Class Action Claims Discover Bank, Experian Unlawfully Included Discharged Debts in Consumer Credit Reports

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A proposed class action alleges Experian Information Solutions and Discover Bank have employed a practice of wrongfully including in consumer credit reports debts that have already been discharged.

The plaintiff, a Nassau County, New York resident, claims Discover Bank furnished and Experian reported “inaccurate and materially misleading information” with regard to his Discover account. In particular, the plaintiff’s credit report indicated that the account still had a balance even though Discover had already sent the man a 1099-C form as proof that the debt had been discharged, the complaint says.

The lawsuit, filed in New York federal court, claims the defendants have violated the federal Fair Credit Reporting Act (FCRA) by failing to take steps to “assure maximum possible accuracy” in the preparation of consumers’ credit reports.

The plaintiff says that Discover had sent him a 1099-C form requiring him to report the debt as income as proof that the amount had been discharged. Per the case, the plaintiff notified Experian by letter in late January 2021 that he disputed the inaccurate information in his credit report, and included with the dispute a copy of his 1099-C form from Discover. The plaintiff believes that Experian notified Discover of his dispute.

According to the suit, Discover “failed to conduct a reasonable investigation” of the plaintiff’s dispute as required under the FCRA and instead continued to report “false and inaccurate adverse information” concerning his account, “including the full balance.”

Moreover, Experian “did not evaluate or consider any of the information, claims, or evidence of the Plaintiff and did not make an attempt to substantially reasonably verify that the derogatory information concerning the disputed account was inaccurate,” the lawsuit contests. Per the case, Experian violated the FCRA by failing to conduct a reasonable investigation within 30 days of receiving the plaintiff’s dispute letter. The suit says Experian has, as of the date the lawsuit was filed, failed to remove the inaccurate information from the plaintiff’s credit report.

“Notwithstanding Plaintiff’s efforts, Defendant Experian sent Plaintiff correspondence indicating its intent to continue publishing the inaccurate information and Defendants continued to publish and disseminate such inaccurate information to other third parties, persons, entities and credit grantors,” the complaint states.

The plaintiff says the defendants’ “erroneous reporting” has harmed his creditworthiness and credit score.

The lawsuit looks to represent anyone for whom Discover issued a 1099 form due to a discharge of their debt yet continued to report a balance to the credit bureaus (including Experian, Equifax and TransUnion) despite the fact that the balance was no longer legally owed and whose false balances were reported on their credit report anytime within the past five years and until 21 days after the filing of the complaint.

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