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RE: Correcting Credit Report Errors ---- Virtually Impossible

Postby andimill » Fri Jul 12, 2013 10:18:48 PM

A groundbreaking study by the Federal Trade Commission has found that credit rating errors are far more common than many realize. Among other findings, the Federal Trade Commission found up to 26 percent of Americans have credit score errors and just over 2 percent of Americans have serious errors.
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RE: Correcting Credit Report Errors ---- Virtually Impossible

Postby footloose » Wed Nov 21, 2012 08:48:23 AM

Often those with the least income, skills and means will have the most to lose when it comes to disputing information on a credit report. Not only will this demographic likely to be the least educated about consumer rights and the laws surrounding consumer reporting agencies, they will also be the demographic most harrassed by creditors and collection agencies. Not all creditors and collection agencies are bad. However, one of the threats available in their collection strategy arsenal is to threaten to destroy one's credit history. Since credit bureaus have no statutory obligation to "look behind" a debt, this often leaves the most vunerable section of society at the mercy of unscrupulous creditors and collection agencies.

As was discussed in a previous post, the Small Claims Court of Ontario, a more accessible court, lacks the jurisdiction to order corrections to credit reports. The only option available to correct information on credit reports is to proceed to the Superior Court of Justce. Unfortunately, not having enough to pay a creditor likely means one does have enough to pay a lawyer, let alone court fees or a process server to deliver court documents once an action is commenced.

In Ontario, access to justice issues has been acknowledged and addressed in the creation of administrative bodies such as the Ontario Rental Housing Tribunal, now the Landlord and Tenant Board. The creation of an administrative tribunal to handle credit reporting complaints would be another way to ensure greater access to justice for Ontarians, particularly those on a low income.

An administrative tribunal dedicated to credit report appeals would provide a forum for individuals to resolve a dispute with a credit bureau expeditiously and inexpensively. A tribunal can also process a high volume of cases inexpensively, with less formality and with an emphasis on mediation.

An amended Act and a new Credit Report Appeal Tribunal would also give creditors, consumers and credit bureaus an incentive to ensure ongoing accuracy of information on credit reports. As orders could be binding and legally enforceable, it would be good business and good economics to avoid a proceeding before the Tribunal. The cost and time savings alone would provide enough incentive to ensure compliance.

While credit bureaus may argue that a Tribunal would be another added level of regulation, credit bureaus currently operate in a regulation-free environment in Ontario. The exclusive income source of credit bureaus is information collected about people, often without their consent. Given this incursion into individuls' privacy and financial well-being, it is not unreasonable to require that credit bureaus adhere to a standard of accuracy that permits individuals to effectively challenge their information.

The creation of a new appeal tribunal would require wholesale amendments to the Consumer Reporting Act.

The Act woluld be separated into two distinct parts, with powers clearly delineated. For example, Part 1 would be specifically dedicated to "registration" of credit reporting agencies. This would not be a difficult task, considering there are currently only two true national consumer reporting agencies, Equifax and TransUnion. Part 2 of the Act would be dedicated to the statutory creation of the new Tribunal. It would establish membership, powers, jurisdiction and order-making power. References to the "Director" would be limited to Part 1 of the Act, and powers of the "Registrar" constrained to dealing specifically with consumer reporting agencies' registration issues and concerns.

The amended Act would include a new section requiring a consumer to write the credit bureau requesting an amendment or deletion in the credit report. If the credit bureau denies the request, the credit bureau is required to send a letter to the consumer. The letter would include a statement directing the consumer to file an appeal with the Tribunal if unsatisfied with the credit bureau's response. An appeal could be requested within thirty days of the credit bureau's response. The fee for the appeal would be reasonable. Hearings could be written or oral, at the request of any party to the appeal if permitted by the Tribunal, or on the consent of all parties. A new set of Regulations would have to be enacted through order-in-council establishing the Rules of Procedure of the Credit Report Appeal Tribunal.

It must be kept in mind that the Tibunal would not be a Superior Court. As such, it's jurisdiction and powers would have to be specifically worded and conferred. The Tribunal would be subject to the Statutory Powers Procedure Act. The Tribunal would operate on a civil burden of proof; balance of probabilities. The Tribunal's jurisdiction would be limited to making a decision on whether a debt, judgment or remark or any other piece of information on an individual or corporate credit report is, in fact, permitted to be registered on a credit report. This means a negative remark regarding payment of a debt would have to be supported by documented proof that the debtor actually authorized the debt. Creditors would have to present proof of a bona fide belief that the said debtor actually owes the debt named in the credit report. Further, judgments on a credit report would have to be proved with a certified court order verifying a judgment, and negative remarks would have to be supported by reasonable proof.

Unliquidated debts are debts where an amount owing is not specifically ascertained. An amount "may" be owed but it is not specifically an agreed-to debt. An example would be late fees at a video store. Perhaps under a contract a video renter agreed to pay for "any late fees" incurred, but the amount is not agreed upon. When the video rental company then arbitrarily sets a late fee, reasonable or not, and attempts to collect it, the debt is unliquidated. Unliquidated debts would be prima facie unacceptable to register on a credit report and any reference to them would be struck without any countervailing proof that the debtor specifically agreed to the said debt. A reverse onus would apply to the creditor.

