Universal Credit Falsely Reports Living Consumers as ‘Deceased’ in Credit Reports, Class Action Alleges

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Credit reporting agency Universal Credit Services, LLC faces a proposed class action over its alleged practice of falsely reporting consumers as deceased and duplicating debts in their credit reports.

According to the 20-page case in Philadelphia’s Court of Common Pleas, credit report reseller Universal Credit “does nothing” to ensure that the reports it sells to third parties are accurate despite being legally obligated to do so under the Fair Credit Reporting Act (FCRA). Per the suit, the defendant “merely parrots” the credit information it receives from the “Big Three” credit reporting agencies—Trans Union, Experian and Equifax—even when there are obvious discrepancies, such as when one agency indicates that a consumer is deceased and the others do not.

Moreover, the lawsuit claims that Universal Credit often duplicates debts that are reported by more than one credit reporting agency, and double- or triple-counts them in an individual’s consumer report even though they have the same account number, balance and creditor.

According to the case, Universal Credit’s practice of selling consumer reports that falsely indicate that the subject of the report is dead, or that contain duplicate debts, has harmed consumers by causing them to be denied credit or considered less creditworthy than they actually are.

The lawsuit explains that potential creditors such as mortgage lenders request consumer reports from Universal Credit, who assembles the information from each of the Big Three into a “tri-merge” or “merged infile” credit report, in order to see a complete picture of a consumer’s credit position.

The suit alleges, however, that Universal Credit takes no steps to ensure that the information it receives and reports is accurate, and instead “merely accepts it at face value.” Per the case, this practice has caused Universal Credit to falsely report consumers as deceased even when there is “clear evidence” that an individual is “very much alive.” Indeed, the lawsuit claims that when one credit reporting agency reports an individual as deceased and the others report for the person an active credit score and recent payment history, Universal Credit performs no investigation into whether the consumer is, in fact, dead, and instead sells a report with a “deceased” notation and a credit score of “N/A” for the Big Three member who indicated the individual was deceased.

According to the suit, an incorrect deceased notation on a consumer’s credit report can have “devastating consequences” for the person’s credit.

“Credit bureaus will not issue credit scores on deceased consumers, and lenders will not lend to consumers who the bureaus refuse to score,” the complaint explains. “This means that someone who is being falsely reported as deceased is unable to obtain credit.”

The lawsuit notes that Universal Credit includes in its reports a disclaimer that states that a deceased notation “does not necessarily mean that the subject of the credit report is deceased,” and advises users not to take any adverse action based on that information. Per the case, it is “nonsensical” and illegal to report that a person is deceased while also indicating that the deceased notation may be inaccurate.

“Defendant cannot disclaim its way out of its legal obligation to issue reports with maximum possible accuracy,” the complaint argues. “Reporting information that it knows or should know is inaccurate, alongside a disclaimer acknowledging the data may be inaccurate, violates the FCRA.”

The lawsuit goes on to claim that Universal Credit further damages consumers’ credit by duplicating the debts listed on their reports. Although the defendant is well aware that a consumer’s debt may be reported by more than one credit bureau, the process it uses to remove duplicate data is “so rudimentary” that it often lists the same debt more than once, even when the tradelines have the same account number, balance and creditor, the suit states. Per the case, this causes Universal Credit to count the same debt multiple times in the “Trade Summary” section of its report.

The suit says that listing duplicate debts in a person’s consumer report makes them appear more indebted than they really are and therefore less creditworthy.

The plaintiffs, who the lawsuit stresses are both “living, breathing consumers,” claim to have been falsely reported as deceased by Universal Credit. Per the case, the defendant’s inaccurate reporting caused one consumer to be denied refinancing on his home and the other, whose debt amounts were also allegedly duplicated, to be denied a mortgage loan on a new home.

The suit looks to represent the following two classes:

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