Clark v. Experian: Szwak Affidavit: AIIB: Must Read

Information that should and should not be reported where there is a bankruptcy.
David A. Szwak

Clark v. Experian: Szwak Affidavit: AIIB: Must Read

Postby David A. Szwak » Tue Dec 27, 2005 6:21 am

 IN THE UNITED STATES DISTRICT COURT
DISTRICT OF SOUTH CAROLINA
Anderson Division

FRANKLIN E. CLARK, on behalf of himself
and all others similarly situated,
Plaintiffs,
v. CIVIL ACTION NO. 8:00-1217-24

EXPERIAN INFORMATION SOLUTIONS, INC.,
Defendant.
and

FRANKLIN E. CLARK, and LATANJALA
DENISE MILLER, on behalf of themselves
and all others similarly situated,
Plaintiffs,
v. CIVIL ACTION NO. 8:00-1218-24

EQUIFAX INFORMATION SERVICES, LLC.,
Defendant.
and

FRANKLIN E. CLARK, on behalf of himself
and all others similarly situated,
Plaintiffs,
v. CIVIL ACTION NO. 8:00-1219-24

TRANS UNION L.L.C.,
Defendant.

A F F I D A V I T
STATE OF LOUISIANA
PARISH OF CADDO

BEFORE ME, the undersigned Notary Public, personally came and appeared DAVID A.
Szwak, a major domiciliary of Bossier City, Bossier Parish, Louisiana, who after being duly sworn did depose and state, upon personal knowledge, as follows:

I am an attorney at law and have been asked to review the proposed settlement of

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David A. Szwak

the above entitled and captioned cases. I am licensed by the State of Louisiana since 1991. I am in good standing with the State Bar of Louisiana and have been admitted to practice in all state and federal courts of Louisiana, the federal courts in Arkansas and the Eastern, Western and Southern Districts of Texas, the Courts of Appeals for the Fifth, Eighth and Eleventh Circuits, and the United States Supreme Court, in addition to being admitted to practice and admitted pro hac vice in many other courts. 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. I have represented hundreds of consumers and plaintiffs before state and federal courts involving FCRA claims and attendant issues. I have studied the business operations and activities of the national
consumer reporting agencies, their affiliates and their subscribers and furnishers of information, and have numerous published articles and writings on these operations. I have also lectured regarding the FCRA and the credit and credit reporting industries. I have also testified, by report and deposition, a number of times regarding these entities and the FCRA, both acting as an expert for plaintiffs-consumers in some cases and for the defense in some cases.

Prior to 2001, Ms. Amanda Craig had obtained a loan for the purchase of an automobile. It was co-signed by the father of her then-fiance. The co-signer filed bankruptcy. Ms. Craig continued to pay the disputed account. She did not file bankruptcy. On one or more occasions during the class period, she applied for credit. During the class period, one or more of the defendants issued a credit report related to Ms. Craig which contained a reference that the account with the bankrupt third party was "included in bankruptcy." Amanda Craig is a class member and has standing to assert this objection. She asserts it on her behalf, for the class itself, and on behalf of all other
persons who have objected to the settlement.

She has filed an objection to the proposed settlement and requested participation in the Fairness Hearing. I have reviewed the proposed settlement, a number of pleadings from the case, the court's prior order regarding class certification, and the objection filed by Mrs. Craig. I have also reviewed credit reporting guidelines and manuals regarding the specific issues involved in this contest.

I believe that the proposed class action settlement provides the defendants with extraordinary relief, while affording the plaintiffs little or no relief. Of course, class counsel appear to be handsomely rewarded. The settlement involves a typically broad release from liability but, here, it goes further to provide the defendants a release for any claims arising out of their illegal practice of reporting a bankruptcy in the credit files and consumer reports of consumers who had never filed such a petition for bankruptcy or
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initiated such any such bankruptcy proceeding. The breadth of the release goes well beyond class issues and would impair the plaintiffs from bringing future claims. The release also envisions impairing other rights the plaintiffs might have under the FCRA as to the defendants where the issues might be wholly unrelated to the claims asserted in this class action. Class actions are, by their nature, narrow, well defined claims. Plaintiffs should not be required to release countless other claims in this process.