Unliquidated debts are especially concerning in current times as private parking lot operators and "shoplifting recovery companies" ( effectively security guards ) regularly register unliquidated debts on credit reports. For example, private parking lot operators will present persons with "tickets" for trespass if they fail to pay for parking on the private lot. The damages for trespass stipulated on the ticket are arbitrarily set by the parking lot operators, despite the matter never having gone before a judge. Shoplifting recovery companies, on the other hand, will send out demand letters to individuals they have caught and accused of shoplifting, requesting a specific sum of money to compensate the store for the cost of the security service. These individuals may or may not have been convicted of shoplifting. If either the parking ticket or the demand letter is not satisfied, the unliquidated debts are then reported to a credit bureau.

On the other hand, the Tribunal's jurisdiction would not include the ability to decide the merits of the debt itself. For example, if a cellular phone company provided services and rendered a bill to a customer and had a copy of that bill it could present, that bill would satisfy proof of the debt. If the debtor disputed the quality of the service, the debtor would have to take the dispute to the Superior Court of Justice. The Tribunal would have no powers to award damages or compensation for any corresponding economic loss due to incorrect information on a credit report. This is especially important for victims of identity theft who are often viewed suspiciously when they attempt to clear their credit reports of fraudulent information.

Under the amended Act, the Tribunal would have order-making power, and these orders would have a binding effect on credit bureaus. Order-making power would involve orders to amend, delete or add information to a credit report, orders to change a credit rating in a credit report ( i.e. a creditor reports a debtor as 60 days late "R3 Rating" when, in fact, the debtor is only 30 days late "R2 Rating" ) and orders to appoint an investigator ( in cases of systemic problems arising in a credit bureau that affect many people at the same time ).

Orders that were not followed by the credit bureau would be registered in the Superior Court of Justice, and failure to follow the registered order would then be treated as contempt of court.

A proceeding would be commenced by a creditor or a consumer. The creditor may want to register information that the credit bureau refuses to register. The consumer may want to amend or delete information that the consumer believes should not be on the credit report. The named credit bureau would always be a party to the proceedings and would have the choice whether or not to make submissions.

The Tribunal would be led by a chairperson, appointed by order-in-council. The Tribunal would then have a membership body appointed by order-in-council. The membership would be split evenly into quarters: one-quarter of members appointed from a list of nominations from creditors, banks or collection agencies; one-quarter appointed from a list of nominations by Equifax and TransUnion; one-quarter appointed from a list of nominations from consumer groups and one-quarter appointed from the general public.

A hearing panel of the Tribunal would consist of four members ( one creditor, one bureau, one consumer and one public member ). In the event of a tie, the chairperson would make the final decision, considering the reasoning of all of the panel members.

Appeals from the Tribunal could be brought before the Divisional Court, either by express wording in the amended Act or pursuant to the Judicial Review Procedure Act.

The Tribunal would be funded by a hybrid user-pay and government-funded model. For example, a consumer or creditor who initiates a proceeding at the Tribunal would pay an application fee. This fee would then be matched by the responding credit bureau. The fee would also help to limit unnecessary or unmeritorious complaints which are an inevitable reality in any Tribunal.

The reasoning for this funding model is economics and efficiency. Rather than having another level of taxation or fees levied upon a credit bureau, the bureau would be responsible only for responding to matters upon which it is challenged. Considering a credit bureau's unique and priviledged near-monopoly position to hold, sell and share consumer's personal information, it is not an unreasonable cost of doing business to require the bureau to defend the legitimacy and correctness of it's product. The hybrid user-pay model would not, however, be enough to offset the necessary funding from the provincial government to ensure the complete operations of the Tribunal. There would likely, however, be long-term cost savings since courts would be unburdened by any matters dealing with credit reports.

Subsection 96(3) of the Courts of Justice Act states: Only the Court of Appeal and the Superior Court of Justice, exclusive of the Small Claims Court, may grant equitable relief, unless otherwise provided. In effect, despite the Small Claims Court's limitation on equitable relief, a section could be added to the Act permitting the Small Claims Court to make equitable orders in amending, deleting or adding information on a credit report. The Small Claims Court already has an established judiciary and accessible fees and procedures. Second, despite the Court's lack of equitable relief jurisdiction, judgments of the Small Claims Court on the merits of a debt could be submitted to the Tribunal as persuavise evidence to remove remarks on the credit report. Going back to the example of the cellular phone customer, if the Small Claims Court determines that the service was unsatisfactory and the judge orders that the debt should not exist, this judgment could be presented to the Tribunal for consideration in ordering the removal of the debt from a credit report.

In a world where efficiency and speed rule, quick ways to make informed judgments on business and risk are preferred. Verifying information on a consumer credit report is a logical way of doing this. Unfortunately, there is no practical way for a consumer to appeal and correct information on a consumer credit report resulting in an unequal and potentially oppresive situation where creditors can unilaterally punish an alledged debtor simply by sending information to a credit bureau.

Credit bureaus are middlemen that choose to distance themselves from creditor-debtor disputes, characterizing their operations as reporting agencies that report the facts alone.

