Authorized User Reportings: Tie In With AIIB [Bankruptcy]

Maximum Possible Accuracy
David A. Szwak

Authorized User Reportings: Tie In With AIIB [Bankruptcy]

Postby David A. Szwak » Wed Nov 02, 2005 7:29 am

Be sure and consider the impact of section CFR 202.10 when couples are married

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IN THE UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON
TACOMA DIVISION

RANDOLPH S. PHILLIPS, ET AL PLAINTIFFS

VERSUS CIVIL ACTION NO.
C00-5306 FDB

TRANS UNION CORPORATION, ET AL DEFENDANTS

AFFIDAVIT OF David A. Szwak

PARISH OF CADDO
STATE OF LOUISIANA

BEFORE ME, THE UNDERSIGNED NOTARY PUBLIC, PERSONALLY CAME AND APPEARED David A. Szwak, WHO I PERSONALLY KNOW BY APPEARANCE, WHO AFTER BEING DULY SWORN, DID DEPOSE AND STATE, UPON PERSONAL KNOWLEDGE, THAT:

1) BACKGROUND: I AM AN ATTORNEY LICENSED BY THE STATE OF LOUISIANA SINCE 1991. I AM AND ALWAYS HAVE BEEN IN GOOD STANDING WITH THE STATE BAR OF LOUISIANA AND ALL COURTS WITHIN WHICH I HAVE MADE APPEARANCES. I HAVE BEEN ADMITTED TO PRACTICE IN ALL STATE AND FEDERAL COURTS IN LOUISIANA IN ADDITION TO BEING ADMITTED TO PRACTICE IN OTHER COURTS. I HAVE PREVIOUSLY MADE APPEARANCES BEFORE A LARGE NUMBER OF FEDERAL AND STATE COURTS PRO HAEC VICE AND MY REPRESENTATION AND CONDUCT HAVE NEVER BEEN QUESTIONED OR COMPLAINED ABOUT.

2) ONE OF MY SPECIALTIES AND THAT OF MY LAW FIRM IS REPRESENTING CONSUMERS IN LITIGATION UNDER THE FAIR CREDIT REPORTING ACT [FCRA] AND RELATED LAWS. IN THAT CAPACITY, I HAVE REPRESENTED HUNDREDS OF CONSUMERS AND PLAINTIFFS BEFORE STATE AND FEDERAL COURTS INVOLVING THE FCRA AND RELATED ISSUES. I HAVE STUDIED THE ACTIVITIES OF THESE AGENCIES AND HAVE NUMEROUS PUBLISHED ARTICLES AND WRITINGS AND LECTURED REGARDING THE FCRA AND THESE AGENCIES I HAVE ALSO TESTIFIED A NUMBER OF TIMES REGARDING THESE AGENCIES, BOTH ACTING AS AN EXPERT FOR PLAINTIFF-CONSUMERS IN SOME CASES AND FOR THE DEFENSE IN SOME CASES.

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David A. Szwak PAGE 1 OF 7

AFFIDAVIT OF David A. Szwak
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3) I HAVE REPRESENTED HUNDREDS OF CONSUMERS IN SUCH LITIGATION AND HAVE INTIMATE KNOWLEDGE OF THE OPERATIONS, POLICIES AND PROCEDURES OF THE THREE [3] MAJOR CONSUMER [CREDIT] REPORTING AGENCIES, EXPERIAN INFORMATION SOLUTIONS F/K/A TRW INC., TRANS UNION L.L.C. A/K/A TRANS UNION CORP., AND EQUIFAX CREDIT INFORMATION SERVICES, AND THEIR VARIOUS AFFILIATES AND SUBSCRIBERS [BOTH USERS AND FURNISHERS OF INFORMATION].