This proposed settlement would provide the defendants and others a full discharge from great exposure to claims of a much larger group, who are all situated to make claims. The price paid for such relief, Fifteen Million [$15,000,000.00] Dollars, all of it for plaintiffs’ attorneys fees and administrative expenses, will not reach or benefit the class. More offensive is that the proposed settlement will legitimize a variation of the same misconduct upon which suit was brought and eviscerate the remedies and abilities of consumers to recover future relief under the FCRA against these defendants and others. The rights and interests of Ms. Craig and other members of the class is further endangered by the over breadth of the proposed settlement agreement and release and the substantive inaccuracies within the class notice.

The credit industry is made up of several participant categories. The consumer reporting agencies [the CRA's] maintain, organize and publish data bearing on various factors of the general credit worthiness of consumers. The CRA's clients are subscribers, who double in two roles, one as the furnisher of information to the CRA's and the other as the user of the credit reports. Collectively, the furnishers and users are termed "subscribers." The CRA's own and maintain large information storage and computerized database systems. The CRA's solely decide which subscribers may furnish data. The CRA's solely decide how and when subscribers may furnish data. The CRA's solely decide how subscribers may access data and which subscribers may access data. The CRA's solely decide the precise formats in which subscribers may furnish data. The CRA's teach the subscribers the subtleties of the system to maximize the credit reporting impact on the targets [consumers] reported about. The CRA's and subscribers each are well aware of the devastating effect that a "bankruptcy" notation has on a consumer's credit report, credit scores and adverse
action/denial reason codes issued. A bankruptcy is regarded, industry-wide, as the most negative item of information which can appear on a consumer's credit report and file.

The Metro Tape format was created through task force members, primarily CRA employees. Task Force members determine reporting formats and factoring to be used in the credit reporting, scoring and related processes. Ultimately, the CRA's promulgate the


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reporting format and teach the furnishers, directly and through its lobby force, CDIA f/k/a ACB, how to report data and manipulate the system. Historically, Metro Tape 1 was the standard and provided a range of preset data fields which subscribers were to provide in the reporting of information. For example, in reporting an account, there are certain required data fields for inclusion, while others are optional. In addition, special comments and statuses may be reported. Over time, the abuses in data reportings became rampant. As the FCRA appeared to be headed for amendment in the mid-1990's, industry commissioned another Metro Task Force to study the issues and come up with an "updated" version of Metro Tape format. This "updated" version provided for expanded reporting fields and other measures to ostensibly correct known problems. For example, one problem was the "re-reporting" or "reappearance" of items, now reported by a collector, which had been supposedly deleted and removed after reinvestigation or upon directive from the creditor furnisher. Expanded reporting fields were designed to relate back the collection account to the original source and link the initial deletion or suppression to the creditor-furnisher and thereby suppressed incoming collection reportings. Despite purported efforts the problem has persisted due to continued flaws in the format and mechanisms used to remove data. Metro Tape
2 is the current standard encouraged, but not required, for reporting by subscribers to the CRA's. There is a close and symbiotic relationship between the CRA's and their subscribers.

The CRA's report bankruptcy information from public records vendors like Hogan Information Services. The "public records" section of the consumer reports published by the CRA's lists information either directly obtained through the CRA's own monitoring of courthouse files or through public record vendor sources. This lawsuit does not pertain to "public record" source data.

This lawsuit pertains to "special comments" which the CRA's permit to be attached to trade account reportings so as to include with the Metro Tape format information an additional comment designating the account as "included in bankruptcy" [AIIB]. Again, the current case pertains only to those consumers upon whom the CRA's have not found a bankruptcy filing or included such a reference in the "public records" section of the consumer's credit report. Thus, there are consumers who have actually filed a bankruptcy but the CRA's fail to pick up the public record posting however one or more of the subscribers will report the fact of the bankruptcy filing as a special comment attached to their trade account with the bankrupt consumer. However, the CRA's have provided the subscribers a mechanism to adversely affect non-filing consumers who have some "association" with the bankrupt consumer's accounts. For example, a daughter might be added as a "authorized user" to her parent's credit account. The parents might file bankruptcy. The lenders' report of the bankruptcy triggers a negative reporting on both the

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parents' credit files and reports but also a negative reporting on the daughter's credit file and reports. Leaving aside the propriety of reporting on authorized users, who have no contractual liability, the reporting of a bankruptcy notation, as an attachment on the trade account reporting, has a devastating effect on the daughter's credit file and reports. All the while, the daughter has not filed bankruptcy nor has she defaulted on any obligation. The same result prevails in a variety of scenarios where the non-filing consumer's credit file and reports are marked.

