Equifax Falsely Reported Federal Student Loan Debt that Was Forgiven, Lawsuit Claims

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A proposed class action alleges Equifax negligently and recklessly reported false and damaging information about an Ohio consumer’s student loans, which had been forgiven by the federal government.

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The 10-page case says that although the plaintiff’s federal student loans were forgiven by the government under the 2022 Student Loan Relief Plan and that, as a result, the woman owed no further debt and had a $0 balance, Equifax unlawfully continued to report that she had an open balance of $101,938. 

The case accuses Equifax of violating the federal Fair Credit Reporting Act (FCRA) by failing to ensure that it followed reasonable procedures to assure the “maximum possible accuracy” of the information it reported about the plaintiff. 

“Defendant’s conduct is particularly egregious, as it [sic] aware of the [federal student loan forgiveness plan], the forgiveness of student loans, and its implications on individual’s credit,” the filing alleges, claiming the plaintiff and similarly situated proposed class members have suffered “defamatory harm” by being misrepresented to third parties as carrying outstanding debts that they do not owe. 

The Biden-Harris administration’s announcement of the Student Loan Relief Plan in August 2022 had a significant impact on an estimated 27 million individuals who the Department of Education contended would be eligible for student loan debt relief. As of December 6, 2023, the suit says, more than 3.6 million people had been approved for forgiveness of their federal student loans, and when an individual applied for forgiveness, their federal loan servicer was notified, the filing shares. 

Although the plaintiff received around August 17 a letter from her loan servicer, Mohela, that stated that her federal student loans had been forgiven in full, Equifax failed to update its reporting on the woman, and as of last month continued to report that the plaintiff’s forgiven loan was open with a six-figure balance, the lawsuit alleges. 

“This information is inaccurate and misleading, because Plaintiff’s federal student loan was forgiven in full, effective as of July 21, 2022, and therein the account has no balance,” the case insists. 

According to the complaint, “countless other individuals” have received notice that their federal student loans have been forgiven, yet Equifax “has continued to report their accounts with an outstanding balance,” harming proposed class members’ creditworthiness, among other damage. 

The lawsuit looks to cover all United States residents whose federal student loans were forgiven and on whom, within the last two years, Equifax furnished to a third party a credit report that contained a federal student loan account reflecting a balance after the loans were forgiven. 

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