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California Federal Court Allows Wells Fargo to be Sued for False Credit Reporting

Two California consumers filed suit against Wells Fargo for allegedly reporting false information on their credit reports. See Levinson v. Transunion, LLC, Equifax Information Services, LLC, Experian Information Solutions, Inc., Innovis Data Solutions, Inc., and Wells Fargo Bank, NA, 2016 U.S. Dist. LEXIS 72284 (C.D. Cal. June 2, 2016). The husband and wife had obtained a Wells Fargo Home Equity Line of Credit. Basically, the couple claimed that Wells Fargo provided credit reporting agencies information about the couple that it knew or should have known was incomplete or inaccurate, due to a "mixed file error." A mixed file is when the credit reporting agency has mixed the information in your credit report with someone else’s information.

Wells Fargo Bank brought a motion to have the case against it thrown out, but the judge did not completely agree with Wells Fargo Bank. The court first discussed how, "Congress enacted the FCRA to counteract unfair and inaccurate reporting practices that undermine consumer confidence. 15 U.S.C. § 1681(a); Nelson v. Chase Manhattan Mortg. Corp., 282 F.3d 1057, 1058­59 (9th Cir. 2002)." The judge held the couple did have valid claims under federal and California credit reporting laws, and refused to throw the case out in its entirety, giving the couple a chance to file an amended lawsuit to address some concerns he had.

Specifically, the judge held the couple had adequately alleged that Wells Fargo willfully or negligently violated its obligations under the federal Fair Credit Reporting Act and California Consumer Credit Reporting Act. But, the court went on to explain, a consumer "must support its claim for pain and suffering with specific claims of genuine injury, such as emotional distress or physical injury", and wanted the consumers to further explain their emotional distress. See Dewi v. Wells Fargo Bank, 2012 U.S. Dist. LEXIS 189878, 2012 WL 10423239, at *8 (C.D. Cal. August 8, 2012). The court disagreed with Wells Fargo Bank's request to throw the case out and gave the consumers another opportunity to clarify their pain and suffering or emotional distress. The court explained how in other Fair Credit Reporting Act cases courts have found what would be a sufficient injury, such as "emotional distress, manifested by sleeplessness, nervousness, frustration, and mental anguish resulting from the incorrect information in her credit report." Guimond v. Trans Union Credit Info. Co., 45 F.3d 1329, 1333 (9th Cir. 1995).

The court also disagreed with Wells Fargo Bank and its attempt to knock out the couple's punitive damages claim. Punitive damages allow a jury to basically punish a defendant if it has engaged in a willful or reckless violation of the law.

So, as it stands, the consumers will be allowed to move forward and try to show that there was false information on their credit report that caused them emotional distress, for which they are allowed to seek compensation. And, if a jury believes a violation of the federal Fair Credit Reporting Act was willful or reckless, may also require them to pay the consumer punitive damages.

Are you the victim of a false credit report? Do you need help getting your credit report? At Wilcox Law Firm, P.C., Attorney Ronald Wilcox has been protecting the rights and interests of consumers for more than two decades and knows what it takes to secure results.

Ready to start exploring your legal options with a proven San Jose consumer protection attorney? Call our firm now.