The problems targeted in this case arise for non-filer consumers who co-signed or jointly incurred a debt with a person who filed a bankruptcy. Mechanically, the Metro Tape formats are flawed and have been for years. The Metro Tape formats do not provide a ready and simplified means by which a furnisher can report a different status for each co-debtor. Metro Tape 2 did not cure this problem. Further, the CRA's have done nothing to remove the negative impact of the reportings, in terms of the affected consumer's credit score and adverse action/risk factors codes. Without manipulation the accounts [tradelines] had to have a single status, even though it may have applied
to and been relevant for only one of the co-debtors. For example, when a son files bankruptcy after purchasing an automobile co-signed by his father, both father and son will receive a reference within their respective credit files and reports. For the son, the references to the bankruptcy would be in the "public records" section and within individual tradelines as furnishers updated their own internal files with the notation and forwarded the Metro information to the CRA's. For the father, whose credit report would not have a reference in the "public records" section, the CRA's would carry onto his report the same tradeline entries as for the filer, the son. This situation also arises for husbands and wives, often with a post-divorce bankruptcy, etc. Importantly, this
includes accounts in which the non-filing consumer remained fully and unconditionally responsible for the debt. Even though the account may be kept current, is never delinquent and is ultimately paid in full, the single bankruptcy status would override this otherwise positive account history. The impact to the consumers of having any reference to a "bankruptcy" within their credit files is substantial. In the modern economy, nearly all aspects of the credit reporting system are automated. This continues to present substantial risks and harm to consumers as the CRA's devote only minimal resources to the "completeness and accuracy" mandates of the FCRA. In the
modern economy, the actual paper credit report is no longer important. Instead, the CRA's offer simplified credit scoring products, coordinated through an industry partner, Fair Isaac. They also make the reports available in a format by which their customers can scan the bureau file for the presence of certain key items.

The inaccurate reference to "bankruptcy" will affect a consumer's credit in two ways.


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First, the CRA's remove the prior [and any subsequent] payment history on the account. This damages the consumer by removing an often otherwise positive (and accurate) payment history from his or her credit score. Instead, the account is then either rated with a status code or "unrated." The status code was previously "7." This is in contrast to a "1" for a current account, or even a "2", "3" or "4" for a 30-, 60, or 90-day late payment. Second, the CRA's' inclusion of the word "bankruptcy" within the tradeline, either as "included in bankruptcy" or "included in bankruptcy of another" is then scanned and reported to imply or suggest either that the consumer has filed bankruptcy or that the account has been zero balanced because of its discharge in bankruptcy. The credit world no longer reads the narratives within a credit report. The
automated systems read only parts of the paper reports. As the CRA's know, within the context of the credit reporting system, the phrases "included in bankruptcy" and "included in bankruptcy of another" have an identical meaning: "Bankruptcy."
The three CRA's had already introduced a reporting alternative prior to the lawsuit at issue. Rather than report a tradeline as simply "included in bankruptcy," the defendants were now reporting the tradeline as "included in bankruptcy of another." Because of the manner in which credit reports are actually generated and used, there was no practical or functional difference between the two. Both still appear on the face of the credit report which causes facial marring. Further, both factor into the credit scoring process and adverse action factoring.

Recently, in John J. McHale v. Credit Bureau of the Pacific, et al, cause number 01-00508-HG-BMK [U.S.D.C. Ha.], I was retained by plaintiff to examine a case involving similar circumstances and asked to render an Expert Report. I did so. The facts in McHale can be summed as: The McHales filed suit against several consumer reporting agencies, Equifax Information Services [“Equifax”], Experian Information Solutions [“Experian”], Trans Union [“TU”], and Credit Bureau of the Pacific [“CBOP”], as well as two lenders-furnishers of credit data to the national consumer reporting agencies, Citibank, [South Dakota], N.A. [“Citibank”] and California Mortgage Service [“CMS”]. The McHales asserted that their credit reports have been damaged by information which is inaccurate and which may not legally be reported. The McHales contested the reporting of a Citibank account bearing an “account included in bankruptcy” special comment. A “special comment” is the Metro Tape field for inclusion of a comment to a trade indicating, for example, that the account is “included in a bankruptcy.” The McHales also contested a CMS First Mortgage reporting bearing a similar “account included in bankruptcy” special comment. Mr. McHale contended that never had any obligation to pay on the CMS First Mortgage and was not a party to that contract. Nonetheless, the credit reporting agencies, CBOP, Equifax and Experian, repeatedly issued consumer credit