4) I HAVE PERSONALLY DEPOSED REPRESENTATIVES OF THESE AGENCIES, REVIEWED DEPOSITIONS TAKEN FROM THESE AGENCIES, STUDIED NUMEROUS POLICY AND PROCEDURES MANUALS FROM THESE AGENCIES AND VIEWED ESTABLISHED, WRITTEN AND PUBLISHED POSITIONS OF THESE AGENCIES. I HAVE ALSO STUDIED MANY TRADE PUBLICATIONS CITING VIEWS OF THESE AGENCIES. I HAVE ALSO STUDIED REPORTINGS FROM THE FEDERAL TRADE COMMISSION REGARDING THESE AGENCIES AND THEIR ACTIVITIES.

5) THIS CASE: THIS PUTATIVE CLASS ACTION WAS ORIGINALLY FILED IN SUPERIOR COURT OF KITSAP COUNTY, WASHINGTON. THE COMPLAINT ALLEGED VIOLATIONS OF THE FAIR CREDIT REPORTING ACT, WASHINGTON CREDIT REPORTING ACT, AND WASHINGTON CONSUMER PROTECTION ACT, AS WELL AS COMMON-LAW CLAIMS FOR NEGLIGENCE AND SLANDER OF CREDIT. WITH THE ENTRY OF ANOTHER PLAINTIFF, THE SUIT WAS AMENDED TO ADD A COUNT OF VIOLATION OF THE MICHIGAN CONSUMER PROTECTION ACT. THE SUIT IS BASED UPON THE MANNER IN WHICH TRANS UNION, EXPERIAN, AND EQUIFAX (COLLECTIVELY, "THE CONSUMER REPORTING AGENCIES" – CRA's) COLLECT AND DISSEMINATE INFORMATION ON "AUTHORIZED USERS." AN AUTHORIZED USER IS SOMEONE OTHER THAN A CARDHOLDER OR CO-SIGNOR, WHO MERELY HAS THE PERMISSION OF THE CARDHOLDER TO USE THE CARDHOLDER'S CHARGE ACCOUNT. NO PERMISSION OF THE CREDITOR IS REQUESTED NOR IS AUTHORIZATION REQUIRED. THE CHARGE ACCOUNT IS A PROPERTY RIGHT OF THE CARDHOLDER WHOSE CREDIT AND CHARACTER, AND SOMETIMES A DEPOSIT OF MONEY, ENTITLED HIM/HER/IT TO RECEIVE AN EXTENSION OF CREDIT. THE CREDIT MAY BE USED AT THE DISCRETION, WHIM AND DESIRE OF THE CARDHOLDER AND, UNLESS IN DEFAULT, THE CREDITOR IS NOT FREE TO REVOKE THE CREDIT. AUTHORIZED USERS MAY OR MAY NOT BE RELATED, AND MAY INCLUDE A WIFE, EMPLOYEE, RELATIVE, FRIEND OR

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David A. Szwak

AFFIDAVIT OF David A. Szwak
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OTHER, WHO HAS A COPY OF HER HUSBAND'S CARD, OR, AS IN THIS CASE OF THE PUTATIVE CLASS REPRESENTATIVES HEREIN, HUSBANDS WHO HAVE A COPY OF THEIR WIVES' CARDS.

IN THIS CASE, MR. PHILLIPS WAS AN "AUTHORIZED USER" OF HIS NOW EX-WIFE'S ACCOUNT - AN ACCOUNT THAT SHE SUBSEQUENTLY DISCHARGED IN AN INDIVIDUAL BANKRUPTCY. HE WAS ALSO AN AUTHORIZED USER ON A CREDIT CARD OF HIS MOTHER. BOTH OF THESE ACCOUNTS APPEARED ON MR. PHILLIPS' CREDIT REPORTS WITH ALL THREE CRA'S AS "UNPAID BALANCE REPORTED AS A LOSS BY CREDIT GRANTOR." THE REPORTS SUPPLIED BY ALL THREE CRA'S LISTED THESE TWO ACCOUNTS AS "INCLUDED IN BANKRUPTCY" AND AS "CHARGE OFF" ACCOUNTS, ALTHOUGH MR. PHILLIPS HAS NEVER FILED FOR BANKRUPTCY. MR PHILLIPS WAS DENIED A HOME MORTGAGE AND CREDIT CARDS, BASED ON THESE ACCOUNTS.

