“A class of more than 100,000 payday loan customers reached a $24 million cash settlement [recently] to end allegations that consumer-reporting giant Experian threatened customers’ credit history by reporting debts on disputed loans.” This according to a story in Law 360. As reported by Law 360,
Georgia resident and lead plaintiff Demeta Reyes first took out a $2,600 loan from tribe-affiliated Western Sky Financial LLC in 2012, but said she later stopped making payments after learning that Georgia’s attorney general was bringing a consumer protection action against the company.
“Western Sky Financial, which is owned by a member of the Cheyenne River Sioux Tribe, avoided state usury laws as a tribe-affiliated lender and charged higher interest rates. Delbert Services Inc. would service the loans issued by Western Sky Financial, and another company, Cash Call Inc., provided the financial backing.
“Reyes claims that Experian continued reporting delinquent loans serviced by Delbert even after Delbert folded and asked the credit agency to stop using its data.
“In 2017, Experian won its motion for summary judgment before the district court, but the case was revived by the 9th Circuit on appeal. The 9th Circuit held that there was an open question of fact as to whether Experian’s continued reporting of the loan serviced by Delbert was misleading and remanded the case for further proceedings.”
This case, Reyes v. Experian Information Solutions (U.S.D.C., C.D. Cal. No. 8:16-cv-00563), is similar to a case playing out in the 7th Circuit against TransUnion. In the 7th Circuit case, according to Law 360, “Great Plains Lending and Plain Green have faced multiple lawsuits over their lending practices, with borrowers accusing them of striking deals with Native American tribes to benefit from tribal immunity so they could charge consumers exorbitant interest rates that are barred by state law.”
In Denan v. TransUnion (7th Cir. No. 19-1519), CDIA filed an amicus brief because the Plaintiffs-Appellants attempt to create obligations on CRAs that do not exist today. Repeatedly, courts that have examined whether a CRA must determine the legal validity of an account in order for the information to be deemed sufficiently accurate to report and repeatedly they have said no. There are good reasons why a CRA is not required to adjudicate the legal validity of a loan or other account.