A pending lawsuit filed by debtors in federal court in Santa Ana, Calif., alleges that two of the three major credit bureaus, TransUnion and Equifax, fail to update credit reports to show a debt has been discharged—a violation, the plaintiffs contend, of state and federal credit laws. Federal law requires the bureaus to assure the "maximum possible accuracy" of their reports.
On Mar. 6, U.S. Bankruptcy Judge David Carter rejected a preliminary settlement in the case. He wrote that a December, 2006, declaration from a former Equifax employee, John Ulzheimer, serving as an expert witness for the plaintiffs, along with other information, suggests that "a jury could reasonably conclude" that TransUnion and Equifax "acted knowingly" in not updating bankrupt accounts.
Equifax and TransUnion have denied the plaintiffs' allegations in the case and declined to comment. By Brian Grow