Since 2000, Ontario alone has seen an unprecedented rise in Superior Court litigation aimed at credit bureaus and creditors that report allegedly incorrect credit information. There have also been privacy complaints to the federal privacy commissioner regarding credit information.

The Ontario Court of Appeal has recently recognized the inherent importance that credit reports play in our lives. Realistically, only well-informed, substantially wealthy Ontarians have the knowledge, time and money to exercise their rights and challenge creditors and credit bureaus on information contained in their credit reports. The average Ontarian is left at the mercy of creditors and collection agencies-----some of whom choose to report debts that, in good conscience and at law, should rightfully, not be reported.

A Tribunal would be a public acknowledgment by the Government of Ontario that consumers have solid rights to control information about themselves------information that affects the ability to get a mortgage, find accommodation and secure things as basic as employment. Enough time has passed without the law addressing the need to treat credit reports as a fundamental piece of personal information that directly affects an individual's ability to secure housing and employment in Ontario. A Tribunal would provide a forum where individuals can resolve disputes regarding their personal credit information.

Expensive and time-consuming litigation should not be the only option to protect an individual's personal information contained in a credit report.

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footloose
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Correcting Credit Report Errors ---- Virtually Impossible

Postby footloose » Sun Apr 17, 2011 10:14:58 PM

Litigation challenging the accuracy of information on credit reports is a relatively new phenomenon. This may be due to the economy's growing reliance on credit information as an efficient way to verify not only creditworthiness, but reliability. In Haskett v. Equifax Canada Inc. the Court of Appeal stated: “Credit is an integral part of everyday life in today's society. Not only people seeking loans, mortgages, insurance or car leases, but those who wish, for example, to rent an apartment or even to obtain employment may be the subject of a credit report and its contents could well affect whether they are able to obtain the loan, the job or the accommodation. Credit cards are a basic form of payment but their availability is also limited by one's creditworthiness. Without credit, one is unable to conduct any financial transactions over the telephone or on the internet. As credit is so ubiquitous, there is nothing exceptional about consumer reliance on credit reporters to carry out their function not only honestly, but accurately, with skill and diligence and in accordance with statutory obligations.”

Litigation regarding information on credit reports takes on two forms. The consumer will either commence proceedings against the creditor who reported the allegedly incorrect information to the credit bureau, or the consumer will commence proceedings against the credit bureau directly for failing to correct disputed information on the credit report. The balance of this post will discuss these two forms of litigation.

Haskett ( Glenn ) is the leading case in Ontario on the duty of care owed by a credit bureau to a consumer regarding reported information. The Haskett decision resulted from an appeal by Haskett of a successful Rule 21.01 (1)(b) [of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194] motion ( striking a claim as disclosing no reasonable cause of action ) by Equifax Canada Inc. and Trans Union of Canada Inc. Haskett was a representative plaintiff in two proposed class actions against Equifax and Trans Union, which had not yet been certified under the Class Proceedings Act, 1992.

On the original motion, the motion judge dealt with three theories of liability: breach of fiduciary duty, invasion of privacy and negligence. After dismissing the first two theories, the motions judge dealt with the negligence claim by holding that although the respondents ( Equifax and Trans Union ) could owe the appellant a duty of care, there were policy reasons for declining to consider a cause of action in negligence. The order of the motion judge was set aside and Haskett was allowed to proceed with the cause of action of negligence.

Haskett has a MBA and was a real estate broker in Toronto.

In the early 1990's, he was obliged to make a voluntary assignment in bankruptcy when third parties breached their obligations to him during the recession. After he was discharged in November, 1996, he had consistently been denied credit, despite making uninterrupted earnings in excess of $75,000 annually, having significant assets and meeting all of his debt obligations. Haskett later discovered that Equifax and Trans Union had continued reporting pre-bankruptcy debts on his credit report allegedly in contravention of Paragraphs 9(3)(a) and (f) of the Consumer Reporting Act. In allowing Haskett's appeal, a unanimous Court of Appeal considered whether an action against a credit bureau for reporting incorrect information should proceed as a claim in negligence. The Court of Appeal reviewed the two-stage negligence test and considered whether a claim against a credit bureau could fit neatly into the category of negligent misrepresentation or be a novel cause of action. The court concluded that, regardless of the matter fitting into the established category of negligent misrepresentation or not, there existed a duty of care between credit bureaus and individuals about whom credit information is reported. The court held that claim for negligence is available for incorrect reporting of information.

It is interesting to note that there is no provision in the Consumer Reporting Act for the awarding of general or punitive damages to a successful plaintiff. However, under Subsection 21(1) of the Act, there is a provision for the Director ( as defined by the Ministry of Consumer and Business Services Act ) to investigate a contravention of the Consumer Reporting Act and apply to the Superior Court of Justice for a restraining order directing a Consumer Reporting Agency to comply with such a provision and upon the application, the court may make such an order as the court deems appropriate. This is the only remedy available to an aggrieved consumer regardless of what financial hardship and loss of financial opportunity the consumer may have suffered due to faulty and inaccurate reporting of credit information.

