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Are all mixed file cases willful FCRA violations?

Posted by Brett D. Sherman | Dec 01, 2021 | 0 Comments

In our view, punitive damages under the Fair Credit Reporting Act are appropriate in all mixed file cases. 

To recap from some of our prior blog posts, a mixed file (a/k/a a mIxed credit file) happens — as the name suggests — when a consumer reporting agency (a/k/a a credit bureau or CRA) mixes personal information and/or account data of two or more consumers within credit files. 

The Fair Credit Reporting Act (FCRA) requires consumer reporting agencies to maintain reasonable procedures to assure the "maximum possible accuracy" of the information they report about all consumers. Unfortunately, flawed procedures followed by credit bureaus like Equifax, Experian, and TransUnion are often less than what is reasonable to assure maximum possible accuracy.  As a result, there are countless mixed files at each of those CRAs every year. Why? In our view, there are very basic explanations:

  • It is almost certainly far more expensive for those credit bureaus to implement the type of procedures that would actually assure maximum possible accuracy than it is for Equifax and Experian and TransUnion to maintain flawed procedures.
  • The credit bureaus know that they will be held accountable for their unreasonable procedures by just a fraction of the consumers who actually are victims of mixed credit files. In other words, just a small number of mixed file victims will sue the CRAs each year, and the amount the credit bureaus payout in those lawsuits is far less than those credit bureaus would have to spend to have sufficiently robust systems to minimize the mixed file problem.    
  • To make a potentially long story short, following procedures that the credit bureaus know will result in tons of mixed files is, to them, a cost of doing business.

Surely, Equifax and Experian and TransUnion spend less money on lawsuits than they would need to do to maintain and follow reasonable procedures to assure maximum possible accuracy of the information they report about consumers. Put differently, it is too expensive for credit bureaus to care about the requirements of the FCRA. The result?  A whole lot of mixed files.

We believe that, because the credit bureaus knowingly fail to maintain reasonable procedures to assure maximum possible accuracy, all mixed file cases are willful FCRA violations. The remedies for willful FCRA violations include punitive damages.  As such, while we cannot ever guarantee what a judge or jury will decide, Sherman & Ticchio believes there is a strong case to be made that all mixed file cases are punitive damages cases.

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