From the recent case of Shap v. Capital One:
"The Court finds that a furnisher's "technically accurate" report of a delinquent debt may be misleading and negatively effect a consumer's credit report if the furnisher fails to mark the debt as disputed.
The Court qualifies this finding, however, as did the court in Gorman; the dispute submitted by the consumer to the furnisher must be bona fide to create furnisher liability under § 1681s-2(b). This holding is consistent with the holdings of those courts within this Circuit that have addressed the issue and is consistent with the purpose of the FCRA "to protect consumers from the transmission of inaccurate information about them, and to establish credit reporting practices that utilize accurate, relevant, and current information in a confidential and responsible manner."
SHAP v. Capital One Fin. Corp.
Dist. Court, ED Pennsylvania, 2012
... CYNTHIA RUFE, District Judge.
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Showing posts with label FCRA case law. Show all posts
Showing posts with label FCRA case law. Show all posts
April 10, 2012
June 04, 2011
Horrible decision on s-2(b) claim
A bad decision was rendered recently, dismissing a consumer's claim against a furnisher who failed to perform a reasonable investigation of the consumer's dispute of the collection of a fraudulently opened account.
In Healey v. Trans Union, a decision rendered May 18, 2011, by the United States District Court for the Western District of Washington threw out a consumer's 15 U.S.C. 1681s-2(b) claim against a furnisher because the Court found that the furnisher's investigation, which was non-existent as best as I can tell, was sufficient.
Healey was the victim of identity theft. The impostor opened an account with Sprint, which eventually resulted in the fraud Sprint account being sold to DRS, a collection agency. Despite numerous disputes made by Healey to DRS regarding the fraudulent nature of the collection account, DRS continued to report the account to the credit bureaus for inclusion on Healey's credit reports.
Healey then disputed the DRS collection account to the credit bureaus, including Trans Union and Experian, pursuant to 15 U.S.C. 1681i. Apparently, Healey did not possess evidence that Trans Union forwarded the 1681i dispute to Trans Union and thus could not establish that DRS's requirement to perform a reasonable investigation of the dispute pursuant to 15 U.S.C. 1681s-2(b) was ever triggered. Thus, dismissal of the s-2(b) claim against DRS relating to the Trans Union dispute was proper.
However, the dismissal of the s-2(b) claim related to the Experian dispute is another matter. There was proof that Experian complied with 1681i and forwarded the dispute to DRS. However, the Court found that summary judgment was appropriate because there was no evidence regarding what exactly DRS did to investigate and it was Healey's duty to establish that DRS' investigation was not reasonable. DRS obviously failed to include in its "investigation" a review of its own files regarding Healey's previous disputes. As a result, it is clear that DRS did not perform even the most elementary investigation of Healey's dispute to Experian regarding the DRS collection. However, the Court did not think so and, as a result, wrongly (in my opinion) granted summary judgment.
Unfortunately for Healey, it was a sad day for justice in the western district of Washington.
In Healey v. Trans Union, a decision rendered May 18, 2011, by the United States District Court for the Western District of Washington threw out a consumer's 15 U.S.C. 1681s-2(b) claim against a furnisher because the Court found that the furnisher's investigation, which was non-existent as best as I can tell, was sufficient.
Healey was the victim of identity theft. The impostor opened an account with Sprint, which eventually resulted in the fraud Sprint account being sold to DRS, a collection agency. Despite numerous disputes made by Healey to DRS regarding the fraudulent nature of the collection account, DRS continued to report the account to the credit bureaus for inclusion on Healey's credit reports.
Healey then disputed the DRS collection account to the credit bureaus, including Trans Union and Experian, pursuant to 15 U.S.C. 1681i. Apparently, Healey did not possess evidence that Trans Union forwarded the 1681i dispute to Trans Union and thus could not establish that DRS's requirement to perform a reasonable investigation of the dispute pursuant to 15 U.S.C. 1681s-2(b) was ever triggered. Thus, dismissal of the s-2(b) claim against DRS relating to the Trans Union dispute was proper.
