About 145.5 million people in the United States had their Social Security number, birthdate and other sensitive personal information stolen, thanks to the Equifax Inc. hack. The data breach raises special concerns for our military, including soldiers and sailors serving abroad.
Service members frequently are ordered to move, making it harder to learn if they’ve had their identities stolen or to spot red flags of fraud. Military consumers report identity theft at roughly double the rate of the general public. Bad credit caused by thieves’ unpaid accounts is especially problematic for service members because it could jeopardize a security clearance.
Yet, ironically, at this very moment, Congress is about to vote to strip away our right of access to the courts – a right that is especially important for service members.
The Equifax scandal is not the only credit reporting issue service members have faced. TransUnion, another one of the big three credit reporting agencies, carelessly mismatched thousands of people with criminals and terrorists who had similar names on a government watch list – and refused to fix the problem despite warnings and an earlier successful lawsuit over the same problem.
Just this past June, my firm tried a case class-action against TransUnion Plc on behalf of these innocent misbranded consumers. The jury was so appalled by TransUnion’s conduct that it ordered the company to pay $60 million ($7,337 for each of the 8,185 class members). Military personnel serving our country abroad were among those mislabeled as potential terrorists or criminals.
Dealing with identity theft or credit report mistakes is especially difficult for service members. Soldiers in Iraq or Afghanistan or sailors out at sea have too much going on – not to mention limited internet and phone access – to deal with the endless runaround that many experience when dealing with the credit bureaus.
Class actions are uniquely suited to helping our military, who can stay focused on the mission of defending our country and let others do the work. In the TransUnion case, for example, service members wrongfully tagged as terrorists or criminals will receive relief automatically. In response to the lawsuit, TransUnion changed its reporting procedures to prevent such gross and harmful mismatching in the future. There is no question that but for the civil justice system and the scrutiny of the class action, TransUnion’s practices would have stayed the same for a long time.
But Equifax and TransUnion have tried hard to take away our access to the courts. Equifax was slow to alert the public to the data breach but quick to shield itself. Until public pressure forced a change, the fine print of the website where Equifax offered free credit monitoring prohibited people from suing Equifax or joining a class action over any dispute with the company. And former Equifax CEO Richard Smith, when testifying before the Senate Banking Committee on Oct. 4, admitted that the credit bureau uses arbitration clauses in other consumer products.
TransUnion, too, has slipped in arbitration clauses in the fine print on its website. One court found that TransUnion actively misleads consumers into thinking that clicking “I agree” merely authorized TransUnion to obtain information needed to get a credit score, not to force them to give up their day in court.
A new rule by the Consumer Financial Protection Bureau will stop these shenanigans – if Congress does not block it. The rule restores our Seventh Amendment right to trial by jury by prohibiting banks, credit reporting agencies and other financial companies from putting forced arbitration clauses with class-action bans in the fine print of contracts.
But the U.S. House of Representatives has voted to repeal the rule and the Senate is considering following suit, stripping service members, along with the rest of us, of our rights. That would be a very bad move, as a recent phone survey conducted by a Republican firm found that in the wake of Equifax’s massive data breach, the CFPB rule has widespread bipartisan support, ranging from 64 percent among Republicans to 74 percent among Democrats.
Our men and women in uniform fight to protect our Constitution, including the Seventh Amendment. Whether service members are harmed by a data breach, mislabeled a terrorist or just given the runaround when trying to correct a credit report mistake, they need access to the courts. Congress must not take that right away from those who serve us.
James A. Francis is a founding shareholder of Francis & Mailman, P.C. in Philadelphia, which specializes in consumer protection litigation.
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