Experian, one of the three credit reporting agencies, has agreed to pay $22.45 million to settle a class-action lawsuit accusing it of failing to properly verify false information sent out in consumers credit reports to third parties.
As a result, the lawsuit claims many consumers were wrongfully denied credit opportunities they would otherwise have received if all the information in their reports had been correct.
The problem lies with Experian’s Fraud Shield, which is supposed to alert creditors to potential consumer risk, Consumer Affairs reported.
Consumers eligible for compensation include those mischaracterized by Experian as having a place of residence that was “high risk” in false credit reports sent out between July 1, 2018, and July 31, 2021,
Some of those who contacted Experian to dispute information in their credit report that said they lived in a high-risk area or that their address was not a residence will receive a cash payment under the terms of the Experian settlement.
Plaintiffs in the Experian class action lawsuit say Experian caused them financial harm due to denied credit opportunities. One plaintiff said her mortgage modification was “derailed” when Experian reported her home address was a business building, Top Class Actions reported.
“Experian continues the practice of parroting the response from the furnisher even though it has been repeatedly sued for failing to conduct a reasonable investigation as required by the FCRA (Fair Credit Reporting Act)”, the Experian class action lawsuit claims.
The more consumers who participate in the settlement, the smaller the payments will be with payment estimates now ranging from $300 to $900.
As part of the settlement, Experian says it will change how it discloses and resolves Fraud Shield Indicator disputes for at least the next five years.
Members of the Money Class can only receive payments if they submit a valid claim form by Jan. 30, 2023. Consumers can submit a claim here, according to Consumer Affairs.