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reports about him containing the CMS First Mortgage, which at times had been marked as “account included in bankruptcy,” on his credit reports. Given that Mr. McHale had no liability on the mortgage and indebtedness, the consumer reporting agencies either added his name as a responsible party to the reported and re-reported mortgage and indebtedness or CMS reported Mr. McHale as a responsible party with knowledge that he never executed any evidence of indebtedness. Either way, Mr. McHale properly disputed and contested the CMS reporting of the CMS First Mortgage, as not belonging to him, to the defendant consumer reporting agencies, CBOP, Equifax and Experian, who had been re-reporting it per their furnisher/subscriber-agency relationships with CMS. Those agencies, CBOP, Equifax and Experian, were obliged under the FCRA to conduct a reasonable and thorough reinvestigation commensurate with the quality of the
dispute. Mr. McHale’s disputes were very clear and specific. The agencies are bound, by industry standards and by statute, to conduct a more thorough reinvestigation of his disputes which amounts to much more than merely parroting the furnisher’s response. After all, the agencies are already aware of the reported and stated position of the furnisher by virtue of merely reviewing the current report contents as found on their database systems. The agencies must go beyond and conduct a reasonable inquiry into the contentions of the consumer and the furnisher and evaluate the propriety of the reporting. The agency is not free to merely take the furnisher’s word as the final answer. The agencies employ a consumer dispute verification [CDV] process. This process can operate manually, by mail, fax or phone, or can operate via its automated CDV systems. See, for example, http://www.xact.com/acdv_user.asp?Loc=acdv and
www.cdiaonline.org/eoscar/ImplementationChecklist.pdf. One such system is CCNS operated by General Electric Information Services [GEIS] while the other system, E-OSCAR, is operated by A.T.&T. These email exchange systems utilize standardized automated form CDVs, called automated CDVs [ACDVs], which are created by the agencies for transmittal to the subject furnisher. The agencies input standardized information about the identity of the complaining consumer, the furnisher at issue, the Metro Tape data reported [account data] and related data fields. The form also provides for response times and a location for the furnisher to provide a “coded” response or free form text messages. The furnisher uses the form to respond and provide
information. Once a furnisher receives a reinvestigation communication from an agency, the furnisher is bound to comply and conduct a reasonable reinvestigation which is considered by the industry and courts to be the same as required of the agencies. In sum, the furnisher must conduct a reasonable reinvestigation of the dispute and respond with its version to the agency. If the lender fails to do so, its reporting must be deleted by industry standard and law. If the lender cannot fully verify its reporting, then it must be retracted and deleted. The onus is upon the agency and the furnisher to exchange information and insure that the reportings and re-reportings are accurate. The industry standard parallels the legal


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standard and that means accurate to the maximum possible extent and not merely technically accurate. The agencies, CBOP, Equifax and Experian, reporting the CMS First Mortgage received the disputes and processed communications with CMS but failed to consider the lack of any proof that Mr. McHale was connected to the subject CMS First Mortgage. The agencies solely control whether data is entered or retracted from the reporting databases which they house and maintain. The agencies chose to maintain the CMS item on Mr. McHale’s credit reports. The standard procedure at the agencies is when an agency receives a dispute from a consumer stating that an account is to reflect inclusion in a bankruptcy, the agency is to determine if the consumer has a copy of the discharge and the schedule of secured and unsecured creditors. If the consumer cannot provide it then the agency is to send a CDV or ACDV to the furnisher and request a copy of the schedule may be most productive. The agencies also allow their employees some leeway to make judgment calls if the schedule is costly to retrieve for some reason. The agencies have professed that schedules are hard to obtain at times thus a CDV or ACDV to the furnisher seeking a response and copy of the schedule. The agencies prefer to try not to lose the ability to report a lot of derogatory data for lack of response from a creditor when a CDV or ACDV is not complied with by the furnisher. Ordinarily, when a consumer seeks to discharge a debt, they complain to the agencies that the account should be shown as “included in bankruptcy.” If the consumer supplied the discharge and schedule then the agencies delete the balance and past due amount and delete the maximum delinquency, history status and pay pattern. The remarks on the reporting are changed to “BKL.” Of some importance is that the agencies have maintained for some time and currently maintain codes and procedures for reporting items as “not included in bankruptcy.” The credit reporting industry seems to key on the discharge order and schedule as defining the credit reporting phrase “included in bankruptcy.” When a consumer contests an item as “not included in bankruptcy,” a CDV or ACDV is sent showing code “019" [Equifax] and “047" [TU]. These are “claims codes,” meaning a codified explanation of the consumer’s dispute. Experian employs a similar code but I was unable to locate it just yet. The furnishers respond, if needed, by engaging “response code” “009" [TU] indicating that the disputed account is “not included in bankruptcy.” TU even has a policy to have its employee check to see if the contested account was paid as agreed with the creditor/furnisher and, if it is on the schedule, then TU does not invoke the “included in bankruptcy” notation.

