Business is picking up in the world of consumer credit related lawsuits. According to Michigan based WebRecon some 617 lawsuits were filed between April 1 and April 15, 2011. Of those 617, 564 were FDCPA lawsuits and 73 were FCRA lawsuits. 564 represents 17% of the FDCPA lawsuits filed so far in 2011. The 73 FCRA lawsuits represents 20% of the total filed so far in 2011. The remaining 17 were either TILA or TCPA lawsuits. I can tell you from first hand experience that March and April were very busy months for credit expert witnesses and FDCPA expert witnesses.

The following is from WebRecon’s semi monthly newsletter…

Summary:

• Of those cases, there were about 624 unique plaintiffs (including multiple plaintiffs in one suit).
• Of those plaintiffs, about 185 had sued under consumer statutes before.
• Combined, those plaintiffs have filed about 1118 lawsuits since 2001
• Actions were filed in 133 different US District Court branches.
• About 504 different collection firms and creditors were sued.

The top courts where lawsuits were filed:

• 50 Lawsuits: Pennsylvania Eastern District Court – Philadelphia
• 48 Lawsuits: Colorado District Court – Denver
• 29 Lawsuits: Minnesota District Court – Dmn
• 24 Lawsuits: Florida Southern District Court – Fort Lauderdale
• 22 Lawsuits: New Jersey District Court – Newark
• 19 Lawsuits: California Central District Court – Western Division – Los Angeles
• 16 Lawsuits: Indiana Southern District Court – Indianapolis
• 16 Lawsuits: California Southern District Court – San Diego
• 15 Lawsuits: Illinois Northern District Court – Chicago
• 15 Lawsuits: Texas Southern District Court – Houston

The most active consumer attorneys were:

• Representing 36 Consumers: Craig Thor Kimmel
• Representing 20 Consumers: David Michael Larson
• Representing 16 Consumers: Lark H Fogel
• Representing 16 Consumers: Mark L Vavreck
• Representing 15 Consumers: Diana Panian Larson
• Representing 14 Consumers: Michael S Agruss
• Representing 13 Consumers: Donald A Yarbrough
• Representing 11 Consumers: Dave Lilley
• Representing 10 Consumers: Andrea Darrow Smith
• Representing 9 Consumers: Allison Marie Wolfe

Statistics Year to Date:

• 3437 total lawsuits for 2011, including:
• 3251 FDCPA
• 368 FCRA
• 172 TILA
• 111 TCPA

Number of Unique Plaintiffs: 3468 (including multiple plaintiffs in one suit)

The most active consumer attorneys of the year:

• Representing 106 Consumers: David Michael Larson
• Representing 105 Consumers: Craig Thor Kimmel
• Representing 66 Consumers: James D Pacitti
• Representing 60 Consumers: Michael S Agruss
• Representing 57 Consumers: Lara Ruth Shapiro

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On April 27, 2011 a man named Kristopher Johns filed a lawsuit in Federal court against Sony. The lawsuit, which seeks class action status, was filed in the US District Court in the Northern District of CA. The issue is the well publicized data breach where Sony’s PlayStation customer list and some of the information was breached by an unknown hacker or group of hackers.

The complaint accuses Sony of (1) VIOLATION OF BUSINESS &PROFESSIONS CODE §17200; (2)VIOLATION OF BUSINESS & PROFESSIONSCODE §17500, FALSE OR MISLEADINGSTATEMENTS; (3) BREACH OF SONG-BEVERLY CONSUMER WARRANTY ACT;AND (4) VIOLATION OF THE CONSUMERLEGAL REMEDIES ACT; (5) BREACH OFEXPRESS CONTRACT; (6) BREACH OFIMPLIED CONTRACT; (7) VIOLATIONS OFSECURITY REQUIREMENTS FORCUSTOMER RECORDS, and (8) NEGLIGENCE

This is also potentially a garden variety credit damages case because of the nature of the information at risk because of the breach, which included personal identification information and possibly payment information. In fact Sony sent an email suggesting that their PlayStation customers get copies of their credit reports and even sign up for credit monitoring services. Their suggestion, while expected, is meant to stem the potential onslaught of credit damaging attempts to obtain new credit fraudulently.

At this point there is probably no need for a seasoned credit expert witness because there really hasn’t been enough time since the data breach for large scale credit report damages or credit score damages. However, if a large number of Sony PlayStation users start finding fraudulent credit inquiries, new accounts or charges showing up on their credit reports then it’s time to bring in a credit expert witness to help lay out a coherent series of events that likely lead to their credit damages.

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Today I received the following email from Round Table Group, an expert witness consulting service.

Dear Mr. Ulzheimer:

More than 15 years ago, we established Round Table Group as an expert witness consulting service to connect the right industry experts, corporate executives and academics with litigators building their cases. Today, Round Table Group helps connect expert witnesses to Am Law 200 and boutique law firms across the United States. We are pleased to tell you that our next step is just as exciting – we are joining Thomson Reuters, a leader in providing intelligent information to businesses and professionals.

Round Table Group will align with the litigation businesses within Thomson Reuters, and will complement the expert witness content on Westlaw, the preferred online legal research service for lawyers. The combination of Westlaw’s expert witness content and Round Table Group’s services will provide our litigator customers with an enhanced service and a more complete litigation solution. And along with our consulting services, this partnership will connect you to an expanded client base through Westlaw.

You can expect our service commitment to you will remain our highest priority throughout this transition and will be an area we will continue to invest in to achieve new levels of service performance on your behalf. And you will continue to work directly with your Round Table Group team, just as you do today.

