Mixed File Lawsuit: Skinner v. Trans Union, et al

Father-Son, Mother-Daughter, Junior-Senior-Trey [Generational Designators], Common Names, Variations on Social Security Numbers and Other Mixed File Issues
David A. Szwak

Mixed File Lawsuit: Skinner v. Trans Union, et al

Postby David A. Szwak » Sun Oct 23, 2005 8:27 pm

THE KANSAS CITY STAR
METROPOLITAN
SUNDAY BUSINESSCredit:
The Kansas City Star
Byline: PAUL WENSKE

Simple mix-up, irritating fix Errors crept onto Missourian'scredit reports, setting off three-year battle to clean them up

In 1998, Peggy and Ernest Skinner met with a loan officer at the UMB Bank of Warsaw, Mo., and got the shock of their lives. Their credit report was pockmarked with debts and bills they didn't owe. At first they were incredulous. Then they were angry. The bank had mixed Peggy Skinner's records with those of her sister-in-law, who shares a similar name, though a worse credit rating. But if the mistake seemed simple, correcting it proved to be a nightmare. "From that day it just kept snowballing out of all proportion," the retired AT&T employee said.She spent three years reclaiming her good name. She wrote blistering letters to credit bureaus disputingerroneous credit card bills, defaulted car loans and a bankruptcy filed in Oklahoma. She sent family photos and copies of her Social Security card and driver's license to prove her identity, often to no avail. One credit bureau claimed it had verified information - which was wrong. "They treated me like I was a liar," she said. "They had me married to two men at the same time, like I was leading a double life for a while."Skinner's efforts - documented in a thick, three-ring binder - portrays a credit industry that loosely verifies information and is slow to fix errors. In fact, Skinner's problems could have been quickly erased if the bureaus had simply checked her Social Security number. Why they didn't points to flaws in the system, consumergroups say.Skinner's Warsaw bank and three major credit bureaus have since apologized, though they do not accept fault. But she remains embittered with a system that she said devalued and abused her. "People don't realize what's going on," she said. "The credit bureaus have too much authority." Credit bureau officials say Skinner'sproblems are rare. But consumer groups say they are not only common but also show how hard it is forconsumers to protect themselves.Thousands of daily consumer transactions - from withdrawing cash from an ATM to getting a home mortgage -are made possible by the ability of creditors to check consumers' credit ratings. But concern over the wayprivate financial information is handled has grown as more personal data are shared, are sold to telemarketers and become vulnerable to online identity theft."It's been a major problem historically," said Bill Haynes, spokesman for the Federal Trade Commission. He said the FTC receives more complaints against credit bureaus than almost anything else. Mistakes do happenConsumer and legal advocates say Skinner did everything right. It was the system, they say, that failed her. "This has carried on far too long," said Kansas City lawyer Karen Weber, who has examined Skinner's records at the request of The Star. "Her letters to the credit bureaus should have sounded an alarm: 'Red alert, red alert!The problem began simply enough with a coincidence: similar names. Peggy Ruth married Ernest Skinner, a former Kansas City firefighter. Ernest's brother, Donald, married Peggy Diane. The two Peggy Skinners and their husbands even lived for years on the same street. They took out loans at UMB Bank of Warsaw and dealt with the same lending officer, who is no longer at the bank. "What we think happened is that we had two families of Skinners," said Tom Hill, president of UMB Bank of Warsaw. "One couple were excellentcustomers. But the brother and sister-in-law didn't share the same credit rating. "Possibly our loan officer got the wrong Social Security number with the wrong husband. And that somehow got mixed at the credit bureau and the credit reports got merged."A credit bureau official, however, said it's also likely that information on all four Skinners was sent to credit bureau data banks without alluding to their separate Social Security numbers. As a result, the bureaus relied on the names to identify credit records. Christina Karpowitz, a spokeswoman for Experian, one of the three largest credit bureaus, said: "It's easy to have the information mixed if the creditor doesn't report all the information to us. For example, maybe they only reported in this instance the name and the address of the individual but not the Social Security number."Mistaken namesCredit bureaus have never widely relied on Social Security numbers to identify people. Sources knowledgeable about the industry say that when the bureaus first set up their databases in the late 1960s and 1970s, to save money on the high cost of computer time, they didn't even use full names and full addresses. That changed. Bureau officials also say consumers in the 1980s didn't want their Social Security numbers bandied about. So personal names became principal identifiers used by credit bureaus to keep track of the millions of files - 210 million at last count they keep on consumers.First and last names became the most crucial. Middle names are largely ignored because they aren't used as much by consumers, said John Mote, vice president of business development for CSC Credit Services. CSC, which does business in Missouri and Kansas, merged with Equifax and shares computer data banks with the larger bureau.Concerns about how to accurately identify consumers and preserve their privacy have prompted proposals to assign them credit passwords. Proponents say this would provide a precise way to track consumer information. But critics say the passwords might just give identity thieves another way to steal information over the Internet. Names are also more important than some demographic information. For example, the bureaus ignore postoffice boxes, which Mote said are often used by identity thieves to avoid detection. The Skinners had different P.O. boxes, but both had Rural Route 1 addresses. As a result, credit bureau computers read them as the same address."I've never seen two families that have the same name and who live on the same street - and it's a rural route," Mote said. But legal advocates say credit bureau computers stumble over lesser coincidences. For example, parents and children with similar names present special challenges. David Szwak, a Shreveport, La., lawyer specializing in credit reporting cases, said mixed-identity errors are increasing. He said he represents aMississippi woman named Myra Coleman whose credit file got mixed with a California woman named Maria Gaitan because their first names were considered "a partial match." "About the best thing you can say is that we have a better credit system than Afghanistan," Szwak said.Credit bureau officials defend their computers. They say they've improved with new technology called"matching logic." David Moody, a spokesman for Equifax, said the technology ensures a consumer match. "If something doesn't match it, (the computer) will put up a flag," Moody said. But Ed Mierzwinski, consumer program director for Public Interest Research Group and a strong industry critic, discounts claims of improved accuracy. "Their state-of-the-art computer programs are a bunch of hooey," he said. He added that the Skinner case is hardly unique. "It's a garden variety screw-up by the credit bureaus," he said. Plain EnglishBy March of this year Peggy Ruth Skinner had reached the boiling point. In one letter that month she angrily demanded of credit bureau officials: "Can't you comprehend plain English??" She was spending hours typingdetailed letters to the credit bureaus. She wrote the FTC and the Missouri attorney general. In May, she even wrote to R. Crosby Kemper III, chairman and CEO of UMB Financial Corp., parent of the Warsaw bank. She responded to a form letter from Kemper that said: "At UMB, our customer's personal privacy is very important to us." She wrote back: "I received your letter concerning customer confidentiality. I have been wronged byUMB Bank of Warsaw, Mo. My legal rights to privacy (were) violated."

