A proposed class action alleges LexisNexis Risk Solutions, Inc. and Kroll Factual Data, Inc. have failed to take reasonable steps to ensure the consumer reports they furnish and sell are accurate.
LexisNexis, which prepares and furnishes consumer reports that include civil judgments and tax liens, “diligently collects” the initial entry of such derogatory consumer information yet fails to report when the judgments and liens are satisfied, withdrawn, or released, the case alleges.
The plaintiff claims Kroll purchases consumer records from LexisNexis to include in credit reports for mortgage loan applicants despite knowing of “the problems and failures of the LexisNexis record collection procedures” and without taking adequate steps to verify the accuracy of the reports.
For years, LexisNexis was the exclusive credit reporting agency provider of tax lien and civil judgment information included in credit reports issued by Experian, Equifax, and TransUnion—known as the “Big 3” credit bureaus, the lawsuit says. According to the case, the public record information provided to the Big 3 by LexisNexis was “frequently inaccurate and out-of-date,” and until recently, the credit bureaus hid LexisNexis’s involvement in the collection of their public records information.
The inaccuracies in the reporting of tax liens and civil judgments have been the subject of multiple lawsuits, the case relays, with the credit bureaus entering into a multi-state settlement in 2015 in which they agreed to only report public records if the information was updated every 90 days.
The subsequent settlement of three class action lawsuits in 2018 and 2019 led the credit bureaus to “stop completely” the reporting of public records and tax liens, the complaint adds.
Taking advantage of the Big 3’s decision, LexisNexis began marketing public records reports under its own brand, the lawsuit says, advertising its “RiskView Liens and Judgment Report” to lenders and creditors as a method of providing the information no longer included in the Big 3’s credit reports. The suit says, however, that LexisNexis does not remark the reason for which Experian, Equifax and TransUnion ended their practice of reporting civil judgments and liens.
“Of course, LexisNexis does not disclose in its marketing materials that the inaccuracies in its data are the reason why the Big 3 stopped reporting civil judgments and tax liens,” the complaint reads.
According to the case, LexisNexis uses automated procedures and “independent-contractor” vendors to collect civil judgment and lien information with “little, if any, meaningful quality control.”
As a matter of policy, the company does not adequately update consumer records when a judgment or lien is satisfied, the case states, relaying that data analyzed in litigation against Experian, who obtained its public records information from LexisNexis, showed an average delay of 77 months in updating civil judgments, while lien updates took an average of 243.5 days in South Carolina.
The case argues LexisNexis refuses to update dispositions—including satisfactions, vacaturs, withdraws, appeals and dismissals—because it is more expensive than following its current procedures.
“Updating records to appropriately reflect satisfactions would require a much more rigorous set of procedures to collect those records and update the original records than LexisNexis currently employs,” the lawsuit alleges.
Instead of changing its procedures, LexisNexis relies on consumers to “clean up their own files” through disputes, the case says. According to the suit, consumer disputes, as well as lawsuits, indicate LexisNexis has known of its inadequate update procedures for years yet has taken no action to fix the inaccuracies because it can make a greater profit from reporting derogatory information. From the complaint:
“By way of example only, and without limitation, LexisNexis’s conduct was willful because it was intentionally accomplished through intended procedures; it had knowledge of its violation through other lawsuits in other jurisdictions but it did nothing to rectify the problem, and because it was motivated by placing LexisNexis’ financial interests above the interests of consumers in accurate reporting. LexisNexis believed that its reporting derogatory credit information about tax liens and judgments was of greater economic value to its paying customers than ‘disposition’ information that demonstrated that the debt was no longer owed.”
Kroll, for its part, is well aware of the accuracy problems with reports obtained through LexisNexis yet continues to purchase and resell the information as part of its “RiskView” report for mortgage lenders given it costs the company less than obtaining the data through other, more accurate, means, the plaintiff alleges.
“Kroll purchases and resells the LexisNexis report because it is less expensive than Kroll searching and compiling judgment and lien information directly,” the complaint reads. “It is also less expensive than Kroll obtaining information from more accurate sources.”
The case goes on to claim Kroll, through its “regular review and industry participation” and litigation against its parent company, was put on notice of the Big 3 settlements and the reason the credit bureaus had stopped reporting data obtained through LexisNexis. Nevertheless, Kroll has resold LexisNexis reports “without sufficient independent investigation, audits, research or review” to ensure the accuracy of the reports, resulting in damage to consumers’ reputations, credit scores and ability to obtain credit, the complaint alleges.
The lawsuit looks to represent the following two proposed classes:
“All natural persons who: (i) were the subject of a civil judgment and/or tax lien recorded in any court clerk’s office or court in the United States (ii) where the judgment or lien appeared within a Kroll Factual Data or CBC Innovis consumer report dated within the five year period preceding the filing date of this Complaint, and (iii) where the public record filing of the related governmental agency indicated that the civil judgment or tax lien had been satisfied, vacated, dismissed, released or withdrawn on a date at least 30 days prior to the date of the consumer report.
All natural persons who: (i) were the subject of a civil judgment and/or tax lien recorded in any court clerk’s office or court in the United States (ii) where the judgment or lien appeared within a Kroll Factual Data consumer report dated within the five year period preceding the filing date of this Complaint, and (iii) where the public record filing of the related governmental agency indicated that the civil judgment or tax lien had been satisfied, vacated, dismissed, released or withdrawn on a date at least 30 days prior to the date of the consumer report.”
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