What’s the effect of incomplete information on a consumer’s financial responsibility?

  • What’s the effect of incomplete information on a consumer’s financial responsibility?
01 Sep, 2023
Daniel Cohen
11 min
195
incomplete information on financial responsibility

It does not affect a consumer’s financial responsibility.

Does having incomplete or incorrect customer info, such as a wrong user number, affect your overall financial responsibility when you make your payments?

It’s a known fact that consumers should pay their debts early. However, one might wonder what will happen if a consumer attempts to make a payment to a wrong account number in the bid to pay the debts.

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This happened in the case of Hauge v. Amerihome Mortgage Company. Let’s dive in and find out the law’s position on such an issue.

Facts of the case

The plaintiff made mortgage payments using an online payment processor. For three consecutive months, the payments were still processed even though the plaintiff entered the wrong account number. But in the fourth month, the payment was rejected because of the wrong account number entered.

Subsequently, the plaintiff attempted to make the payment via check, but it was rejected due to the same wrong account number issue. As the issue persevered, the plaintiff’s report was hit with delinquency for the missed payment. This resulted in reducing the plaintiff’s credit scores and ruining their chances of obtaining a home equity line of credit.

The plaintiff disputed the delinquency as a credit reporting error and later initiated an action against the defendant, seeking damages for the defendant’s violation of the Fair Credit Reporting Act.

The verdict and lessons

It was found that the defendant’s report stating the plaintiff’s payments were late was technically accurate but materially misleading.

The plaintiff submitted payments on time but due to entering a wrong account number, the defendant chose not to apply the payments to the plaintiff’s account.

The reality is that the plaintiff actually attempted to make the payment early, but the payment was rejected by the defendant. The omission of a single digit in a ten-digit account number by the plaintiff has absolutely no bearing on the plaintiff’s financial responsibility.

There is no question as to whether the plaintiff attempted to make the payments on time. After all, the payments were accepted for the initial three months even though the account number was wrong.

Since the defendant’s report that the plaintiff’s payments were late came without an explanation of the surrounding circumstances, it could have been expected to have an unfavorable effect.

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About the author
Daniel Cohen
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Daniel Cohen is a Founding Partner of Consumer Attorneys and a co-chair of Consumer Finance Litigation practice. Since 2017, he is a member of the National Association of Consumer Advocates and the National Consumer Law Center. Mr. Cohen is a nationally-recognized practitioner of consumer protection law. He has a wealth of proven legal experience in the US in: collective claims, representing visually impaired people who believe their rights under the Americans with Disabilities Act have been violated in both the physical and digital environments, corporate governance and dispute resolution. Read more

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