FDCPA/FCRA Expert Witness

Sat, 17 Oct 2009 15:59:32 -0600

Damages and Procedures that must be followed by a debt collector, credit reporting agency, credit bureau or creditor are the two issues that Credit Expert Witness John Ulzheimer says he is most often required to testify on. John Ulzheimer, the nation’s credit guru, states on his blog at www.fdcpaexpertwitness.com:

“In cases where I’ve served as an FDCPA expert witness it seems as if the most common issues are credit related damages, economic damages, and whether or not the procedures followed by the collection agency were reasonable when performing an investigation or reinvestigation.”

It seems obvious, at least to an attorney, that damages and causation are going to be the two issues most testified on. In every torts case, the Plaintiff’s attorney must prove (1) that the Defendant owed the Plaintiff a duty; (2) that the Defendant breached that duty; (3) that the Plaintiff was damaged; and (4) that the Defendant’s breach of that duty was the cause of the Plaintiff damages. So, the most important elements to prove are causation (that the Defendant’s actions caused the Plaintiff’s damages) and the amount of damages (what is the extent of injury caused to the Plaintiff?). As John indicates, there are at least two kinds of injuries a Plaintiff may suffer in FDCPA and FCRA actions including actual economic damages (a lower credit score results in higher interest rates or complete credit denial) and credit related damages (the consumers credit score is actually damaged or the consumers credit reputation suffers). On the surface, damages seem to be the easiest element to prove, however, just because something bad happens to a consumer’s credit score or profile doesn’t always mean they are damaged. Part of being injured is knowing that you are injured. I guess the question on proving easy damages is whether or not a lowered credit score would be considered actual damage or injury. Plenty of people’s credit scores increase or decrease on a daily basis without them even knowing. Injury is more easily proven if you can tie economic damages to a lowered credit score or as a result of inaccurate information on a person’s credit profile. Now the tough part - causation - did the actions of the Defendant cause the Plaintiff’s injury?

If a debt collector erroneously reports a collection on a consumer’s credit report, has that consumer been damaged? And if so, is the erroneous collection the cause of the Plaintiff’s damages or are there other factors to consider? Say I have a collection reporting on my credit report since July, 2008 but I don’t know it until October, 2009 when I am denied credit due to low credit scores. The lender specifically tells me that I was denied due to low scores AND a collection account. I do some research and find out that the collection account doesn’t even belong to me. Now I have been denied credit because of a collection account that wasn’t even mine, right? Maybe. The lender denied me because of low scores and a collection account. Let’s assume that the collection account was not there to begin with; would I have still been denied credit as a result of low scores.?Maybe the lender failed to tell me that not only was there a collection account on my credit but all my revolving balances were too high so even if the collection account hadn’t been reported, my scores still would have been too low and I would not have been approved.

In this example the fictional Defendant Debt Collector (1) owed a duty to me not to report inaccurate information on my credit; (2) breached that duty by reporting a collection account on my credit that didn’t belong to me; (3) I was damaged (I didn’t get the financing I applied for); BUT (4) the Defendant’s breach of its duty was NOT the cause of me getting denied credit. In other words, had the collection account not been reported on my credit, I still would have been denied credit as a result of my poor management of my credit balances - the ACTUAL cause of my damages.

The mysteries involved with credit scoring models and how different factors influence a consumer’s credit score must be understood by any credit expert witness to be effective, especially in light of the two most important issues an expert witness is required to testify on - damages and causation.

Consumer Credit & The Law A blog by SBFC Law Group, PLLC

FDCPA/FCRA Expert Witness