A recent court ruling gives insight into what happens when a creditor files a false credit report.
Maybe this has happened to you: You pay off a credit card. The credit card company reports to a credit bureau that you are delinquent on the debt. You dispute the report. The credit card company corrects the report. Then it happens three more times. The credit card company reports default. You dispute. Credit card company corrects. Ridiculous, no? Beyond ridiculous.
The 7th Circuit Court of Appeals addressed this issue in Talley v. U.S. Department of Agriculture where the Department of Agriculture incorrectly reported Mr. Talley delinquent four times. The Ag Department tried to weasel out of liability by disputing that they were not a “person” under the Act’s definition, but the Court was having none of it. But it still illustrates a consumer’s remedies when a creditor makes an improper or false report to a credit bureau.
Creditors Should Be Held To Account When They Make False Credit Reports
Can a creditor get away with this sort of negligence? Fortunately, no.
The Fair Credit Reporting Act protects consumers from, among other things, false information on their credit report. Under the the Fair Credit Reporting Act, any person who willfully or negligently fails to comply with the Act is liable for damages. When a creditor makes a false credit report, the court can punish them monetarily.
What kind of compensation can a consumer get for a creditor’s failure to comply? In the case of willful noncompliance, he can get actual damages of between $100 and $1000 in actual damages, such punitive damages as the court will allow, and costs and attorneys’ fees. In the case of negligent noncompliance, he can get his actual damages and costs and attorneys’ fees.
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