GEICO and Safeco Credit Scoring Procedures Taken to Supreme Court
Insurance commissioners from 13 states have filed briefs against the use of credit scoring by insurance companies, and have taken these arguments to the U.S. Supreme Court in an effort to further protect consumers.
According to a story in the Insurance Journal, Delaware Insurance Commissioner Matt Denn headed up the amicus curiae, or "friend of the court," brief, which was filed with the Supreme Court in Washington, D.C. in separate cases against insurance companies GEICO and Safeco.
Consumers have alleged that GEICO and Safeco violated the Federal Fair Credit Reporting Act when they failed to send people "adverse action notices" when their credit scores resulted in higher rates.
The FCRA typically requires banks, landlords and others to send "adverse action notices" when a low credit score or other negative information contained in consumer a consumer credit report leads to the denial of a loan, higher interest rates, or the need for a higher down payment when purchasing something.
Denn cited several reasons for the brief, which most notably included putting valuable information into the hands of consumers and making sure that insurance companies using credit scoring systems adhere to ethical procedures or face the consequences.
He also urged the Court to uphold recent decisions which found GEICO and Safeco to have acted with willful disregard of the FRCA requirements to send out "adverse action notices."
Insurance commissioners from Arkansas, California, Georgia, Iowa, Kansas, Michigan, Montana, New Mexico, North Dakota, Oklahoma, Utah and Washington also contributed to the brief.
As this situation reveals, it is vital that consumers to know what insurance companies are doing with their credit scores.
Remember insurance companies operate at their best when you have as little information as possible. Whether using factors like credit scores to increase automobile insurance rates without your knowledge or minimizing claims in order to avoid making fair compensation when you're injured or your property is damaged, insurance companies are focused on their own bottom lines, not your well being. If you have questions about the conduct of your insurance company, speak with a local lawyer.
When it comes to your credit scores and credit report, you need to be on top of your game-educate yourself about your credit and your insurance coverage.