FCRA litigation for judgment on pleadings granted

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In Green v. Innovis Data Solutions, Inc., 2021 US Dist LEXIS 176996 (ND Tex. September 17, 2021), the plaintiff brought an action against Innovis Data Solutions (“defendant”) and other entities resulting from the defendant’s conduct (or lack of it) regarding the business line of the plaintiff with a financial institution as set out in the plaintiff’s consumer report, and alleges that the defendant violated 15 USC § 1681e (b) and 1681 (i). Read on to find out more.

The applicant obtained a mortgage for a property located in Florida. The original mortgage was guaranteed by a bank and then the mortgage was later acquired by a third-party financial institution in 2006. In 2018, the applicant missed a mortgage payment resulting in the default of his account. In response, the financial institution approved the applicant for a loan modification in September 2018. When November 2019 arrived, the applicant obtained his credit report where he claims there were inaccuracies including multiple payments in delay between January and July 2018. The plaintiff followed by sending the defendant a letter of dispute stating that he “may have missed a payment, if applicable”. The plaintiff also asked the defendant to “re-investigate[]”his business line and reports,” in the meantime “that the account is” in dispute. “

The defendant responded to the plaintiff’s letter and included an updated credit report reflecting his deletion from the plaintiff’s account with the financial institution. The defendant maintains that it contacted the financial institution about the dispute, but the financial institution verified the information it provided to the defendant regarding the failure of the plaintiff’s account. In response, the defendant deleted the entire business line of the plaintiff.

The plaintiff brought this action against the defendant, alleging that it violated 15 USC § 1681e (b) and 1681 (i). The respondent argues that these claims should be dismissed because they were authorized by the FCRA, in law, to suppress them.

how does the story end? Let’s talk about the law first.

As a reminder, the objective of the FCRA is “to ensure fair and accurate credit reports that protect consumers while meeting the needs of the business”. In order for the defendant to dismiss a motion to dismiss under section 1681e (b), a plaintiff must rely on facts to show the court that:

  1. Incorrect information was included on a credit report;

  2. The inaccuracy was due to failure to follow reasonable procedures to ensure maximum accuracy;

  3. An injury was sustained; and

  4. The injury was caused by the inclusion of inaccurate information.

The Court determined that the plaintiff alleged sufficient facts to show that there were inaccuracies in his credit report, meeting the first part of the test above. However, the Plaintiff did not allege any facts to support his claim that the inaccuracy of his disputed November 2019 credit report was the result of the Defendant’s failure to follow reasonable procedures. Conversely, the plaintiff relied on statements that the defendant “knew or should have known” and that “the plaintiff’s account status and payment history were inaccurate”. This is simply not sufficient to show that the defendant’s inaccuracy was due to his failure to follow reasonable procedures.

In addition, the plaintiff has not alleged any facts in support of its claims for injury. Instead, the plaintiff alleged that he “suffered damage, including… Attempts to refuse to refinance, loss of ability to finance property, loss of credit, loss of ability to purchase and benefit from ‘credit, and the mental and emotional pain, anguish, humiliation and embarrassment of denial of credit. Again, this is simply not enough. In short, the plaintiff did not allege any facts from which the court can reasonably infer that the defendant has violated the rights of the plaintiff in accordance with 1681e (b).

The plaintiff also claims that the defendant violated 15 USC § 1681i when he failed to review and update the plaintiff’s credit report after notifying the defendant of the dispute. In order for the defendant to dismiss a motion to dismiss under section 1681i, a plaintiff must rely on facts to show the court that:

  1. [plaintiff] disputed the completeness or accuracy of information contained in its consumer file and notified [defendant] directly from this dispute;

  2. [defendant] has not reinvested free of charge and has not recorded the current state of the disputed information or deleted the item from the file in the manner prescribed by Article 1681i (a) (5) within the legal time limit;

  3. [defendant’s] the non-compliance was negligent or intentional;

  4. [plaintiff] suffered harm; and

  5. [plaintiff’s] injury was caused by [defendant’s] failure to re-investigate and save the current state of the disputed information or to remove the item from the file.

It is not disputed that the plaintiff sent the defendant a letter disputing the information concerning his account, responding to the first part of the above test. The Applicant, however, has failed to allege sufficient facts to satisfy the other branches of the above test. The plaintiff only alleged that the defendant “did not[ed] conduct a new legal investigation ”, but he does not allege sufficient facts to support this allegation. The Court states “[on] its own, this statement is conclusive.

Further, the Plaintiff has not made sufficient allegations that the Defendant (1) failed to comply with Section 1681i (a) (5) when he deleted his account or (2) that any failure to compliance on behalf of the defendant was negligent or willful. Further, the plaintiff has not alleged how the removal of a business line reflecting missed payments and delinquency caused him harm. Thus, the Court held that the pleadings of the plaintiff do not allege that the defendant violated Article 1681i of the FCRA.

© Copyright 2021 Squire Patton Boggs (US) LLPRevue nationale de droit, volume XI, number 278


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