Further, in Angela Neal v. Wells Fargo Bank, et al, cause number 8:02CV0378 [U.S.D.C. Neb.], I was retained by plaintiff to examine a case involving similar circumstances and asked to render an Expert Report. I did so. The facts in Neal can be summed as as: Neal's father signed an auto lease, which Wells Fargo Bank held, and Neal signed the lease as a guarantor. Neal's father filed a Chapter 7 bankruptcy and discharged his liability under

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the subject lease. Neal has never filed a bankruptcy. Wells Fargo reports credit data by automated means to Equifax Information Services ["Equifax"] and CSC Credit Services, Inc. ["CSC"]. Wells Fargo reported the same auto lease account twice. The trade contained two different "open dates" for the account. One reporting pre-dated the other. The initial trade reporting listed an open date of 9/99 and showed the account as a Joint Account. That same trade reporting listed a balance initially but later showed the balance as $0. That same trade reporting also had special comments attached to it over time and listed an I2 status/MOP at times, meaning one time 30+ days late on payments on this installment account. That same trade reporting was made by Wells Fargo under one subscriber code while the other trade reporting was made under a different subscriber code. The other Wells Fargo trade reporting appeared later and bore an Association Code [ECOA description] of "I" meaning Individual account, thereby suggesting that plaintiff was the primary and only obligor. This second duplicated reporting suggested that it was opened in 8/99 and it also bore an "Included in Bankruptcy" notation. In or about April, 2002, Plaintiff learned of the false bankruptcy notation on the duplicated Wells Fargo reporting on her CSC/Equifax credit report, dated April 4, 2002, and contested the duplicated reporting and bankruptcy remark to CSC. Plaintiff’s dispute regarding her Equifax/CSC report was sent to CSC for reinvestigation and response. Her dispute was very clear and likely could not have better explained her dispute. Plaintiff did not file a bankruptcy. On or about April 22, 2002, CSC sent an ACDV document to Wells Fargo Auto Loss and advised them that plaintiff allegedly contested the account reporting as belonging to another person with the same or similar name [dispute code 002]. The proper dispute code is code “019." [[CSC Bates labeled nos. 375-376, ACIS dispute codes; Exhibit CSC-115. CSC failed to have and use reasonable procedures for handling this type of dispute. ACIS is Equifax’s reinvestigation tracking and documentation system which includes dispute communications.]] Code “019" would have advised Wells Fargo Auto Loss that plaintiff contested the reporting as “Included in the bankruptcy of another person. Verify liability/status.” Id. Unfortunately, CSC failed to send the correct dispute code. This ACDV did not reflect the dispute submitted by plaintiff and did not properly advise Wells Fargo Auto Loss that plaintiff complained that a duplicated trade appeared on her credit report bearing an "included in bankruptcy" remark, which seriously damaged her credit rating, scores, risk factors/denial codes, and the overall appearance of her credit report. [[Wells Fargo testified that “[N]othing came through on the first dispute that had anything related to the bankruptcy. The dispute was ‘belongs to another.’” P.34, deposition of Wells Fargo rep. This dispute suggested that plaintiff was claiming that she was not associated with the subject Wells Fargo account. Id. at 31.]] An MOP rating of “9" is the worst possible rating on the scale of “0" to “9." The risk factors/adverse action codes/denial codes listed are generated from the content of a credit file. Fair Isaac Co. generates the codes through the Equifax and CSC data. Credit scores and adverse action

