Experian has reached a $24 million settlement with a class of more than 100,000 payday loan customers in a lawsuit that alleged that Experian inaccurately reported customers’ credit history by reporting debts on disputed loans. If approved, the $24 million settlement fund will be used to make automatic payments to each of the participating members of the class without the need to file a claim.

Lead plaintiff Demeta Reyes first took out a $2,600 loan from tribe-affiliated Western Sky Financial LLC in 2012, but said she later stopped making payments after learning that Georgia’s attorney general was bringing a consumer protection action against the company. Western Sky Financial, which is owned by a member of the Cheyenne River Sioux Tribe, avoided state usury laws as a tribe-affiliated lender and charged higher interest rates. Delbert Services Inc. would service the loans issued by Western Sky Financial, and another company, Cash Call Inc., provided the financial backing.

Reyes claims that Experian continued reporting delinquent loans serviced by Delbert even after Delbert folded and asked the credit agency to stop using its data. Reyes sued Experian Information Solutions Inc. in 2016, claiming that the company purposefully failed to “follow reasonable procedures to assure maximum possible accuracy” in violation of the FCRA.

In 2017, the trial court ruled in favor of Experian on summary judgment, with U.S. District Judge Andrew J. Guilford holding that the agency’s credit reports weren’t “unduly misleading” and that the evidence presented didn’t appear to support that Experian “willfully” failed to comply with the FCRA. A Ninth Circuit panel in May reversed the lower court’s decision over doubts about whether Experian intentionally continued to report on the Delbert portfolio — containing more than 128,000 accounts — after the servicer urged the agency to delete the accounts.

In October, Judge Guilford certified a class of more than 100,000 payday loan customers who claim Experian jeopardized their credit history when it reported debts on disputed loans. Under the proposed settlement, class members will receive a check for at least $270 in the mail within 45 days of the date that the settlement goes into effect.

The case is Demeta Reyes v. Experian Information Solutions Inc., case number 8:16-cv-00563, in the U.S. District Court for the Central District of California.

This blog is intended to provide information to the general public and to practitioners about developments that may impact Oregon class actions.

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A Washington federal judge has denied a bid by a fintech firm and a tribal corporation through which the firm ran a payday lending business to force into arbitration a suit over exorbitant interest rates, ruling that arbitration clauses in agreements borrowers signed are invalid. The judge said the unclear loan contract language seems to intend that the tribal law of North Dakota’s Turtle Mountain band of Chippewa Indians should apply — to the exclusion of federal and state law — but he ruled that the agreement goes against public policy and cannot be upheld because it forms a substantive waiver of federal statutory rights. Continue reading “Judge Rejects Arbitration Clause In Tribal Payday Loan Class Action”