In Neil ( Leslie Kenneth ) v. Equifax Canada Inc., an appeal to the Saskatchewan Court of Queen's Bench, the court upheld the lower court's decision that the credit bureau had been negligent in failing to correct erroneous information on an individual's credit report in a reasonable amount of time. In Neil, the respondent/plaintiff was a lawyer who had applied for a credit union loan and was declined because of a judgment registered on his credit report. It was revealed upon investigation that the judgment was against the plaintiff's client and was incorrectly added to Mr. Neil's credit report. In describing the standard of care of credit bureaus, Mr. Justice Krueger stated: “The standard of care contained in Section 19 of the The Credit Reporting Agencies Act provides: Every credit reporting agency shall take reasonable steps to assure the maximum accuracy of any information in a credit report. As providers of credit information to lending institutions, credit reporting agencies are in a position to exert considerable influence of the credit rating of individual consumers. Any error in the information reported to a lending institution has the potential of affecting the success of individual endeavors. Maximum accuracy is the goal in recording and disseminating credit information. The standard is understandably high”.

This case was originally heard in the Small Claims Court division of the Provincial Court of Saskatchewan. At the conclusion of the trial, Provincial Court Judge O'Hanlon awarded Neil damages as follows:
1. $448 for loss of billable hours.
2. $4,500 as punitive or exemplary damages.
3. $50 as costs of issuing the summons.

On appeal by Equifax Canada Inc. to the Saskatchewan Court of Queen's Bench, Justice Krueger reversed the award of $4,500 for punitive or exemplary damages. He said that “punitive damages are awarded in situations where the misconduct is so malicious, oppressive and high-handed that it offends the court's sense of decency. Punitive damages are only awarded in circumstances where the combined award of general and aggravated damages would not be sufficient to achieve the goal of punishment and deterrence”.

In Birchill Home Sales Ltd. v. Equifax Canada Inc., a Nova Scotia Small Claims Court decision, Adjudicator Richardson, described the duty of care of credit bureaus as follows: “For the purposes of what follows, I am prepared to accept that the Defendant owes a duty of care to people whose credit files are maintained by it to take reasonable steps to ensure the files are reasonably accurate.” In Birchill, the plaintiff claimed that as a result of inaccurate information about three outstanding lawsuits, all of which had settled, the company was unable to obtain financing for a housing project. Consequently, the plaintiff was forced to sell homes before completion at a loss. Adjudicator Richardson dismissed the plaintiff's claim, finding that Equifax corrected the record promptly after being advised of the error by the plaintiff.

Creditors, like credit bureaus, have also been held liable for reporting incorrect information regarding consumers to credit bureaus. Courts have found credit bureaus liable for reporting incorrect or false information in actions framed as negligence or defamation. On the other hand, courts have refused to establish a unique cause of action framed as “intrusion of financial integrity”.

In Clark ( Robert Neil ) v. Scotiabank, for example, the plaintiff commenced an action after continually being declined loans between 1994 and 2000. The plaintiff contacted Equifax and was told that if an error existed on his credit file, it would be corrected. The plaintiff contacted both Equifax and Scotiabank repeatedly but did not put his complaint into writing until 2000. At that point, Equifax discovered that the error was a delinquent loan of a person with the same last name as the plaintiff and was erroneously reported on the plaintiff's credit report. In awarding damages of $5,000 against both Equifax and Scotiabank, Justice Day stated: “I further find that Equifax and Scotiabank breached their duty of care to Mr. Clark when they failed to take reasonable care with his credit rating.”

Scotiabank has admitted their failure. While Equifax could not be blamed for applying information provided by Scotiabank, they indeed can be faulted for not responding to the plaintiff's repeated requests for clarification over the span of years. However, in overturning the award to Clark, and allowing an appeal by Scotiabank, the Divisional Court stated: “We are of the view that there is no cause of action known to law which corresponds to what the trial judge labeled as “intrusion on financial integrity”. Although we can not be certain what the underlying elements of the award were, it falls under “other general damages” in the Reasons and appears to refer to the exposure of the plaintiff to the error which occurred in the credit records pertaining to the plaintiff in the files maintained by Equifax. That error occurred because of the confusion of the plaintiff with another person whose name was similar to the plaintiff's that resulted in an unwarranted low credit rating being attributed to him and reported by Equifax to others. Although the error resulted in some understandable frustration and inconvenience to the plaintiff, there was no actual monetary loss proven by him or compensable psychological damage.”.

In effect, the Divisional Court's decision in Clark closed the door to a new cause of action being established in Ontario that specifically permits a litigant to assert specific legal rights in regards to the integrity of information reported to a credit bureau by a reporting creditor. Litigants are required to fit their grievance into a pre-existing cause of action such as negligence or defamation in order to hold a reporting creditor liable.

Millar v. General Motors of Canada Ltd. involved a dispute between a consumer and General Motors. The plaintiff had leased a new Yukon SLE truck. Immediately after leasing the truck, the plaintiff began to notice defects. The plaintiff returned the vehicle and General Motors sold the vehicle, yet charged the plaintiff for the $1,000 shortfall and reported the transaction as a “repossession” to credit bureaus. Despite the plaintiff's request, General Motors refused to remove the information from the plaintiff's credit report. The plaintiff framed his action in defamation, intentional interference with economic relations and breach of obligations under the lease agreement. Regardless of the framing of the cause of action, Justice Seppi found General Motors liable for the increased interest rate on a personal loan as a result of the negative information on the plaintiff's credit report. Furthermore, Justice Seppi made an order deleting the information from the plaintiff's credit report and found General Motors liable for damages for breach of its obligation to provide accurate and complete information. The finding in Millar was consistent with the defamation approach applicable to information reported in error by parties on credit reports in the United States. In Dun & Bradstreet Inc.v. Greenmoss Builders Inc.the United States Supreme Court held that Dun & Bradstreet Inc. a company in the business of selling financial and credit reports about businesses, was liable for defamatory statements made in a credit report that incorrectly reported that Greenmoss Builders had previously filed for bankruptcy.