However, the dismissal of the s-2(b) claim related to the Experian dispute is another matter. There was proof that Experian complied with 1681i and forwarded the dispute to DRS. However, the Court found that summary judgment was appropriate because there was no evidence regarding what exactly DRS did to investigate and it was Healey's duty to establish that DRS' investigation was not reasonable. DRS obviously failed to include in its "investigation" a review of its own files regarding Healey's previous disputes. As a result, it is clear that DRS did not perform even the most elementary investigation of Healey's dispute to Experian regarding the DRS collection. However, the Court did not think so and, as a result, wrongly (in my opinion) granted summary judgment.
Unfortunately for Healey, it was a sad day for justice in the western district of Washington.
February 17, 2010
New case law out of the Seventh Circuit Court of Appeals
According to a recent ruling by the United States Court of Appeals for the Seventh Circuit, sovereign immunity does not apply to protect the federal government from credit reporting violations.
The federal government is protected against individual lawsuits in all cases except where Congress explicitly states the immunity has been lifted. The question in the case, Talley v. United States Department of Agriculture, was whether Congress waived the federal government’s immunity in the Fair Credit Reporting Act.
The FCRA was amended in 1996 to apply to all "persons", with no mention either way as to whether its definition of a "person" included the federal government. The U.S. Department of Agriculture argued that Congress did not intend to do away with sovereign immunity when it amended the FCRA.
“You are asking us to presume that Congress is a bunch of blithering idiots,” responded Chief Judge Frank Easterbrook. He added that “Congress is presumed to know what is in the statute books when it amends them.” He added that “because Congress need not add ‘we really mean it!’ to make statues effectual, and because courts don’t interpret statues to blot out whole phrases, that line of argument has poor prospects.”
The federal government is protected against individual lawsuits in all cases except where Congress explicitly states the immunity has been lifted. The question in the case, Talley v. United States Department of Agriculture, was whether Congress waived the federal government’s immunity in the Fair Credit Reporting Act.
The FCRA was amended in 1996 to apply to all "persons", with no mention either way as to whether its definition of a "person" included the federal government. The U.S. Department of Agriculture argued that Congress did not intend to do away with sovereign immunity when it amended the FCRA.
“You are asking us to presume that Congress is a bunch of blithering idiots,” responded Chief Judge Frank Easterbrook. He added that “Congress is presumed to know what is in the statute books when it amends them.” He added that “because Congress need not add ‘we really mean it!’ to make statues effectual, and because courts don’t interpret statues to blot out whole phrases, that line of argument has poor prospects.”
February 09, 2010
Illinois Federal Judge rules that FACTA does not apply to e-merchants
In the case of Shlahtichman v. 1-800 Contacts, Inc., U.S. District Judge John Darrah ruled that FACTA's truncation requirements for "printed" receipts does not apply to e-mails sent to purchasers by internet merchants.
The theory, according to Judge Darrah, behind FACTA's requirement that credit card numbers and expiration dates be truncated on receipts, is that such truncation would help prevent "low tech" types of identity theft such as dumpster diving. According to Judge Darrah, an e-mail sent to a e-purchaser does not fall under the definition of "printed receipt" since its not actually printed, merely e-mailed. While that is true, I disagree that an e-mail is not a risk for identity theft. Why should FACTA not try to prevent high tech identity theft as well?
While Judge Darrah is technically correct in his ruling, Congress should take note of his ruling and amend the law to fix this loophole and, in the age of the information superhighway, help protect us all, not just those who do not partake of e-commerce.
The theory, according to Judge Darrah, behind FACTA's requirement that credit card numbers and expiration dates be truncated on receipts, is that such truncation would help prevent "low tech" types of identity theft such as dumpster diving. According to Judge Darrah, an e-mail sent to a e-purchaser does not fall under the definition of "printed receipt" since its not actually printed, merely e-mailed. While that is true, I disagree that an e-mail is not a risk for identity theft. Why should FACTA not try to prevent high tech identity theft as well?
