Following The Money

An estimated 25% of consumers’ credit reports have errors in them serious enough to cause a denial of credit, according to studies referenced by the National Consumer Law Center (NCLC). Forty million mistakes which are difficult to correct are made on credit reports, and 1 in 10 Americans have errors on their credit reports that might lower their credit scores, per a 60 Minutes Report interview by Steve Kraft. (Elizabeth Warren, A Fighting Chance, p. 313, n. 154; https://www.consumeradvocates.org/media/news/60-minutes-report-40-million-mistakes-your-credit-report-accurate)

One question that immediately comes to mind regarding these alarming statistics is: Who is causing all these errors to appear on your credit reports? For starters, the answer would include retail merchants, financial institutions, debt collection companies and the credit bureaus themselves (especially Equifax, Experian and Trans Union). Sadly, although these entities are obligated by federal law to ensure maximum possible accuracy in reporting your credit information, they frequently have other fish to fry.

In the film All the President’s Men, a secret informant named “Deep Throat” famously directs Washington Post correspondent Bob Woodward to “follow the money” in the Watergate investigation. This is sage advice when it comes to litigation involving false credit reporting.

We recently took the deposition of the president of a debt collection company that was furnishing very derogatory information on a debt that was disputed by our client. When the president was asked why he made the decision to pursue litigation against our client, he responded, “I made a decision that there were assets, and that’s the basis on my decision, as to whether or not there are assets to pursue…And based on my review, I thought that there were assets.” Note that his initial motivation was not to ensure the accuracy of his company’s reporting of the disputed debt, but to determine whether our client had money he could go after. He determined that she did so he gave it the “green light” for the next stage.

Until there is a much better system in place, the greed motivation will continue to predominate in the credit reporting industry. Unfortunately, so long as the foxes continue to guard the hen house you needn’t bother expecting any great zeal in policing the accuracy of the information contained in your credit reports.