furnishers or CRAs, it may be time to contact an experienced southern California consumer law attorney to determine if relief for their credit woes is available through the courts.

California

To protect yourself, Brennan suggests a practical, proactive approach. “Keep an eye on your credit reports and if there is something false, you need to dispute it,” he says.

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