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Credit rating class action could be biggest ever

Credit rating class action could be biggest ever

GERARD MALOUF and Partners (GMP) is representing plaintiffs in a class action that has the potential to become the largest ever class action in Australia. Eighteen plaintiffs have filed a suit…

GERARD MALOUF and Partners (GMP) is representing plaintiffs in a class action that has the potential to become the largest ever class action in Australia.

Eighteen plaintiffs have filed a suit against Australia’s top credit profiler, Veda Advantage Information Services and Solutions, formerly Baycorp Advantage, alleging defamation, negligence and breaches of the Trade Practices Act.

The plaintiffs allege that Veda kept inaccurate information on their database which resulted in them being denied credit.

In 2004, the financial policy officer for the Australian Consumers Association Catherine Wolthuizen found 34 per cent of a pool of 50 subjects discovered errors in their Baycorp reports.

Based on its own research GMP believes that the number of people affected could be up to 100,000 of the 14.5 million people whose credit histories Veda manages.

Gerard Malouf said this meant the amount of compensation being sought could end up being enormous due to the number of people involved.

“In terms of the potential amount or value, it could be in excess of a couple of hundred million if you had over 50,000 people getting $5000. That’s a lot of money,” Malouf said.

“Potentially, because it affects so many and can affect people financially, this could be a major political issue come the federal election later this year. Credit reporting needs to be reformed. This case is only touching the surface of credit reporting issues,” he said.

According to the class action, the alleged errors arose when Veda updated its database from information supplied by creditors.

“They are supposed to keep accurate and up-to-date records and have a system in place to ensure it’s correct. But there is no system; it’s an honour system. Subscribers update info directly,” Malouf said.

GMP said those affected were incorrectly labelled “defaults” when they were actually in an arrangement scheme with their creditors.

“Anyone who goes into a scheme of arrangement with their creditors was listed as bankrupt — the whole point of a scheme of arrangement is to avoid bankruptcy,” Malouf said.

Veda has said it plans to mount a vigorous defence and that dispute resolution and investigation processes have been put in place.

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