While Judge Darrah is technically correct in his ruling, Congress should take note of his ruling and amend the law to fix this loophole and, in the age of the information superhighway, help protect us all, not just those who do not partake of e-commerce.
September 21, 2009
New FCRA case - McDonald v. Equifax
It is quite difficult to lose an FCRA case via summary judgment. As long as you can show an inaccuracy appeared on your credit report, you should be able to survive summary judgment since, once an inaccuracy is shown, the question becomes whether or not the credit bureau's procedures and/or actions were reasonable, which is almost always a jury question. Thus, as long as there is an inaccuracy, losing via summary judgment is difficult to do. But this pro se plaintiff was able to lose via summary judgment not once but three times. This is yet another example of why consumers need to hire attorneys experienced in FCRA litigation to represent them and never, ever, should consumers represent themselves.
In the case styled Michael L. McDonald v. Equifax, Experian and Trans Union pending in the United States District Court for the Northern District of Texas, Dallas Division, McDonald filed claims against all three national credit bureaus for violations of unspecified sections of the Fair Credit Reporting Act. While he did not identify the statutes in his Complaint, his case appeared to claim garden variety 1681e(b) claims for failing to follow reasonable procedures to assure the maximum possible accuracy of the credit reports regarding McDonald and 1681i for failing to conduct reasonable investigations of the disputed information.
According to the opinion penned by U.S. District Judge Jane J. Boyle, McDonald learned of various inaccuracies on his Equifax credit report when he was denied a loan. He then obtained copies of his credit reports from Experian and Trans Union and learned of additional errors appearing on his credit reports published by those companies. He lodged several disputes regarding the inaccurate credit information with all three credit bureaus. However, the CRAs failed to correct the errors. McDonald then filed litigation against Equifax, Experian and Trans Union.
Apparently, McDonald failed to correctly serve Experian with the Complaint. The opinion does not indicate how McDonald messed up service of process, as Experian had already been dismissed from the case prior to the motions before the Court. Trans Union and Equifax both filed motions for summary judgment, arguing that McDonald failed to present any evidence of any inaccuracies on his credit report.
All McDonald had to do was come up with some type of sworn testimony or documentation that his credit reports contained inaccuracies. It could have been as simple as an affidavit from McDonald himself swearing that the reports contained inaccurate information. Or he could have produced some type of documentation that demonstrated the inaccurate nature of the information. Any competent attorney could have easily beaten the credit bureaus' motion for summary judgment in this case. However, lawyerless McDonald failed to provide any documentation or any sworn testimony. As a result, Judge Boyle was correct in dismissing McDonald's claims.
In the case styled Michael L. McDonald v. Equifax, Experian and Trans Union pending in the United States District Court for the Northern District of Texas, Dallas Division, McDonald filed claims against all three national credit bureaus for violations of unspecified sections of the Fair Credit Reporting Act. While he did not identify the statutes in his Complaint, his case appeared to claim garden variety 1681e(b) claims for failing to follow reasonable procedures to assure the maximum possible accuracy of the credit reports regarding McDonald and 1681i for failing to conduct reasonable investigations of the disputed information.
According to the opinion penned by U.S. District Judge Jane J. Boyle, McDonald learned of various inaccuracies on his Equifax credit report when he was denied a loan. He then obtained copies of his credit reports from Experian and Trans Union and learned of additional errors appearing on his credit reports published by those companies. He lodged several disputes regarding the inaccurate credit information with all three credit bureaus. However, the CRAs failed to correct the errors. McDonald then filed litigation against Equifax, Experian and Trans Union.
Apparently, McDonald failed to correctly serve Experian with the Complaint. The opinion does not indicate how McDonald messed up service of process, as Experian had already been dismissed from the case prior to the motions before the Court. Trans Union and Equifax both filed motions for summary judgment, arguing that McDonald failed to present any evidence of any inaccuracies on his credit report.
