This post, written by Alexa Pugh, comes from our partner site LearnVest.
Having errors on your credit report can spell financial doom—but for Julie Miller, it was a windfall.
After hounding credit bureau Equifax with 13 letters over the course of two years urging them to amend errors on her report, she finally sued and won $18.4 million in punitive damages–more than has ever been awarded in a similar case.
Miller registered about seven official disputes, but almost every time was told by Equifax that she hadn’t provided sufficient proof of identity. Even after she submitted a pay stub, her driver’s license, W-2 form and insurance bill, the company still wouldn’t process her request.
Miller was the victim of what’s called a “mixed file, ” or when information from one person is assigned to another person with a similar name. Miller’s report listed the wrong social security number, date of birth and 38 collection accounts that were erroneously attributed.
Could you have a mixed file?
Though credit bureaus (the big three are Equifax, TransUnion and Experian) are obligated to investigate cases of misattributed information or mistaken identity under the Fair Credit Reporting Act, they are often slow to act, if they act at all.
Consumers may be shocked to learn that assigning information to a credit report is an inexact process in the first place—only the majority of the identifying data needs to match in order for a computer to feed credit information into an account. In some cases, the social security number or date of birth is off by a few digits or years.
These partial matches occur for an estimated 2-4 million consumers and despite the fact that the complicated error needs to be fixed manually, most cases are handled by an automated system.
Credit bureaus argue that they would rather include too much information on a report than too little. In their eyes, having someone mistakenly assigned bad credit is better than someone with bad credit habits getting off scot-free, consumer lawyer Leonard Bennett told the New York Times.
But for credit bureaus, it costs less to leave errors unresolved and count on settling complaints out of court. “They can buy off a number of consumers with small dollar amounts and get rid of the vast majority of cases. To Equifax, that’s the cost of doing business, ” Justin Baxter (the lawyer who headed Miller’s case) told the Times.
Some experts say Miller’s case still won’t be enough to jolt the industry into changing its ways, though others are more optimistic.
“If they have to pay $2.5 million every time one of these folks gets to court, they might have to reconsider their procedures, ” Bennett added. Although that’s one option, it’s more likely that better practices will follow from regulations imposed by the Consumer Financial Protection Bureau, the Times reported.
In the meantime, consumers who spot an error in their reports may be in for a fight.
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