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August 10, 2009

New FCRA case - Cornock v. Trans Union

New FCRA case out of the United States District Court for the District of New Hampshire - Troy Cornock v. Trans Union, 2009 WL 2252886 (July 29, 2009). The opinion was handed down by District Judge Joseph N. Laplante.

The lawsuit alleged that Troy Cornock was the victim of identity theft by his e-wife. Apparently, Cornock's ex-wife allegedly obtained a credit card from MBNA before their divorce but after Cornock had moved out of the marital home. The ex-wife made various purchases on the alleged fraud account and even made some payments. After the payments stopped, MBNA attempted to collect the amount owed from Cornock. Cornock disputed the account, informing MBNA that he had not opened, used or even knew about the account. MBNA did not believe Cornock and filed an arbitration action against him.

Cornock defended the arbitration by informing the arbiter that he was a victim of his ex-wife's identity theft. The arbiter ordered MBNA to produce documents that Cornock had previously requested to prove his innocence. MBNA conveniently claimed not to be able to produce the documents but said that the documents were not relevant since payments were made in Cornock's name (even though Cornock neither made the payments or knew about them). The arbiter amazingly bought this argument and entered an award against Cornock. The Court called this argument "imaginative". Sounds like a completely pro-business, anti-consumer arbiter to me. But that's what you usually get with arbitration.

MBNA sued Cornock to convert the arbitration award to a enforceable judgment. In the interim, Cornock disputed the MBNA account to Trans Union as a fraud account. Trans Union relayed the fraud dispute to MBNA who verified the account to Trans Union, resulting in its continued inclusion on Cornock's credit report. Trans Union apparently did not perform any investigation of its own.

Cornock successfully defended MBNA's litigation to enforce the "imaginative" arbitration award, resulting in the arbitration award being voided. Cornock then sued MBNA, Trans Union and other CRAs for violations of the FCRA. After being sued, Trans Union removed the fraudulent MBNA account from Cornock's credit report. Cornock settled his claims with all defendants other than Trans Union, who filed a motion for summary judgment.

Cornock's sole claim against Trans Union was that Trans Union violated 1681i of the FCRA by failing to perform a reasonable investigation of his dispute of the fraudulent MBNA account. A necessary prerequisite to a 1681i claim is that the disputed information must be inaccurate.

This Court (I think incorrectly) held that Cornock could not prove an inaccuracy on his credit report because any investigation by Trans Union would not have revealed any inaccuracy. This is in my opinion a terrible decision. Trans Union did no investigation. Instead it chose to rely on MBNA's "investigation" which of course got the wrong answer. Trans Union could have performed its own investigation by requesting MBNA's documents and compared the signatures on the payments and/or receipts to Cornock's true signature. Or it could have checked to see what Cornock was allegedly buying. Instead, Trans Union merely parroted what MBNA said and, as a result, clearly violated 1681i. Yet, unfortunately, the Court did not see it that way and granted Trans Union's motion for summary judgment. Unfortunately for Cornock and other consumers, the Court got it wrong.

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