All McDonald had to do was come up with some type of sworn testimony or documentation that his credit reports contained inaccuracies. It could have been as simple as an affidavit from McDonald himself swearing that the reports contained inaccurate information. Or he could have produced some type of documentation that demonstrated the inaccurate nature of the information. Any competent attorney could have easily beaten the credit bureaus' motion for summary judgment in this case. However, lawyerless McDonald failed to provide any documentation or any sworn testimony. As a result, Judge Boyle was correct in dismissing McDonald's claims.
September 07, 2009
New FCRA case - Eller v. Experian and Trans Union
A new case was released on August 20, 2009 in the United States District Court for the District of Colorado. The case was filed pro se by Gerald Hansen Eller but he apparently hired attorney Steven T. Nolan after Trans Union moved to dismiss his Complaint as not containing sufficient facts to support his claims that Trans Union violated the FCRA.
Since attorney Nolan did not have sufficient time to review the complaint or determine whether the complaint should be amended, the court viewed the motion to dismiss using the standard applied to pro se filed complaints, i.e. very liberally.
While the Court did find that Eller did not provide sufficient facts to establish his claims of violations of the FCRA, the Court found that amendment of the complaint was the appropriate remedy, not dismissal. As a result, the Court granted Trans Union's motion in dismiss in part (the part that claimed lack of sufficient facts) but denied dismissal, instead opting to give plaintiff and his new counsel an opportunity to amend the complaint to allege sufficient facts.
I agree that amendment is appropriate, however, I do not think it is required. The Federal Rules of Civil Procedure merely require "notice" pleadings, i.e. pleadings sufficient enough to put the defendant on notice of the claims filed against it. The plaintiff's complaint provided sufficient notice to Trans Union for Trans Union to discern the types of claims lodged against it. Trans Union could then have used the discovery period of the litigation to flesh out the facts supporting the claims against it. That's what discovery is for. Fortunately, the Court avoided a complete injustice by giving the plaintiff an opportunity to amend his complaint.
That's my opinion, at least. But what do you think of the Court's ruling?
Since attorney Nolan did not have sufficient time to review the complaint or determine whether the complaint should be amended, the court viewed the motion to dismiss using the standard applied to pro se filed complaints, i.e. very liberally.
While the Court did find that Eller did not provide sufficient facts to establish his claims of violations of the FCRA, the Court found that amendment of the complaint was the appropriate remedy, not dismissal. As a result, the Court granted Trans Union's motion in dismiss in part (the part that claimed lack of sufficient facts) but denied dismissal, instead opting to give plaintiff and his new counsel an opportunity to amend the complaint to allege sufficient facts.
I agree that amendment is appropriate, however, I do not think it is required. The Federal Rules of Civil Procedure merely require "notice" pleadings, i.e. pleadings sufficient enough to put the defendant on notice of the claims filed against it. The plaintiff's complaint provided sufficient notice to Trans Union for Trans Union to discern the types of claims lodged against it. Trans Union could then have used the discovery period of the litigation to flesh out the facts supporting the claims against it. That's what discovery is for. Fortunately, the Court avoided a complete injustice by giving the plaintiff an opportunity to amend his complaint.
That's my opinion, at least. But what do you think of the Court's ruling?
September 05, 2009
Another new FCRA case - Shurland v. Bacci Cafe & Pizzeria
The plaintiff purchased a pizza from Bacci Cafe & Pizzeria and paid with a credit card. His receipt, however, contained his full credit card number and expiration number, a big no no under the FCRA. Shurland then sued Bacci Cafe & Pizzeria in a class action lawsuit on behalf of everyone else that received receipts with non-truncated credit card numbers.
The pizzeria moved to dismiss the plaintiff's claims via summary judgment, arguing that their violation of the FCRA was not willful (the defendant admitted violating the FCRA) because it did not know of the requirement to truncate credit card numbers. A willful violation is one committed knowingly or with reckless disregard for the law.
The Court correctly did not buy the pizzeria's argument that its alleged lack of knowledge of the law gives it a pass. First, ignorance of the law is no excuse. Second, the evidence shows that the pizzeria was called by at least three employees of the company that sold it the credit card machine and told that it needed to update its software to comply with the FCRA's requirement to truncate credit card numbers. Further, the credit card machine company's monthly bill to the pizzeria indicated that truncation was required. Yet, the pizzeria did nothing (except bake pies).