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codes are provided to lenders when they access the report. One document produced by Wells Fargo listed the MOP as a “9" though CSC’s frozen scans did not show a numeric MOP on the duplicated trade. The bankruptcy reference will nonetheless trigger the “9" status whether specifically shown in the MOP field or not. As a direct result of the defective ACDV, Wells Fargo Auto Loss verified that the subject account did bear the name and other personal identifiers of plaintiff as being involved with the account though she was merely as a guarantor, not a joint, co-maker. CSC knew her true dispute but both in sending and receiving the dispute failed to properly respond to and resolve the dispute. CSC had all pertinent data at their finger tips to determine that plaintiff had not filed a bankruptcy. CSC knew the account had been coded "Z:" meaning bankruptcy. CSC also knew that it had duplicated and permitted the duplicated reporting of the same Wells Fargo account on her report. CSC took no steps to address the duplication. The Fair Credit Reporting Act does not permit duplicated reportings of the same alleged matter. Further, it does not permit the inclusion of a bankruptcy reporting on the credit report and records of a person who has not sought nor received bankruptcy protection. In May, 2002, plaintiff lodged a second dispute with CSC. Again, she contested the duplicated reporting and bankruptcy remark. Plaintiff's dispute was sent to CSC for reinvestigation and response. Her dispute was very clear.
Plaintiff did not file a bankruptcy. This time CSC sent an ACDV document to Wells Fargo Auto
Loss and advised them that plaintiff contested the account reporting as not being involved in a bankruptcy [dispute code 047]. This ACDV did not reasonably or precisely reflect the dispute submitted by plaintiff and did not properly advise Wells Fargo Auto Loss that plaintiff complained that a duplicated trade appeared on her credit report bearing an "included in bankruptcy" remark, which seriously damaged her credit rating, scores and the overall appearance of her credit report. As a direct result of the defective ACDV, Wells Fargo Auto Loss verified [response code 26] that the subject account did bear the name and other personal identifiers of plaintiff and, in Wells Fargo's view, was included in a bankruptcy - Chapter 7. [[CSC denied that the Wells Fargo trade was shown as account included in bankruptcy. Par.11, CSC’s Answer to complaint. The appearance of the trade reporting [duplicate item] is such that it appears to indicate that plaintiff filed a bankruptcy and included the subject and only Wells Fargo account with which she ever had any involvement. In fact, Wells Fargo, in its Answer, stated that it “unintentionally indicated” that the account at issue was included in a bankruptcy. Pars. 10-11, Wells Fargo’s Answer to complaint.]] The account still listed the account as an "individual" account which means that it was allegedly reported that plaintiff was the individual and primary obligor on an account which was included in a bankruptcy. The manner of reporting can only be read to state that plaintiff filed a bankruptcy. Again, plaintiff was a guarantor, not a joint, co-maker and certainly not the individual and primary obligor. CSC knew her true dispute but both in sending and receiving the dispute failed to properly respond to and resolve the dispute. CSC knew the


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account had been status coded "Z" and retained the bankruptcy remark. CSC also knew that it had duplicated and permitted the duplicated reporting of the same Wells Fargo account on her report. CSC took no steps to address the duplication. The Fair Credit Reporting Act does not permit duplicated reportings of the same alleged matter. Further, it does not permit the inclusion of a bankruptcy reporting on the credit report and records of a person who has not sought nor received bankruptcy protection. In August, 2002, plaintiff's written complaint filed on or about August 12, 2002, and served, prompted and lodged a third dispute with CSC. Again, as filed, she contested the duplicated reporting and bankruptcy remark. CSC claimed to perform a reinvestigation. In her complaint, plaintiff's dispute was very clear. Plaintiff did not file a bankruptcy. This time, unbeknownst to plaintiff, CSC sent an ACDV document to Wells Fargo Auto Loss and advised them that plaintiff contested the account reporting as "not his/hers" [[Wells Fargo Disclosure, Bates labeled nos.31-32.]] [dispute code 001]. This ACDV did not reflect the dispute submitted by plaintiff and did not properly advise Wells Fargo Auto Loss that plaintiff complained that a duplicated trade appeared on her credit report bearing an "included in bankruptcy" remark, which seriously damaged her credit rating, scores and the overall appearance of her credit report. The bankruptcy reporting is the most damaging item that can appear on a credit report. [[“The items here are listed in order of descending importance with the first item being the "most damaging" to your credit: Bankruptcy....” Http://www.creditconnectusa.com/equifax.htm]] The ACDV's dispute code invoked and text message of plaintiff's dispute was even further off target than the prior two. As a direct result of this third defective ACDV, Wells Fargo Auto Loss again verified [response code 35] the subject account as properly reported. The account still listed the account as an "individual" account which means that it was allegedly reported that plaintiff was the individual and primary obligor on an account which was included in a bankruptcy. The manner of reporting can only be read to state that plaintiff filed a bankruptcy. Again, plaintiff was a guarantor, not a joint, co-maker and certainly not the individual and primary obligor. CSC knew her true dispute but both in sending and receiving the dispute failed to properly respond to and resolve the dispute. CSC knew the account had been status coded "Z" and retained the bankruptcy remark. CSC also knew that it had duplicated and permitted the duplicated reporting of the same Wells Fargo account on her report. CSC took no steps to address the duplication. The Fair Credit Reporting Act does not permit duplicated reportings of the same alleged matter. Further, it does not permit the inclusion of a bankruptcy reporting on the credit report and records of a person who has not sought nor received bankruptcy protection. If CSC was unable, due to automated option limitations, to properly convey plaintiff's dispute to Wells Fargo Auto Loss, then CSC was bound to send a written CDV [manually], write in the pertinent information, and fax or mail it to Wells Fargo Auto Loss and accurately convey plaintiff's dispute. Wells Fargo also testified that it accepted and processed both automated and