We are delighted by the opportunity that this acquisition represents for you, Round Table Group and Thomson Reuters. We will continue to keep you updated as our plans unfold. If you have any questions, please contact us at (202)-595-1338. We look forward to continuing to work with you as a valued partner.

Best regards,

 

Russ Rosenzweig
Chief Executive Officer
Round Table Group

Allison Guidette
Vice President and General Manager – Litigation
Thomson Reuters

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We’re almost 3 months into 2011 and we’re on pace to match the record volume of FDCPA and FCRA lawsuits from 2010. We ended the year with over 12,000 consumer credit protection lawsuits, with the majority being FDCPA and FCRA suits. Of course, there were also countless lawsuits of another nature that included a credit damage claim.

I had a case out of Ohio that was a medical malpractice lawsuit. A woman was diagnosed, incorrectly, with cancer and after years of treatment, lost jobs, no healthcare coverage, and zapped saving’s accounts the truth was revealed. She never had cancer in the first place.

The problem is her credit report was now awash in medical collections and maxed out credit cards. This one was filed as a medial malpractice case, among other things, but had a garden variety credit damage component to it. A case like this would not be counted in the aforementioned 12,000 lawsuits because there was no FDCPA or FCRA cause of action.

I quickly realized I was not going to be their star witness. That honor went to an oncologist out of Texas was who going to testify as to the errors in initial doctor made when examinging and diagnosing the plaintiff’s medical condition. Point being, a credit damage claim doesn’t always have to involve a bank, collection agency or credit bureau.

I had another case out of Florida where the plaintiff was hit while driving to work. She was unable to continue working and had to begin living off of her credit cards. Her once modest credit card usage patterns suddenly shifted dramatically and began to look more like someone who used their cards excessively.

Her FICO credit scores went from the mid 700s to the mid 600s. The chance in score was because of a dramatic increase in credit card utilization. As the percentage went up, the scores went down.

There are, of course, thousands of garden variety FDCPA and FCRA lawsuits, which involve a creditor or a collector. And while many of them have merit, many of them do not. For example, I had a case out of Arizona where a consumer was claiming a collection agency was damaging her scores because they reported a collection on her credit reports.

She had a “plaintiff only” credit expert witness submit a report trying to paint the collection agency as a rouge collector guilty of malicious credit reporting. He neglected to acknowledge that the collection was rightfully being reported because she owed thousands of dollars of delinquent credit card debt. And, her credit was already being damaged by the 17 other unrelated collections and 6 unrelated charge offs, which were the real cause of her lower scores.

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On April 5th, 2010 a jury in San Diego voted 9-3 for the defense in a credit damages claim against an insurance company. John Ulzheimer served as the credit expert witness for the defense team and testified at deposition and trial that the actions of the defendant did not, in any way, cause credit damages to the plaintiff.

Plaintiff was a non-staff handyman at an apartment complex and was sued several years prior when a party at the apartment went horribly bad and someone was injured. He was named in the lawsuit and the apartment’s insurance provider would not provide for a defense since he was not an employee. He lost by default and a judgment in excess of $4 million dollars was filed against him.

Shortly after, he filed a lawsuit against the insurance company and changed his story to say that he WAS an employee of the apartment complex and should have had his defense paid for. Within the complaint was a claim for credit damages caused by the judgment.

Plaintiff hired his own expert witness who claimed the judgment, which was never on any of the plaintiff’s credit reports, caused him to be declined credit and cost him a job. Plaintiff’s expert, who claims to be an expert in credit reporting and credit scoring, overlooked one key fact…items not on your credit report cannot cause credit report damage or credit score damage. Yet, even under oath at deposition, their expert held firm that items not on a credit report can cause credit damage.

A review of the Plaintiff’s three credit reports showed that the judgment was not being reported and had never been reported. Regardless, even if it had been reported it would have had no incremental negative impact on his credit because his credit reports were populated 100% with negative information and no positive information. His credit scores would have been in the lowest 1% nationally even without the judgment being reported to his credit. As such, any lender or employer who would have reviewed his credit as part of their underwriting or screening processes would have seen a record of horrible credit performance.

Ulzheimer was the last expert witness the testify. Shortly after the jury rendered their verdict, not guilty on all counts and the plaintiff takes $0. The feedback from the jury members was positive, “The jury said they thought you were great and they didn’t believe (the plaintiff’s expert) at all.”

Although Ulzheimer has been an expert witness in over 50 cases, trials are rare. The results in San Diego kept Ulzheimer’s trial record a perfect 3-0.

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Washington, DC – Tomorrow, Rep. Luis Gutierrez (D-IL), Chairman of the Subcommittee on Financial Institutions and Consumer Credit, will hold a hearing to examine the role consumer credit scores and reports play in today’s economy. Credit scores and reports are ubiquitous in the current financial marketplace and are used for everything from credit card and mortgage approval to setting car insurance rates and even judging whether or not someone is employable.

“Consumers’ credit scores and credit reports have become their passports in our financial world,” Rep. Gutierrez said. “Yet many consumers do not fully understand how these increasingly important scores and reports are created and used by lenders and others, how consumers can obtain copies of their credit scores and reports and use them to their best advantage, and what they can do in order to correct inaccuracies in their credit reports.”

The subcommittee hearing will focus on how credit scores and reports are formulated, who purchases them and for what purpose. The hearing is also intended to provide a discussion of relevant issues of particular concern to consumers and several Members of Congress, including the impact of rising medical debt on credit scores and reports and their use for hiring purposes. Witnesses will include FICO, VantageScore, and the three major credit bureaus – Equifax, Experian and Transunion. The Federal Reserve and the Federal Trade Commission will also testify to their recent and ongoing oversight efforts over the consumer credit scoring industry.

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