Banking and Finance Law Daily Proposed settlement reached in case involving public filing of credit reports
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Thursday, February 14, 2019

Proposed settlement reached in case involving public filing of credit reports

By Nicole D. Prysby, J.D.

A proposed settlement has been reached in a case involving class-action claims that a debt collector violated the Fair Credit Reporting Act and the Fair Debt Collection Practices Act by publicly filing consumer credit reports with credit scores as part of state-court collection actions.

Parties have filed a proposed settlement for claims against debt-collection law firm Machol & Johannes, LLC (Machol) over alleged violations of the Fair Credit Reporting Act (FCRA) and the Fair Debt Collection Practices Act (FDCPA). A consumer brought the class-action FCRA and FDCPA claims in the federal district court in Colorado against Machol over its practice of publicly filing consumer credit reports with credit scores as part of state-court collection actions. Under the terms of the settlement, each member of the class will receive $60 from a total class settlement fund of $51,540.

The consumer brought the class-action FCRA and FDCPA claims against Machol after she was unable to repay the balance on her credit card, and the account was sent to Machol for collection. When Machol filed the complaint, it attached one of the consumer’s credit card billing statements, which contained her unredacted Trans Union credit scores for a 12-month period. The consumer argued that Machol did not "obtain" or "use" her consumer credit reports for a "permissible purpose" and that her credit scores did not "evidence" the writing of the underlying credit transactions.

In the class-action stipulation and settlement agreement, Machol admits no wrongdoing but will petition the courts to change the public record filing status of any previously filed credit report/credit score of any class member to be protected. Each member of the class will receive $60 from the total class settlement of $51,540. The consumer will receive a $5,000 incentive award, and Machol will also pay settlement administrator costs (to be determined) and attorney fees and costs of up to $50,000.

In the parties’ joint motion for preliminary approval of the class action settlement, they identify two settlement classes with a total of 859 members: (1) the FCRA Settlement Class of all Colorado consumers who have had their TransUnion consumer reports/credit scores published in various judicial court actions by Machol within two years of the date of the action; and (2) the FDCPA Settlement Class of all Colorado consumers who have had their TransUnion consumer reports/credit scores published in various court actions by Machol within one year of the date of the action.

The parties assert that Rule 23(a) prerequisites are satisfied, given that the named plaintiff fairly protects the interests of the class, the class size of 859, and the fact that all class members allegedly had their rights violated in the same manner. Rule 23(b) requirements are met because common questions predominate, no other class members have shown an interest in controlling the litigation, and there are no similar pending actions against Machol. The parties also argued that the court should approve the proposed settlement because it follows extensive investigation by the plaintiff’s counsel, review of Machol’s motion to dismiss the claims, and a review of settlements in similar cases.

Therefore, the settlement was fairly and honestly negotiated. Based on the arguments in Machol’s motion to dismiss, there is a question of law as to whether the plaintiff suffered an injury in fact sufficient to confer standing, and further litigation would expose class members to risks related to liability and timeliness of payment. Finally, class counsel believes the settlement is fair and reasonable.

Attorneys: Thomas J. Lyons Jr. (Consumer Justice Center P.A.) for Alannah Blanks. Alan Schindler and Edward P. Timmins (Timmins LLC) for Machol & Johannes, LLC.

Companies: Machol & Johannes, LLC; TransUnion

MainStory: TopStory ColoradoNews ConsumerCredit DebtCollection FairCreditReporting

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