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manual version consumer dispute verification documentation. Given that plaintiff did not file a bankruptcy, attaching such a remark to a reporting on her credit report only serves to seriously harm her and "twist her arm." Reporting that an account, for which she was merely a guarantor and not a maker, was involved or "included in bankruptcy" does not serve any utility and only harms plaintiff who continued to make efforts to resolve the account with Wells Fargo Auto Loss. Wells Fargo Auto Loss testified that Equifax and Experian trained Wells Fargo Auto Loss regarding credit reporting processes. Equifax and CSC also provided reporting formats [Metro and Metro 2] to Wells Fargo Auto Loss. Wells Fargo Auto Loss was trained as to the manner of reporting desired by Equifax and CSC. Given that the status codes are provided by the agencies for use and the special comments attachments to trades are encouraged by Equifax and CSC, as well as the other agencies, Wells Fargo Auto Loss complied with the training they had received. Wells Fargo Auto Loss was also trained regarding dispute resolution. Wells Fargo Auto Loss viewed its duty as involving a need to look up and verify the reportings and make changes if needed. After reading the testimony of Wells Fargo Auto Loss, it seemed that Wells Fargo Auto Loss was trained to perform perfunctory reinvestigations by the agencies. The formatting of the actual CDV’s and ACDV’s is determined by Equifax and CSC. In this case, CSC dictated the format and method used. The ACDV limited the ability of CSC to accurately convey the dispute information to Wells Fargo, while in response Wells Fargo was restricted to available response codes. Further, it appears that neither the furnishers or CSC communicate with each other by phone which would surely expedite the resolution of the dispute and, particularly in this case, would have likely resulted in the dispute being accurately conveyed in each instance. CSC decided that automated dispute resolution was more important to its costs savings than the harm sustained by plaintiff and others like her due to continued mis-reporting. Again, in testimony, Wells Fargo emphasized that CSC mislead them about the nature of plaintiff’s dispute. For ex., see pp.31-32, deposition of Wells Fargo’s rep. CSC improperly allowed Wells Fargo to add a charge-off designation to the contested account after the first dispute. Thus, not only did the first reinvestigation fail due to various errors, but Wells Fargo also responded to CSC that the trade reporting should list as a charge-off. Id. at p.32. In the second dispute, CSC advised Wells Fargo that plaintiff was claiming that the subject account itself was not involved in any bankruptcy proceeding. Again, that is not what plaintiff was complaining about. Plaintiff’s complaint, in part, involved the reporting of the bankruptcy reference on her credit report since she did not file a bankruptcy and the reference itself ruined her credit and implied that she had filed the bankruptcy, all of which should not have occurred. Further, even if Wells Fargo initiated the problematic reporting of duplicated accounts with different listings and statuses shown, which is improper to allow, CSC had knowledge of these reportings and failed to take any action to cure it. CSC did this not once but on at least three occasions, though CSC failed to disclose the third


