One of the world’s biggest credit agencies, Experian, has agreed to pay a settlement of $22.5 million in a class-action lawsuit, which started after the company made mistakes in its reporting.
Experian, which is one of the three major credit reporting agencies, admitted that it sent false information about credit applicants to third parties, and this could have cost consumers money or, in some cases, could have meant they were denied credit altogether.
According to the lawsuit, some applicants were wrongly documented as being in a high-risk place of residence, which could then affect their credit scores. The settlement acknowledges that these false credit reports were sent out between July 2018 and July 2021.
The company said that the reporting issue was caused by Experian’s Fraud Shield, which alerts creditors to certain risks. In some cases, Experian claimed they lived in a higher-risk area or that their address wasn’t a residence.
However, some people disputed the information on the report and believe that Experian has failed to verify this information correctly. This meant that some people were denied credit opportunities, even though they should have been approved if the information was correct.
Although the company denied any misconduct, it agreed to settle the lawsuit, and many consumers that disputed their information are now eligible for a cash payment.
The lawsuit claims: “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 cash payment plaintiffs are entitled to will be between $300 and $900 and the exact amount depends on several factors, including how many claims are made.
In addition to this, Experian says it plans to change the way it deals with disputes in the future, and changes to Fraud Shield Indicator disputes will be adjusted for at least the next five years.