MR. KAVANAUGH WAS MADE AN AUTHORIZED USER ON A CHARGE CARD THAT HIS WIFE OBTAINED BEFORE THEY WERE EVEN MARRIED. MR. KAVANAUGH NEVER RECEIVED A BILL, MADE ANY PAYMENTS, NOR MADE ANY CHARGES ON THIS ACCOUNT. INFORMATION ABOUT THE PAYMENT HISTORY ON THE ACCOUNT SUBSEQUENT TO THEIR DIVORCE IS INCLUDED ON HIS CREDIT REPORT. DUE TO HIS EX-WIFE'S SPOTTY PAYMENT RECORD, HE HAS ALSO BEEN DENIED CREDIT.

I AM AWARE OF NUMEROUS OTHER CONSUMERS WHO HAVE SUFFERED DENIALS OF CREDIT DUE TO NEGATIVE "AUTHORIZED USER" INFORMATION BEING REPORTED ON THEIR CREDIT REPORTS. I HAVE BEEN PROVIDED WITH A COPY OF THE PLEADINGS SUBMITTED HEREIN, INCLUDING THE MOTIONS TO DISMISS AND SUPPORTING MEMORANDA SUBMITTED BY THE DEFENDANTS HEREIN, AND HAVE REVIEWED SAME.


6) CONTROL: IN EACH INSTANCE AND CASE, THE CRA'S HAVE THE SOLE AND ULTIMATE DISCRETION AS TO THE FORMAT AND TYPE OF DATA THEY RECEIVE, ACCEPT AND POST TO THEIR DATABASES. THEY HAVE THE SOLE AND ULTIMATE DISCRETION AS TO WHO MAY FURNISH DATA AND WHO MAY ACCESS DATA AND HOW THESE MAY BE PERFORMED AND ACCOMPLISHED. THE DECISION TO REPORT AUTHORIZED USER DATA LIES WITH THE CREDIT REPORTING AGENCIES. THE AGENCIES ARGUE THAT THEY ARE REQUIRED BY E.C.O.A. TO

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David A. Szwak

AFFIDAVIT OF David A. Szwak
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REPORT AUTHORIZED USER DATA AS TO SPOUSES. THEY DO NOT CONTEND NOR COULD IT BE ARGUED THAT IT REQUIRES THEM TO REPORT SUCH DATA ABOUT OTHERS WHO ARE NOT SPOUSES.