The Court correctly denied the pizzeria's motion for summary judgment and granted class certification.
September 04, 2009
New FCRA case - Hamilton v. DirecTV
A new FCRA opinion was handed down on August 14, 2009 by District Judge W. Harold Albritton in the United States District Court for the Middle District of Alabama, Northern Division.
The case is styled Annie Hamilton v. DirecTV, but includes claims against Experian, Equifax and Trans Union. Hamilton claimed that DirecTV had placed seven fictitious accounts on her credit reports with Experian, Equifax and Trans Union. Hamilton disputed the accounts to the credit bureaus, who all removed the accounts only to reinsert one of the accounts back onto all of her credit reports. NOTE TO PLAINTIFF'S ATTORNEY - that's a claim right there - violation of 1681i's requirement that the credit bureaus inform the consumer before reinserting an account that was previously deleted. After the reinsertion of the account, Hamilton disputed the account to the credit bureaus again, who refused to remove it. Equifax did remove the account for a while, only to reinsert it again.
The issue before Judge Albritton was a motion for partial dismissal filed by Trans Union and joined by Experian and Equifax. The motion sought to dismiss Hamilton's claim for injunctive relief, namely seeking a declaratory judgment that she did not owe DirecTV and enjoining the CRAs from publishing the account on her credit reports.
The problem is that the FCRA does not provide for injunctive relief as only the FTC can "enforce" the FCRA while private consumers can only receive compensation for their injuries caused by violations of the FCRA. The Plaintiff tries to do an end run around the FCRA by claiming that she can get injunctive relief via her defamation claim. While I agree that the Plaintiff's defamation claim is not preempted by 15 U.S.C. 1681h(e) of the FCRA, a defamation claim is not a means to get injunctive relief.
Based on this. Judge Albritton correctly granted the Defendants' motion for partial dismissal, thereby eliminating Hamilton's claims for injunctive and declaratory relief.
While this is a correct decision, what does it really get the CRAs? Are they really going to reinsert the fictitious account again and just subject themselves to more litigation and liability to the Plaintiff? Surely not. The only reason to even file such a motion was to run up attorneys' fees for the defense lawyers and to make the plaintiff's attorney work harder to get justice for his client. I can tell you for a fact that the CRAs lawyers do this to lawyers new to suing the credit bureaus to try to dissuade them from filing more litigation in the future. They no longer file such frivilous motions in cases where I am involved, probably because they realize that I'm too stubborn (or stupid) to run off. Unfortunately, the CRAs' motion in this case was a waste of the Court's resources, even though it was correctly granted.
The case is styled Annie Hamilton v. DirecTV, but includes claims against Experian, Equifax and Trans Union. Hamilton claimed that DirecTV had placed seven fictitious accounts on her credit reports with Experian, Equifax and Trans Union. Hamilton disputed the accounts to the credit bureaus, who all removed the accounts only to reinsert one of the accounts back onto all of her credit reports. NOTE TO PLAINTIFF'S ATTORNEY - that's a claim right there - violation of 1681i's requirement that the credit bureaus inform the consumer before reinserting an account that was previously deleted. After the reinsertion of the account, Hamilton disputed the account to the credit bureaus again, who refused to remove it. Equifax did remove the account for a while, only to reinsert it again.
The issue before Judge Albritton was a motion for partial dismissal filed by Trans Union and joined by Experian and Equifax. The motion sought to dismiss Hamilton's claim for injunctive relief, namely seeking a declaratory judgment that she did not owe DirecTV and enjoining the CRAs from publishing the account on her credit reports.
The problem is that the FCRA does not provide for injunctive relief as only the FTC can "enforce" the FCRA while private consumers can only receive compensation for their injuries caused by violations of the FCRA. The Plaintiff tries to do an end run around the FCRA by claiming that she can get injunctive relief via her defamation claim. While I agree that the Plaintiff's defamation claim is not preempted by 15 U.S.C. 1681h(e) of the FCRA, a defamation claim is not a means to get injunctive relief.
