Lawsuit Alleges Trans Union Continued to Report Debts Eliminated By Class Action Settlement

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Trans Union is the defendant in a proposed class action out of Virginia in which four plaintiffs allege the credit reporting bureau unlawfully included outstanding balances on consumers’ credit reports that had been forgiven as the result of a class action settlement.

According to the lawsuit, each plaintiff received a usurious payday loan from a lender called Western Sky Financial that was then transferred to WS Funding, LLC—owned by CashCall, Inc.—for collection. CashCall’s general lending practices, the suit says, became the subject of a class action lawsuit—Hayes v. Delbert Servs. Corp.—that argued the company’s payday loans violated a slew of state and federal lending statutes. Despite attempts from the defendants in Hayes v. Delbert Servs. Corp. to send the proceedings into arbitration, the U.S. Court of Appeals for the Fourth Circuit ruled otherwise.

The case says that following the Fourth Circuit’s ruling, the parties in Hayes v. Delbert Servs. Corp. reached a settlement in which the defendants “agreed to pay monetary consideration to the settlement class and to adjust to zero all the outstanding debts” in the companies’ possession. For its part, Trans Union has allegedly continued to report on consumers’ credit reports outstanding balances supposedly owed to Western Sky/CashCall despite the class action settlement forgiving the obligations. From the case:

“Upon information and belief, Defendant Trans Union knew or should have known that these Western Sky/CashCall debts were invalid under Virginia law and that they had been the subject of the Hayes settlement, which provided that the balance of the loans was zero.

Despite this knowledge, Trans Union did not have any procedures in place to ensure that this inaccurate information was not reported on the Plaintiffs’ and putative class members’ reports.

Instead, Trans Union waited for consumers to dispute the inaccurate information themselves before it removed the CashCall/Western Sky debts from consumer reports.”