7) LIABILITY: CARDHOLDERS, IN ESSENCE, THE PERSON CONTRACTUALLY LIABLE FOR THE CHARGES AND ACCOUNT, HAS THE SOLE DISCRETION TO INDICATE ANY PERSON'S NAME AS BEING A PERMISSIBLE CARD USER ["AUTHORIZED USER"]. THE DESIGNATED AUTHORIZED USER NEVER SAW THE CARD AGREEMENT, NEVER AGREED TO BE BOUND BY IT, NEVER GAVE ANY AUTHORITY TO THE CARDHOLDER TO BIND THE USER, AND ULTIMATELY IS NOT LIABLE OR RESPONSIBLE FOR CHARGES MADE ON THE ACCOUNT. IN THE INDUSTRY, IT IS ACCEPTED THAT THE CARD/CREDIT ISSUER ASSESSES THE RISK OF EXTENDING CREDIT TO THE ACTUAL APPLICANT, NOT THE AUTHORIZED USER, WHOSE NAME IS MERELY LISTED BY THE APPLICANT. THE AUTHORIZED USER'S CREDIT REPORT MAY NOT BE RUN AND THE STRENGTH OR WEAKNESS OF THE USER'S CREDIT REPORT IS NEVER A FACTOR. THE CREDIT IS ALWAYS EXTENDED ON THE STRENGTH OF THE CARDHOLDER APPLICANT WHO HAS CONTRACTUALLY BOUND HIMSELF/HERSELF/ITSELF TO PAY THE CHARGES UNDER THE TERMS OF THE AGREEMENT. AGAIN, THE AUTHORIZED USER HAS NO CONTRACTUAL OR LEGAL RESPONSIBILITY. FOR EXAMPLE, IF I FILLED OUT A CREDIT AGREEMENT AND LISTED PRESIDENT CLINTON AS AN AUTHORIZED USER, IT DOES NOT MAKE HIM LIABLE ON THE ACCOUNT. HOWEVER, UNDER THE BIZARRE CREDIT REPORTING PROCEDURES IN PLACE, THE CRA'S WOULD NOTATE CLINTON’S CREDIT REPORT WILL INFORMATION ABOUT MY ACCOUNT AND SHOW HIM AS HAVING RESPONSIBILITY AND CONNECTION TO THE ACCOUNT. AGAIN, IT WOULD BE ATTRIBUTED TO HIM,. ON HIS CREDIT REPORT, JUST LIKE THE CRA'S DID WITH REGARD TO THE PLAINTIFFS HEREIN. IT IS SILLY FOR THE CRA'S TO ARGUE THAT THEY ACCURATELY REPORTED THE DATA THEY RECEIVED WHEN THEY KNOW THE DATA WILL BE POSTED AND SHOWN AS ATTRIBUTED TO A PERSON HAVING NO RESPONSIBILITY FOR THE ACCOUNT. THE CRA'S ARGUMENT THAT OTHER CREDITORS MIGHT NEED TO KNOW THAT THE CONSUMER HAS "CREDIT AVAILABLE TO THEM" IS UNDERCUT BY THE FACT THAT THE CONSUMER HAS NO LIABILITY FOR THE ACCOUNT, THUS, WHO CARES IF HE/SHE HAS SOME AUTHORIZED USER STATUS ON ANOTHER PERSON'S ACCOUNT? AUTHORIZED USERS MAY BE LISTED BY MERELY

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David A. Szwak

AFFIDAVIT OF David A. Szwak
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PUTTING A NAME DOWN ON AN APPLICATION AND NO INVESTIGATION OR ASSURANCE IS EVER MADE TO DETERMINE IF THE PERSON EVEN WANTS TO BE LISTED IN THE CREDITOR'S RECORDS AS AUTHORIZED TO USE SAID ACCOUNT.


8) ACCURACY: THE CRA'S SUGGEST THAT THEY ARE REPORTING ACCURATELY IN THAT THEY ARE REPORTING THE DATA SUPPLIED TO THEM BY FURNISHERS. THIS IGNORES THE CONTROL AND ABILITY THE CRA'S HAVE TO MAKE THE FURNISHERS SUPPLY ADDITIONAL INFORMATION TO PERMIT THE CRA'S TO DETERMINE WHETHER THE AUTHORIZED USER AND CORRELATIVE ACCOUNT DATA SHOULD BE POSTED TO A NON-SPOUSE'S REPORT.