On the other hand, in Houseley v. Global Credit Collection Inc. Deputy Judge Kilian found the defendant collection agency was negligent in reporting an unliquidated debt to the credit bureau without even investigating the source or reason for the debt. No damages were awarded to the plaintiff since he failed to establish that the negative statement on the credit report caused him harm. No correction of the credit report could be ordered as the Small Claims Court in Ontario does not have the jurisdiction to order equitable relief pursuant to Subsection 96(3) of the Courts of Justice Act.

Despite the relative laxity of provincial consumer protection legislation and federal private sector privacy legislation in regards to consumer credit agencies, the courts in Ontario appear open to holding credit bureaus and reporting creditors liable when they are negligent in reporting information on a consumer's credit report. While this is a welcome evolution of consumer protection law, it also raises issues of access to justice and judicial efficiency. Not all individual consumers have the expertise nor can they afford litigation against a corporation like Equifax. Furthermore, litigation involving negative information on a credit report requires the entire judicial process of a civil action, which further backlogs Ontario courts.

On my next blog, I will discuss a process that could quickly resolve errors in the reporting of credit information by both creditors and credit bureaus.

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Educating one Consumer at a time

footloose
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RE: Correcting Credit Report Errors ---- Not Quite Impossible

Postby DanielBl » Mon Aug 16, 2010 08:08:18 AM

As per Footloose's comments

"......Consumers who are unhappy with an entry on a credit report can file a complaint under the Act with the Registrar. If they are unhappy with the response of the Registrar, they can further appeal that decision to the Licence Appeal Tribunal pursuant to Subsection 14(3). However, it should be noted that since 2000, not one appeal regarding incorrect information on a credit report has been brought before the Licence Appeal Tribunal. The lack of appeals is clearly not due to a lack of disputes over information contained in consumer credit reports. Rather, as the Registrar of Consumer Reporting Agencies only has the limited legislative authority to order the amendment or deletion of true errors (i.e. technical), not the jurisdiction to "look behind" the information. An appeal to dispute the veracity (truthfulness) of information in a credit report is pointless. In effect, an appeal to the Licence Appeal Tribunal, while in form is an appeal from a decision of the Registrar, regarding information on a credit report, is in substance not going to result in a discussion or challenge of the merits in an alleged negative entry on a credit report. Again, in practice, the Act provides no real protection to a consumer who disputes information on a credit report......"

I night have also added the purpose of the Licence Appeal Tribunal is NOT to settle issues of incorrect data on consumer credit files PER SE, but to ensure the credit bureau, in order to maintain its licence, is not breaking the Consumer Reporting Act or other legislation. For example, if they knowingly and wilfully were reporting first bankrupticies longer than 7 years, that would be contrary to provincial legislation and proper material for a hearing.

If someone complained their first bankruptcy was still on their credit file for 10 years, then they would/should have recourse to the Tribunal, if the Consumer Protection complaint and subsequent mediation process failed. Not sure why Haskett, in the previous example, took them to Superior Court, using the "simplified procedure" (which is fairly inexpensive by the way) as opposed to first going to the Tribunal.

In any event, the stuff posted by Footloose about how the bureaus perform diligent, investigative reports on disputes is taken from bureau literature in many places. Most of that stuff is strictly boilerplate; it doesn't at all match what really goes on. In fact, even when they have original confirming documents, TransUnion can't be counted on to amend consumer files within 30 days - or to do so at all. Their policy on hard pulls widely contravenes provincial legislation, but they remain unabashedly defiant, allowing their high paying collection agency and debt buying members free reign. Same with Equifax.

Yes, you can challenge them, assuming you're assertions are true, but you've got to be prepared for a fight - and few are.

Part of this dismal situation arose out of an earlier period when credit repair entrpreneurs were saturating the market. They blatantly advertised they could amend most consumer files by challenging the credit bureaus' data.

The charleton's asserted the credit bureaus had 30 days to ensure the data on a file was accurate and verifiable or it had to be removed. As a result, consumers were led to believe they could bluff the bureaus by sending in largely pointless reverse onus claims.

The bureaus are set up to to make big money fast, and not waste time being tied up with consumer complaints, especially bogus ones. As a result, they developed the boilerplate facade one sees today and began shipping most of their "customer response teams" over to the Philippene call centres where "credit resolution specialists" will get rid of you for 10 pesos an hour. At least Transunion does; and the ones Equifax hire in Canada are not much better, if at all.

