What Can You Get for an Inaccurate Credit Report Lawsuit?

Use these links to jump to different sections:

• Threshold Issue Is Whether Conduct by CRA Is Negligent or Willful
• Punitive and Statutory Damages
• Attorney’s Fees and Costs

Between securing a potential new job and major purchases like a home or car, credit reports can have a significant impact on our lives. The outcome of such events can hinge on the results of a report. It may come as a slight comfort to know that the consumer reporting agencies (CRAs) issuing these reports have requirements under the Fair Credit Reporting Act (FCRA). Should they fail to follow them and violate the FCRA, and if that violation negatively impacts a consumer, the CRA may be liable for damages. The CRA can be in violation of the FCRA for several reasons, including:

• listing information that is required to be excluded under the law
• failure to furnish a consumer report for a permissible purpose
• failure to follow reasonable procedures to assure maximum possible accuracy of the consumer’s information contained in their credit file
• failure to conduct proper reinvestigation

Threshold Issue Is Whether Conduct by CRA Is Negligent or Willful

A CRA found negligent in failing to comply with requirements of the FCRA including disputed information, inaccurate information, or incorrect information, is liable to an injured consumer for their damages. To determine negligent conduct, a court evaluates what a “reasonably prudent person” would do if stepping in the shoes of the CRA. If the conduct of the CRA falls short of that standard, it’s negligent. If the CRA meets that standard, the consumer will not receive damages for the credit reporting error. If negligent, the CRA is liable to the consumer for the consumer’s actual damages. Actual damages typically include the following:

• Out-of-pocket expenses
• Lost wages
• Lost credit opportunities
• Emotional distress and humiliation
• Damage to reputation

Some forms of actual damages are straightforward to calculate. Violations could result in a consumer being denied credit or losing out on a job opportunity—losses that can be calculated. Emotional distress damages and damages to the consumer’s reputation may be more difficult to calculate. These damages can be awarded even in the absence of out-of-pocket expenses. Emotional distress damages must be supported by something more than victim’s bare allegations. The consumer’s statements must be coupled with additional evidence of some kind of actual or genuine injury. That additional evidence can take the form of:

• Testimony regarding the surrounding circumstances
• Testimony of the injured party’s conduct
• Corroboration of other witnesses
• Medical or psychological evidence

There is no limit to this amount, as long as a consumer can prove the loss.

Punitive and Statutory Damages

A CRA which willfully fails to comply with requirements of the FCRA with respect to a consumer is liable to that consumer for damages. Those damages can be the actual damages of the consumer, or punitive damages. A CRA’s conduct is willful if it is performed with knowledge or reckless disregard of the law. Punitive damage awards are primarily tools of deterrence and retribution. In determining a punitive damage award courts consider:

• the degree of reprehensibility of the CRA’s misconduct and
• the disparity between the actual damage award and the punitive damages award

Punitive damages must be both reasonable and proportionate to the amount of actual damages to the consumer. The FCRA also allows for statutory damages of between $100 and $1,000 for willful violations. These damages are often pursued in class action FCRA claims. Although the amount of damages may be small to an individual consumer, the benefit of statutory damages is that consumers need not prove harm from a violation of the FCRA.

Attorney’s Fees and Costs

Regardless of the credit reporting agencies conduct, consumers who successfully prove either statutory, negligent or willful violation of the FCRA can recover their attorney fees. This allows many consumers access to an attorney on a contingency or no-fee basis. If a consumer is faced with inaccurate reporting on their credit reports, the first step should be to immediately contact a law firm and seek legal advice from an experienced Washington consumer attorney. For more information on this area of law, see our overviews of consumer law and debt collections.