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David A. Szwak

reinvestigation communications in during this lawsuit. Plaintiff learned of the third dispute communication from Wells Fargo. CSC violated the mandates of section 1681i in failing to advise plaintiff of its activities then concealing the results of that activity. Wells Fargo testified that it is only capable of altering the numerical portion of the MOP and not the bankruptcy code which was attached to the reporting by Wells Fargo initially. Wells Fargo testified that it was unable to revert or alter that reporting in its future reportings. Id. at pp.50-51. CSC also permitted Wells Fargo to duplicate reportings under two different ECOA/Association codes. This is improper. The FCRA and industry standards do not permit agencies to report the same alleged indebtedness on the same report under multiple listings. Allowing a subscriber to re-report a negative account multiple times, with slight variations so as to avoid overlay of data, would compound the negative effect and frustrate dispute resolution. Both of those effects are seen here. CSC also improperly allowed Wells Fargo to manipulate the data in the duplicated listing which did not bear the bankruptcy notation. In an ACDV response, CSC allowed Wells Fargo to add a charge-off comment. On another occasion, Wells Fargo added a Bankruptcy Chapter 7 comment. The series of frozen scans document the progression of reportings of the duplicated trade lines. [[On the scans, like the credit reports, it shows a listing of trades [credit accounts] which trade accounts show certain information about each furnisher of information who reported about him. Trades are reported in standardized formats. It is reported in Metro Tape [1 or 2] which is a standardized reporting format of data by furnishers.]] CSC allowed Wells Fargo to list one of the trade lines without any account number. Wells Fargo reported the duplicate items monthly as shown on the “date reported” field and the “months reviewed” field on each item. From at least December 2001, CSC reported one of the Wells Fargo trade lines as opened in 9/99, an I2 MOP/rating, Joint account, with a historical delinquency of one time 30+ days late. Of course, the I2 reference would indicate that the “current status” as of reporting the account was one time 30+ days late. That I2 reference was frozen and repeatedly reported month after month throughout the period of time that scans were produced by CSC, which ended February, 2003. Of course, the May 2, 2003, CSC credit report provided to plaintiff also showed the same status on that one trade line listing. The other Wells Fargo [duplicated] trade line listed an opened date of 8/99, an Individual account, and “included in bankruptcy” status. Oddly, on the frozen scans, CSC claimed that once plaintiff contested the Wells Fargo matter, the first time, CSC added a consumer disputes notation to the trade line on file. However, in comparing the April, 2002, frozen scan with Exhibit A to Wells Fargo’s Disclosure, there were no such “consumer disputes” flag which the FCRA mandates. I could not explain this anomaly between CSC’s frozen scans [archived snapshots of plaintiff’s credit report] and an actual copy of plaintiff’s credit report accessed in the same time frame. The “consumer dispute” flag was removed thereafter and was not replaced upon plaintiff’s further disputes. The June 2002 frozen scan showed that Wells Fargo had just added an


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David A. Szwak

additional ‘Bankruptcy Chapter 7' remark to the Wells Fargo duplicated reporting bearing an alleged opened date of 8/99. This specific additional comment was added since the May 2002 scan was captured toward or at the end of the month as part of the systematic capture and archival of all credit reports and data files. As of August 2002, that special comment was removed. These manipulations evidence CSC activities showing that CSC was aware of the disputes by plaintiff but failed to properly react. Such retraction occurred at the direction of CSC as Wells Fargo did not indicate any changes in the substantive reportings during that time period and, in fact, had been responding to ACDV inquiries, as noted herein. In reviewing the earlier frozen scans, as of the September, 2001 frozen scans, there was but a single Wells Fargo trade line reporting showing the subject account, opened in 9/99, with an I1 [installment; current/paying as agreed] status, but improperly reflecting a “Joint” account. The balance is listed as $16K. The DLA [last activity] suggests August, 2001, and months reviewed was “22.” Oddly, the Wells Fargo account did not appear at all on the October 2001 frozen scan produced by the CRA. As of November, 2001, CSC reported the account as having a $0 balance and a date of last activity in July, 2001. The months reviewed now show “24.” The trade also suggested that plaintiff was one time 30+ days late a single time in September, 2001. Those series of reportings appeared terribly inconsistent. In yet another odd twist, as of December 2001 frozen scan, there are suddenly the aforementioned duplicated reportings by Wells Fargo.

Credit reporting is the cheapest and most effective collection tool available to force a consumer to comply with the creditor’s demands. The Code of the industry is to force payment on any account marked delinquent, even despite disputes. The reporting process is designed to emphasize the negative. Higher interest rates and fees are charged to those having even the slightest blemishes and the reporting process is used as leverage to attack the consumer. The CRA's and furnishers do not arbitrarily assign the false and damaging ratings to accounts.


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David A. Szwak

SWORN TO AND SUBSCRIBED BEFORE ME this the ____ day of ___________, 2003.

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NOTARY PUBLIC

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