And the government responded by not legally allowing the credit repair operators to do any billing until they had acheived at least some positive result for their clients.
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RE: Correcting Credit Report Errors ---- Not Quite Impossible

Postby DanielBl » Sun Aug 15, 2010 10:36:19 AM

http://rc.lsuc.on.ca/jsp/pageFromCLE/loadPageCleMonth.do?id=41#_ftnref12

Hmmm. Well, as you can see from the above excerpt on the LSUC website, the case of Haskett v. TransUnion of Canada Inc. indicates that the courts still don't consider the false reporting of negative credit information to be a reasonable cause of action. However, that prevailing jurisprudence might morph into a full tort if consumers were more vigorous in persuing what are, in fact, very real (and often consequentially expensive) wrongs.

That's why the 2 credit bureaus only pay perfunctory attention to Section 13.1 of the Act. Even when consumers submit original account statements correcting the errors, whether in person, by phone, or via registered mail, they will still likely be ignored.

Equifax and TransUnion rest confident doing this because they know the legislation is pretty toothless; and, more significantly, there's an unwritten but very real, organized and long established spirit to not enforce it. Thus most consumers will let the matter die after receiving one of the bureaus' letters of refusal. Such inane boilerplate "investigative" parodies are churned out by the millions; and very few overcome their intimidation or inertia to challenge them.

However, if every aggrieved consumer took them to Court (like Haskett did with TransUnion) or demanded a mediation hearing with Consumer Protection, government regulators AND the bureaus would soon get the message.

If you haven't got the original documentation, force the collection agency or debt buyer to give you their file copies via PIPEDA. You'll probably have to fight to get them to obey the Law, but they ultimately will have to. Then get the phone number of their designated compliance officer. Frankly, in most comapnies, it's only a token postion for superficial legal compliance. Nevertheless, for obvious reasons, the first line of attack should always be to bug the compliance person to make the correction with the bureaus.

Should that fail, go into the credit bureau with the documents proving your case. However, that obviously may not be feasible for those having to travel great distances. All they can do is call or send registered mail. Even then the bureau will probably stall, lie or stonewall their efforts because they're there to serve their high paying members (and not consumers, who they regard as a nuisance/cost of doing business.)

Give the bureau the direct phone number of the compliance officer and tell them to call it if you can visit in person, or while on the phone to one of their their Canadian offices. If you call TransUnion though, you will almost certainly only reach their dismal Philippene call centres, who are paid 10 pesos an hour to get rid of you asap, Don't waste your breath on these frustration factories; instead try to reach a Canadian office.

If these efforts fail - and they may - keep a record of your correspondence with the bureaus so you have a written record of their lies and wilful carelessness. Reporting credit errors is not against the Consumer Protection Act, but deliberate carelessness or knowing deception is. Failing to "look behind" a piece of faulty credit reporting info is one thing, but deliberately ignoring evidence contradicting it is a more serious matter. In fact, the LSUC as of 2008, reported privacy invasion via negligence was being viewed as an "embryonic tort" of sorts. This gives the consumer a more cogent case when requesting mediation and tying them up with it.
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RE: Correcting Credit Report Errors ---- Virtually Impossible

Postby footloose » Sun Apr 17, 2011 10:40:41 PM

Credit bureaus are covered by provincial jurisdiction in Canada. In Ontario, credit bureaus are regulated by the Consumer Reporting Act [Act]. Under Section 3 of the Act, credit bureaus have to be registered to operate in Ontario. The Act and its corresponding regulations are administered by the Ministry of Government Services. Credit bureaus are subject to the regulation and order-making power of the Registrar of Consumer Reporting Agencies [Registrar]. This order-making power includes the power to compel credit bureaus to "amend or delete any information, or by order restrict or prohibit the use of any information, that in the Registrar's opinion is inaccurate or incomplete or does not comply with the provisions of this Act or regulations".

The Act lays out a very low threshold that a credit bureau must meet in addressing the complaint of a consumer. In particular, a credit bureau must use its "best endeavours" in accordance with "good practice" to confirm or complete the information in a credit report. Subsection 13(1) of the Act reads:

"Where a consumer disputes the accuracy or completeness of any item of information contained in his or her file, the consumer reporting agency within a reasonable time shall use its best endeavours to confirm or complete the information and shall correct, supplement or delete the information in accordance wih good practice."

The Act does not provide a definition of "best endeavours" or "good practice". The jurisdiction of the Registrar to order amendment or deletion, however is limited to actual "technical" errors on a credit report, or to situations where the credit bureau did not make "best endeavours" in a "reasonable time" to verify the information.

The Registrar does not consider incorrect or inaccurate information reported on the credit report. The Registrar has no obligation to "look behind" information on a credit report and ask the credit bureau or creditor to furnish proof of a debt. The Act contains offense sections that make it illegal to "knowingly report incorrect or false information on a consumer's credit report".

The Collection Agencies Act in Paragraph 28(10)(c) makes it an offence to "knowingly" contravene the Act and regulations. Moreover, Section 22 of the Consumer Reporting Act prohibits a person from "knowingly" supplying false or misleading information to another who is engaged in making a consumer report.