9) POLICIES AND PROCEDURES: I HAVE REVIEWED POLICY AND PROCEDURES OF THE CRA'S WHEREIN THEY ROUTINELY DELETE AND SUPPRESS AUTHORIZED USER STATUSES FROM COMPLAINING CONSUMERS. THIS REFLECTS A BACK-END METHOD OF DELETING FALSE DATA ONLY ONCE THE CONSUMER COMPLAINS, RATHER THAN, AS THEY SHOULD, REQUIRE ACCURATE DATA ON THE FRONT-END, DURING REPORTING AND POSTING PHASES, AS OPPOSED TO POST-REINVESTIGATION. THE BEST METHOD OF ENSURING ACCURATE REPORTING IN SUCH CASES IS TO HAVE THE SPOUSE INDICATE A DESIRE TO BE REPORTED ABOUT. THIS COULD BE DONE BY WRITTEN OR VERBAL VERIFICATION PROCEDURES. IT COULD BE DONE AT THE POINT OF SALE, SINCE THE CREDITOR IS CONTENDING THAT THE USER DESIRES TO BE ALLOWED TO USE THE ACCOUNT. NONE ARE THESE ARE DONE AT THIS TIME. ANOTHER METHOD IS TO REQUIRE SUBSCRIBERS TO CEASE REPORTING CONSUMERS AS MARRIED ONCE THEY ARE NOTIFIED OF A SEPARATION AND DIVORCE. THEY COULD BE REQUIRED TO CHANGE THE ASSOCIATION CODING AND CAUSE A DELETION OF THE PREVIOUSLY REPORTED MARITAL RELATION. IN THE CASE OF PHILLIPS' MOTHER'S ACCOUNT BEING REPORTED ABOUT HIM, THIS HIGHLIGHTS THE LACK OF ACCURACY IN THESE REPORTINGS. PHILLIPS HAS NEVER BEEN MARRIED TO HIS MOTHER AND E.C.O.A. COULD NOT EVEN ARGUABLY BE ADVANCED AS A DEFENSE. WITH MARRIED COUPLES, IT SEEMS THE CRA'S HAVE UTILIZED THIS "ACROSS THE BOARD" METHODS OF REPORTING ON AUTHORIZED USERS RATHER THAN DETERMINING WHETHER THE NAMED PERSON HAS ANY

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David A. Szwak

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RELATIONSHIP TO THE CARDHOLDER THROUGH WHICH LIABILITY COULD ATTACH AND TO REQUIRE THE AUTHORIZED USER TO FORCE, VIA REINVESTIGATION REQUESTS, THE CRA'S TO DISASSOCIATE THEM FROM THE REPORTINGS.

IN THIS CASE IT IS MY UNDERSTANDING THAT PHILLIPS AND KAVANAUGH ARE NOT LIABLE FOR THE ACCOUNTS BY LAW AND THEIR NAMES APPEARED IN ASSOCIATION WITH THE ACCOUNTS THOUGH NEITHER MAN EVER REQUESTED SAME NOR, APPARENTLY, WERE THEY AWARE SUCH REPORTINGS WERE BEING MADE UNTIL THEY WERE DENIED CREDIT OR HAD SOME OTHER FORM OF NOTICE OF THE ERRORS.

THE AGED-OLD E.C.O.A. PROVISION WAS DESIGNED TO PROTECT WOMEN, WHO WERE OPPRESSED, YEARS AGO, BY THE CREDIT INDUSTRY AND THEIR HUSBANDS, WHO HANDLED ALL TRANSACTIONS AND WHO HAD ALL OF THE CREDIT AND PROPERTY RIGHTS IN HIS NAME ONLY. THAT PROVISION WAS NEVER INTENDED TO PERMIT THE CRA'S TO REPORT, IN BLANKET FASHION, AUTHORIZED USER DATA ABOUT PERSONS UNLUCKY ENOUGH TO HAVE THEIR NAME[S] SCRAWLED ON THE APPLICATION.

WORSE YET, THE CRA'S FURTHER VIOLATE THE FCRA BY MARKING THE REPORTED ACCOUNTS WITH DEROGATORY STATUSES AND BANKRUPTCY NOTATIONS SO THAT THESE DEROGATORY REMARKS APPEAR ON THE AUTHORIZED USER'S CREDIT REPORTS AND, MOST IMPORTANTLY, ARE USED IN CREDIT SCORING AND RISK FACTOR/DENIAL CODES IN ASSOCIATION WITH THE AUTHORIZED USER AND HIS/HER CREDIT REPORTS. THUS, IT IS BAD ENOUGH TO REPORT ABOUT THE AUTHORIZED USER, WHO HAS NO RESPONSIBILITY FOR THE ACCOUNT, BUT TO GO A GIANT LEAP FURTHER AND MARK THE ACCOUNT REPORTINGS AS DEROGATORY AND LIST IT AS SAME ON THE USER'S REPORTS, MAKES THE OFFENSE ALL THE WORSE. THEN, GOING ANOTHER GIANT LEAP FURTHER, THE CRA'S FURTHER VIOLATE THE FCRA BY FACTORING CREDIT SCORES, ECONOMIC PROFILES AND RISK FACTORS/DENIAL CODES BY USING THESE AUTHORIZED USER ACCOUNTS. ALL THE WHILE, THE CRA'S HAVE A STANDING POLICY AND PROCEDURE THAT IF THE CONSUMER ["AUTHORIZED USER"] MERELY COMPLAINS, THEY INTEND TO DELETE IT FROM THE USER'S CREDIT REPORT, BECAUSE THEY KNOW THAT IT SHOULD NOT BE THERE TO BEGIN WITH. IF THE CONSUMER HAS NO LIABILITY FOR THE