Soon afterward, Hill, president of the Warsaw bank, called Skinner. He said he had thought her problem was resolved. "It was a total surprise to me there were still issues," he said. She was seeing a doctor for high blood pressure. She didn't understand why no one was fixing her problem. What she didn't know then was that the credit bureaus were still verifying her record based almost solely on her name. "I'd write a letter, get it notarized and send it," she said. "Then I'd get back an updated credit report and it was still wrong. So I'd sit down and write another letter. I felt like a little nobody dealing with all these 'more important' people." She did herhomework well. She understood that under the Fair Credit Reporting Act, credit bureaus had 30 days toinvestigate her disputes and get back to her with a clean report. Each of her letters patiently laid out her name and her Social Security number. She notarized the letters. She included her photo. She identified each disputed item. The replies from credit bureaus were unsatisfactory. Instead of getting better, her credit got morepockmarked, paralleling the worsening fortunes of her in-laws.By late 2000, Donald and Peggy Diane Skinner had moved to Yukon, Okla., where they filed for Chapter 7 bankruptcy. In February, a Trans Union credit report pulled by the Warsaw bank showed that the Oklahoma Skinners' bankruptcy and all their other bad debt had merged with the credit of the Missouri Skinners. If that wasn't bad enough, even after the Oklahoma Skinners closed out their bankruptcy and discharged all their debts, they still showed up on the Missouri Skinners' credit reports. That meant the credit bureaus were holding them liable for debts that no longer existed. "That could have devastating effects," said Bret Davis, the Oklahoma Skinners' attorney.Phantom debtsThe bogus debts stuck as if they were glued to Peggy Skinner's reports, and the credit bureaus refused toremove them. She wrote CSC Credit Services to dispute thousands of dollars in erroneous debts the creditreporting service said she owed to Chrysler Credit Corp. and First USA Bank. Both those debts were clearly listed in her relatives' bankruptcy and were subsequently discharged by the court. CSC Credit wrote Skinner back that it contacted her creditors and had "verified" that each debt "belongs to you." How could CSC verify debts that didn't exist? The credit bureau said it sent Skinner's name, the account number and the amount owed to each creditor. All of those factors checked out. CSC should have checked the debts against her Social Security number, said consumer advocates contacted by The Kansas City Star.Indeed, Chrysler and First USA officials told The Star that they never had Peggy Ruth Skinner in theircomputers. In September, saying she had run out of patience, Skinner brought her struggles to The Star. She said she hoped going public with her story could at least "help someone else avoid problems I've gone through the last three years."After a series of press inquiries to the Warsaw bank, the various credit bureaus and her creditors, Skinner's credit report suddenly began to clear up in October. She began getting written and telephoned apologies fromthe credit bureaus and creditors who had snubbed her before. She got responses like this one dated Nov. 2, from the office of the president of First USA Bank: "We now recognize that this account belongs to your sister-in-law and that the account is reflecting on your credit report in error ... "You will be pleased to know we have requested that the credit-reporting agencies, Trans Union, Experian and Equifax, have this account removed from your credit report."Consumer advocates, however, said it shouldn't take newspaper inquiries to spark interest in a consumer's case. "You shouldn't have to stimulate people to do their jobs," said Richard Le Febvre, president of AAA Credit, a credit-reporting agency in Flagstaff, Ariz., that works with consumer groups to challenge credit bureaus. "Itshould have taken 30 days to clear her record, not three years," he said. "She documented this. She had them hook, line and sinker. She shouldn't have to go through this mental anguish."Skinner said she hasn't ruled out taking legal action under the Fair Credit Reporting Act. "This has been nerve-racking," she said. "Someone has to be responsible."

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