Consumers who are unhappy with an entry on a credit report can file a complaint under the Act with the Registrar. If they are unhappy with the response of the Registrar, they can further appeal that decision to the Licence Appeal Tribunal pursuant to Subsection 14(3). However, it should be noted that since 2000, not one appeal regarding incorrect information on a credit report has been brought before the Licence Appeal Tribunal. The lack of appeals is clearly not due to a lack of disputes over information contained in consumer credit reports. Rather, as the Registrar of Consumer Reporting Agencies only has the limited legislative authority to order the amendment or deletion of true errors (i.e. technical), not the jurisdiction to "look behind" the information. An appeal to dispute the veracity (truthfulness) of information in a credit report is pointless. In effect, an appeal to the Licence Appeal Tribunal, while in form is an appeal from a decision of the Registrar, regarding information on a credit report, is in substance not going to result in a discussion or challenge of the merits in an alleged negative entry on a credit report. Again, in practice, the Act provides no real protection to a consumer who disputes information on a credit report.

Despite the significant technological changes over the last thirty years to consumer credit reporting, the Act has remained essentially unchanged from its original state when it was passed in the 1970's. At the time, the original Consumer Reporting Act was passed, consumer reporting agencies tended to be decentralized county by county across Ontario. Reporting agencies received and reported information based on phone calls and letters from local creditors. Over the past thirty years, a U.S. based credit bureau, Equifax, has bought smaller credit bureaus. As a result, credit reporting has become centralized and credit information is sent by direct, secure electronic transfers from creditors to the credit bureaus. Thus, errors that were common before automation have decreased significantly, hence the authority of the Registrar under the Act is rarely exercised.

Ontario lacks provincial private sector privacy legislation. As such, in January 2004, the Personal Information Protection and Electronic Documents Act [PIPEDA] began to apply to all private companies in Ontario that collect, use or disclose personal information in the course of any commercial activity. "Commercial activity" is defined in the legislation as being any activity that is of a commercial character and includes sales and purchases as well as barters and exchanges.

PIPEDA incorporates ten "principles" regarding the collection and use of personal information. One of these principles is accuracy -- this means not using inaccurate or out-of-date personal information to make decisions about the individual. The logical result is that individuals have a right to correct personal information that is incorrect. Unfortunately, the privacy commissioner does not issue reported decisions or orders in relation to complaints regarding the application of PIPEDA. Instead, she issues "Case Summaries". These case summaries do not name the parties to the complaint, even when the subject of the complaint is found to be in contravention of PIPEDA. Further, the Case Summaries have no legally binding effect and are only morally persuasive on credit bureaus.

Equifax and Trans Union are subject to the authority of PIPEDA. In fact, the privacy commissioner of Canada has several Case Summaries that deal exclusively with information held by consumer credit reporting agencies.

On the Ontario Ministry of Small Business and Consumer Services website, the Province of Ontario acknowledges the awkward state of privacy legislation governing credit bureaus.

Many consumers believe credit reporting is an invasion of their privacy. Remember, that information recorded in the credit files is based on facts and not arbitrary judgements. Therefore, a trade-off of a certain amount of your privacy is necessary in order to obtain such benefits as credit.

In effect, the only legislative duty a credit bureau in Ontario has to a consumer in regards to alleged "incorrect" information is to reasonably verify that the information provided by a creditor is correct. In practical terms, this means calling the creditor and enquiring if a debt exists. There is no requirement for the credit bureau to ask a creditor for proof of the debt, since a simple assurance will suffice to meet the duty legislated by Subsection 13(1) of the Act.

Collection agencies and creditors have a carte blanche with some exceptions, to add negative credit information to a consumer's credit report. There is no true due process model to permit the consumer to challenge a creditor on the veracity (truthfulness) of the alleged debt. The consumer who denies responsibility for a debt does not have an appeal process available under the Act, but instead, would have to bring the discrepancy to court by way of litigation. Ontarians are thus left with a legislative scheme regulating credit bureaus that was implemented in the 1970's that addresses only technical errors or omissions on credit reports and fails to recognize privacy concerns of citizens. To date, there is no binding legislative or administrative tool for a consumer to challenge or dispute incorrect information on a consumer credit report.

The current appeal process available to a consumer who disputes information contained in a credit report is less than transparent. Both Equifax and Trans Union have a "dispute resolution" process, but it requires only that the credit bureaus "within a reasonable time shall use its best endeavours to confirm or complete the information".

The test inherent in this statutory requirement is "reasonableness". What does this mean in practical terms? If a creditor confirms that the debt is real, then it is real. The credit bureau is not required to "look behind" the debt to confirm such critical information as a signed contract, a document authorizing a debt or any other proof legitimizing a debt.

Equifax and Trans Union have very similar internal appeal processes that allow a consumer to challenge information on a credit report. For purposes of this blog, only Equifax's policy will be reviewed. Equifax describes its "Dispute Resolution" policy in the following words:

"First we review and consider the information you have sent us about your dispute. If this initial review does not resolve the problem, we will continue our investigation. This involves contacting the submitter of the disputed information on your behalf to review the details. They will investigate and report their conclusions to us. Based on their findings, we may make changes to your credit file. If the disputed information is correct, we will not make any changes."