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David A. Szwak

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ACCOUNT, THEN HOW COULD THE E.C.O.A. PROVISIONS BE FURTHERED BY POSTING ADVERSE AUTHORIZED USER DATA TO THE USER'S REPORT? IT CANNOT. IF YOU ASSUME FOR A MOMENT THAT E.C.O.A. REQUIRED REPORTING AUTHORIZED USER DATA ON ALL MARRIED PERSONS, HOW WOULD THE PURPOSES [TO HELP OPPRESSED WOMEN LACKING CREDIT STANDING] BE FURTHERED BY POSTING ADVERSE/NEGATIVE DATA TO THEIR CREDIT REPORTS BECAUSE THEY HAVE AN ERRANT HUSBAND, WHO AFTER DIVORCE OR PRIOR TO MARRIAGE, HAVE SERIOUS DEBT PROBLEMS OR FILE A BANKRUPTCY FOR WHICH THE WIFE HAS NO LIABILITY?

CURING THE REPORTING VIOLATION IS SIMPLE. CRA'S CAN SIMPLY MAKE THE SUBSCRIBERS CERTIFY THAT THEIR REPORTINGS ARE MADE WITH REGARD TO PERSONS WHO ARE LIABLE FOR THE ACCOUNT. THEY COULD REQUIRE CERTIFICATIONS INDICATING THAT THEY OBTAINED THE PERMISSION OF THE USER TO REPORT ABOUT THEM IN ASSOCIATION WITH THE ACCOUNT. THEY COULD REJECT AUTHORIZED USER REPORTINGS ABOUT A CONSUMER, AS AN EXCEPTION FILE, WHEN THE SPOUSE NAME DOES NOT MATCH THE IN-FILE RECORD OF THE CONSUMER'S SPOUSE'S NAME. SIMPLY PASSING THE BUCK BACK TO THE CREDITOR AND COMPLAINING THAT "THE CREDITOR TOLD US THAT" IS NOT WHAT IS CONTEMPLATED BY THE FCRA. THE FCRA HAS ALWAYS REQUIRED TO CRA'S TO STEP IN BETWEEN THE CONSUMERS AND THE CREDITORS/SUBSCRIBERS/FURNISHERS/USERS, SINCE THEY ARE IN THE BEST POSITION TO COMMAND COMPLIANCE FROM THEIR AGENTS/CLIENTS, THE CREDITORS/FURNISHERS/USERS/SUBSCRIBERS. NUMEROUS APPELLATE DECISIONS REINFORCE THAT PREMISE. THE CRA'S ARE NOT TO MERELY MIMIC THEIR SUBSCRIBERS, LIKE PARROTS. THEY HAVE A GRAVE RESPONSIBILITY AND A LIMITED LICENSE TO OPERATE UNDER THE FCRA AND MUST ACCEPT THE LEGAL RESTRICTIONS AND DUTIES IN ADDITION TO THE HUGE REVENUES AND PROFITS THEY DERIVE FROM THEIR OPERATIONS.

I DECLARE UNDER PENALTY OF PERJURY THAT THE FOREGOING IS TRUE AND CORRECT.
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David A. Szwak

SWORN TO AND SUBSCRIBED before me, this the _____ day of ________________, 2000.
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NOTARY PUBLIC
MY COMMISSION IS FOR LIFE

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