Credit Reporting Liability

Some of the erroneous information reflected data on loans that had been paid off and closed as still open and delinquent because no further payments had been made since the final payments had been made, victim Mark S. Blythe told MortgageDaily.com. And a current loan was reported as two separate loans, each “being in arrears and with 27 late payments,” according to his lawsuit.

The erroneous data had been sent to Cincinnati-based Fifth Third from Casselberry, Fla.-based R-G Crown Bank, which Fifth Third acquired last year. Data processing giant Fiserv handled the transfer. The information also was sent to at least one credit bureau but whether it was by Fiserv or Fifth Third could not be determined

Fifth Third has admitted that several thousand persons were impacted by the erroneous reporting which occurred late last year. Blythe said his own investigation identified approximately 2,500 people in Florida, about a thousand in Ohio and hundreds more in other states were affected.

“My three closed accounts at Crown Bank were changed to active files,” Blythe commented, pointing out, “I had no business relationship with Fifth Third.”

A real estate investor based in Flagler Beach, Fla., Blythe discovered the error when he went to the closing on three residential loans last Dec. 21 and the lender pulled a second and more current credit report, he explained.

“My credit score had gone from the high 760s to the low 600s” because of the erroneous reporting, he said, pointing out that as a result the closing never was completed. Although Fifth Third offers loans similar to those he was denied as a result of Fifth Third’s erroneous credit reporting, the bank never offered him loans similar to those that had been denied to him, he said.

The Fair Credit Reporting Act requires banks to provide accurate data to credit bureaus and to provide updated information if it learns there have been any errors, American Bankers Association spokeswoman Nessa Feddis told MortgageDaily.com. If Fifth Third sent erroneous information to only Experian, then it is required to send corrected information to only Experian. As to any inaccurate information that ended up at TransUnion and Equifax, she pointed out, “Someone had an obligation to correct it.”

In his complaint against Fifth Third Bank, filed on Jan. 23 in Orange County, Fla., Circuit Court, Blythe alleged that the bank “has caused plaintiff to lose all of the goodwill and profitability in excess of $80,000 which plaintiff would have received had the slander of his credit by defendant not occurred.”

Fifth Third Bank’s actions, according to the complaint, “virtually destroyed plaintiff’s business.”

Further, the complaint maintains, Fifth Third “has taken no meaningful action to remedy the harm done to plaintiff.” Unspecified money damages, court costs and applicable fees are sought.

In two letters to Blythe from Fifth Third officials dated Dec. 13 and Dec. 19 and attached as exhibits to the complaints, an official admitted that Blythe’s loans had “no delinquencies” and promised, “All of the errors reported will be corrected,” while another official said that “credit reporting agencies” have been notified to “correct this negative reporting immediately.”

Blythe said Fifth Third Bank apparently notified only Experian of the errors and did not notify TransUnion and Equifax of the errors and that no corrections had shown up in any of his credit reports.

A Realtor in South Carolina told MortgageDaily.com that she discovered errors in her credit report and score from TransUnion when she sought to refinance her home mortgage. She did not complete the refinance when the interest rate, after the lender saw her erroneous credit report, was raised to 7.5 percent from 5 percent, 150 basis points higher than what she was paying on her old mortgage. Attempts to get Fifth Third to correct the errors have, to date, been unsuccessful, maintained Barbara Dwulet, of Myrtle Beach, who had a mortgage from R-G Crown Bank.

“I’m not a customer of Fifth Third, so they don’t have any information on me,” she said. “They couldn’t find me in any of their files. They said they didn’t have any records before 2007.”

Dwulet said her credit report included false late payments and some accounts she didn’t recognize.

“My things are on TransUnion. But I don’t know whose accounts are on my credit report,” she commented. “Fifth Third feels they only have to report to Experian.”

Fifth Third declined to discuss the situation, including what it has done.

“Because of pending litigation,” Fifth Third Bank spokeswoman Amy A. Williams told MortgageDaily.com, “we cannot comment at this time.”

Fiserv Marketing Communications Manager Kathleen Desmond Mikula, said in a statement e-mailed to MortgageDaily.com, “The corrected credit bureau file was sent to Experian in early December and the upload success was verified by the bureau. They have had the corrected files since that time.”

She did not immediately respond when asked whether the corrected file had also been sent to any of the other two credit reporting bureaus.

Blythe said he had reported the erroneous credit reporting to the Federal Reserve Bank of Cleveland and the bank told him it was investigating the situation. But on Feb. 1, “they told me they had stopped the investigation and had concluded that Fifth Third had acted satisfactorily.”

A Federal Reserve Bank of Cleveland spokeswoman would not comment on the matter.

The Federal Trade Commission “may take action on behalf of consumers as a group if the FTC sees a pattern of unfair or deceptive practices,” according to its consumer protection division.

Dwulet, who already has filed a complaint against Fifth Third with the Federal Reserve Bank of Cleveland, said she intends to also file a complaint with the FTC.