We will send you a revised credit report if changes are made as a result of the Dispute Resolution process. It should be noted that the internal "appeal" process involves simply asking a creditor if the information is correct ---- based on "their findings". If a consumer says that the debt does not exist, but the creditor continues to affirm it exists, it is not likely that Equifax will amend or remove the information since it is impossible for a third party [Equifax] to make changes in your file if the facts have been correctly reported. Of course, the issue in question is how "the facts" are established. Under current legislation in Ontario, "the facts" are what a creditor says they are PERIOD.

The only small condolence available to the consumer, should Equifax refuse to amend or remove information on the credit file, is the short statement Equifax will permit the consumer to add to a credit report.

"If you still do not agree with an item after it has been verified with the submitter, you can send us a brief statement explaining that you disagree. We will add this statement to your credit file and it will be shown every time that your credit file is reviewed."

What Equifax does not mention is that the disputed information still has a negative impact on one's overall credit score. Most credit grantors do not even look at the overall credit report, instead relying on one's FICO, BEACON or Empirica score. (FICO stands for Fair, Isaac and Company [credit scoring model]. BEACON and Empirica are Credit Bureau scores. BEACON is calculated from a customer's Equifax credit file and is used to understand a customer's likelihood to repay. The score uses a mathematical equation that evaluates information on the customer's credit file compared to information patterns in millions of past credit files. BEACON scores range from 300 to 900. The higher the score, the lower the risk to creditors. The Trans Union equivalent of the BEACON score is the Empirica score.) If the score is high enough, credit will likely be extended. If not, the creditor may look behind the score and read the credit report. Generally, the accepted practice is that a prospective credit grantor will treat any information on a credit report, regardless of a consumer's comments as the gospel truth. In effect, any disputed information on a credit report is de facto negative information.

The last resort to disputing incorrect information on a credit report is through the judicial system. A consumer can commence an action in the Small Claims Court of Ontario, a more accessible court. However, it lacks the jurisdiction to order corrections to credit reports. Subsection 96(3) of the Courts of Justice Act, R.S.O, 1990, c. C43 reads: "Only the Court of Appeal and the Superior Court of Justice, exclusive of the Small Claims Court, may grant equitable relief [authority to issue a court order to require a credit bureau to amend, cancel or delete information on a consumer's credit report] unless otherwise provided". Therefore, in Ontario, there is only one practical way to appeal disputed information on a consumer credit report: initiating litigation in the Ontario Superior Court of Justice.

On my next blog, I will discuss the current state of litigation as it relates to correcting errors on credit reports.

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Educating one Consumer at a time
footloose
Member
Posts: 654
Joined: Mon May 31, 2010 07:12:21 PM
Province: ON


Correcting Credit Report Errors ---- Virtually Impossible

Postby footloose » Sun Apr 17, 2011 10:17:12 PM

As the James Browns of Ontario know all too well, it is not easy sharing a name with thousands of other people. Sometimes, it is a simple mistake in receiving another James Brown's mail, but other times it is a collection agency hounding him for an unpaid cell phone bill. The problem is he does not own a cell phone nor has he ever owned a cell phone. In fact, he has never used the services of the cell phone company, nor has he ever heard of the company and the collection agency is contacting the wrong James Brown. Even worse, when James Brown applies for a line of credit at the bank, and is declined because of an allegedly unpaid cell phone bill he has never heard about.

The situation may also arise when there is a confusing call from a creditor, a random Internet company with whom he has never done business. However, the creditor has James Brown's address, banking information, and perhaps his social insurance number. "Pay up or we are reporting you to the credit bureau," threatens the creditor. Unfortunately, James Brown's wallet was stolen last week and he is now the victim of identity fraud. Too bad ---- James Brown is going to be reported as a delinquent debtor to Equifax Canada Inc. [Equifax] and to Trans Union of Canada, Inc. [Trans Union], Canada's two national credit bureaus.

Equifax and Trans Union are private companies in the business of collecting credit information about consumers. In their own words, they take no responsibility for the information about a consumer that appears in their databases. Credit bureaus passively receive information from creditors and add this information to an individual's credit report.

If you have ever applied to own a cell phone, or if you have ever applied for a credit card and even if you have a bank account, you have a consumer credit report with either Equifax or Trans Union. So don';t blame Equifax or Trans Union for incorrect information. In other words "don't shoot the messenger". Equifax and Trans Union receive millions of bytes of information every day regarding individual consumers. The information comes from banks, credit unions, utility companies, student loan lenders, collection agencies, credit grantors, parking lot operators and yes, even your local video store (regarding late payments, unpaid accounts and late fees on a DVD rental last year).

The problem with so much data is that there is bound to be an error. For example, James Brown, who lives in London, Ontario is incorrectly blamed for a late mortgage payment expected from James Brown who lives in Kingston, Ontario. In the worst case scenario, there may be a nefarious (extremely dishonest) comment on a credit report that does not even belong to the credit report's owner as a result of a case of fraud or identity theft. What can James Brown do to correct the information on his credit report? He could write to Equifax or Trans Union to dispute the incorrect information. If Equifax and Trans Union deny James Brown's request, where can he turn to appeal this decision in Ontario?

In my next blog, I will discuss credit bureaus, the role of the Registrar, the Licence Appeal Tribunal and the Consumer Reporting Act..

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Educating one Consumer at a time
footloose
Member
Posts: 654
Joined: Mon May 31, 2010 07:12:21 PM
Province: ON


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