Periscope PERSONAL FINANCE
20 NEWSWEEK.COM OCTOBER 04, 2019
a recent five-year period, it had gen-
erated 24 million consumer reports,
and that its reports had an overall dis-
pute rate of only 0.2 percent—which
would be about 48,000 disputes about
multiple issues, including mixed files,
during that time. In a 2016 decision on
the case, the 6th U.S. Circuit Court of
Appeals called this rate “remarkably
low.” Richman would not provide
additional detail but called the inclu-
sion of inaccurate data in its reports
“rare.” These numbers are unlikely to
reflect the extent of the problem, says
Francis, whose firm litigated the issue.
“That only would address the number
of people who disputed, not the num-
ber of errors that are actually created.
And not everybody disputes.”
A 2004 report by the Federal
Trade Commission found that credit
reports by Experian, Equifax and
TransUnion contain Social Security
numbers that are off by a digit or two
about 1 percent to 2 percent of the
time. A 2012 follow-up report found
that, for credit reports with disputed
collection information, data that
didn’t belong to the consumer was
alleged in 84 percent of cases. About
40 percent of those consumers were
unable to find a resolution after a dis-
pute, the FTC reported. Accusations
of incorrect information make up
more than half of the credit or con-
sumer reporting complaints the Con-
sumer Financial Protection Bureau
receives, according to a 2018 report.
And mixed files are a common prob-
lem Kelly sees in her cases with data
brokers. She says a lot of her clients end
up suing “the same consumer report-
ing agencies, including LexisNexis,
over and over for the same violations
because they don’t correct them.”
OPERATING IN THE “WILD WEST”
Complicating matters is the lack of
federal regulation of consumer data.The Fair Credit Reporting Act (FCRA),
which entitles you to free annual
reports and prompt resolution of dis-
putes, among other things, applies to
some LexisNexis reports, but not all.
There is no comprehensive federal
regulation covering the data broker
industry—just a few state laws and
some federal statutes regulating par-
ticular types of consumer data, many
dating from the 1990s and earlier.
Lawmakers have proposed fed-
eral regulations in the past year that
would affect data brokers, including
laws that would expand protections,
allow more thorough consumer opt-
outs and levy stricter penalties on
executives of companies found to be
violating the rules. But Santa Clara
University’s de la Torre, who is also
of counsel at Squire Patton Boggs,
doesn’t think any will be passed in
the next couple of years because of
other government priorities.
For now, many companies are oper-
ating “in the Wild West, and they justdo whatever they want,” says Francis,
the consumer lawyer.
Even on reports governed by the
FCRA, Francis says companies’ prac-
tices for data retrieval can fall short
of the FCRA standard, which requires
credit reporting agencies maintain
“maximum possible accuracy” in their
data. LexisNexis’ Richman counters
the company is in strict compliance
with the FCRA: “We strive to achieve
the highest precision rate possible.”
In the 6th Circuit Court’s 2016 deci-
sion on the Smith case, the panel noted,
“A reasonable jury could conclude that
Lexis negligently violated the FCRA by
not requiring Smith’s middle name.”
The appeals court affirmed the Mich-
igan district court decision, which
called the deficiencies in LexisNexis’
matching procedures “glaring.” But
the 6th Circuit declined to uphold
a portion of the damages the lower
court awarded Smith, in part because
the panel held there was evidence
LexisNexis’ procedures met or
exceeded industry standards.
“I’m sure that the big companies
spend a lot of money on compliance,”
EPIC’s Butler says. “That doesn’t really
provide much comfort if there’s still
significant errors going on.” And the
errors we know about, Butler adds, are
just “the tip of the iceberg.”
As for Tolbert, rather than attempt
the traditional dispute process with
LexisNexis again, he says he served
it with an intent to file suit earlier
this summer. “I just want this mat-
ter resolved, and I want it to stay
resolved,” Tolbert says. “[They] need
to learn [they] can’t just do this to
people and walk away.”Ơ Alice Holbrook is a writer for nerd-
wallet, a personal finance website
and app providing content, tools and
advice for consumers, where this story
first appeared.“This is the biggest
thing you don’t knowanything about.”