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Saturday, November 2, 2024

Fourth Circuit dismisses $12M credit report case against Experian

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RICHMOND, Va. (Legal Newsline) – The U.S. Court of Appeals for the Fourth Circuit has overturned a nearly $12 million award in a class action lawsuit against Experian Information Solutions.

On May 11, the Fourth Circuit ruled that plaintiffs representing a 69,000-member class did not prove they were harmed by the company and, therefore, did not possess standing. The court ruled that the case be dismissed, as the plaintiffs did not show they were hurt by allegedly incomplete or incorrect credit scores.

In 2010, plaintiff Michael Dreher allegedly was subjected to a background check for a security clearance. During the process, the suit states the federal government discovered that the plaintiff was associated with a past-due credit card account. 

It was later discovered that Dreher’s cousin had taken out a credit card in Dreher’s name to pay off expenses for a failing business he had. Dreher requested a credit report from Experian to clear up the confusion. After seeing the delinquency account on his report from Advanta Bank and Advanta Credit Cards, he sent a letter to Advanta.

He asked for verification that he owed the debt in March 2011 and April 2011 with no response, the suit states. Advanta got back to him saying he had an outstanding balance of more than $15,000, along with an online credit card application with his name and Social Security number. 

He sent a follow up letter asking it to remove the mistake, with no response. Because of this, he contacted Experian about the issue. The Advanta account was eventually deleted from Dreher’s credit file on June 6, 2012.

Unknown to Dreher, the Utah Department of Financial Institutions had closed Advanta in 2010. CardWorks Inc. obtained Advanta’s portfolio and was the responders to credit card customer complaints. CardWorks continued to use Advanta’s name, website and phone number.

Dreher decided to sue Experian and CardWorks in the U.S. District Court for the Eastern District of Virginia, alleging that Experian willfully violated the Fair Credit Reporting Act by not including the name CardWorks in the credit reports. Experian filed a motion for partial summary judgment on the claims, but the district court denied it.

Experian took the case to the Fourth Circuit. The appeals court said that it didn't believe Dreher was badly affected by the error on his credit report. It ruled that Dreher failed to prove he suffered any injury and that the class action must be dismissed. 

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