Based on this. Judge Albritton correctly granted the Defendants' motion for partial dismissal, thereby eliminating Hamilton's claims for injunctive and declaratory relief.
While this is a correct decision, what does it really get the CRAs? Are they really going to reinsert the fictitious account again and just subject themselves to more litigation and liability to the Plaintiff? Surely not. The only reason to even file such a motion was to run up attorneys' fees for the defense lawyers and to make the plaintiff's attorney work harder to get justice for his client. I can tell you for a fact that the CRAs lawyers do this to lawyers new to suing the credit bureaus to try to dissuade them from filing more litigation in the future. They no longer file such frivilous motions in cases where I am involved, probably because they realize that I'm too stubborn (or stupid) to run off. Unfortunately, the CRAs' motion in this case was a waste of the Court's resources, even though it was correctly granted.
August 20, 2009
New FCRA case - Josey v. Sallie Mae, Inc.
A new case came out of the United States District Court for the Southern District of New York (which I am happy to say I have had a case or two in) on August 17, 2009. The case is styled Yolanda Josey v. Sallie Mae, Inc. and U.S. Dept of Education. The case is yet another attempt by a pro se plaintiff that fails miserably. When will people learn not to try to represent themselves.
Josey believed that Sallie Mae imposed an improper interest rate under the Higher Education Act, failed to properly credit Josey's account for payments she has made, falsely and inaccurately reported the loan balance to the big 3 credit bureaus, and violated her rights under the Debt Collection Improvement Act of 1996, her constitutional Due Process rights, right to notice of debtor's rights, and congressionally mandated consumer protections notice of student loan borrowers rights to different payment options and exemptions. I will focus only on the attempt at alleging an FCRA claim but, suffice it say, all the claims failed thanks in part to the lack of legal training of the plaintiff.
Josey would have been well served had she carefully read 15 U.S.C. 1681s-2(b), which requires notice of a dispute to a consumer reporting agency that is then relayed to the furnisher before any duty of the furnisher is triggered under the FCRA.
The Court found that "Josey, however, lacks standing under § 1681s-2(b) because she did not plead in her complaint (or even in her opposition to the instant motion) that Sallie Mae received notification from a consumer reporting agency regarding the accuracy of information furnished by Sallie Mae, as required under the FCRA. See, e.g., Ostrander v. Unifund Corp., 2008 WL 850329 at *3-4 (“[T]he court finds that plaintiff has failed to allege facts to state a plausible claim for relief under FCRA § 1681s-2(b)” because plaintiff did not plead that defendant data furnisher “received notice of the disputed information from a consumer reporting agency.”); Prakash v. Homecomings Fin., 2006 WL 2570900 at *3, 4-5 (“[P]laintiff lacks standing to bring his claims under the Fair Credit Reporting Act” where “nowhere in the complaint or opposition to the instant motion does plaintiff allege that defendant [data furnisher] received notice of the dispute from a credit reporting agency.”).
Furthermore, although Josey alleges that she “sent several notices” and “made phone calls” to Sallie Mae demanding it provide “several copies of documents including the original promissory note, terms and conditions of agreement, payment history and invoices” ... such actions, even if interpreted to constitute receipt of notice of disputed credit information by Sallie Mae, do not establish standing under the FCRA. In order to establish a private right of action under § 1681s-2(b), Josey must allege, which she has not, that a consumer reporting agency notified Sallie Mae."
Josey never disputed the error directly to the credit bureau or, if she had taken this step, she failed to allege that she had taken this step. All it took was an allegation that she had disputed the alleged error to one or more of the credit bureaus (who then would have relayed the dispute to Sallie Mae) to trigger Sallie Mae's duty to perform a reasonable investigation of the dispute pursuant to 15 U.S.C. 1681s-2(b).
Once again, this bad result could have been avoided by some competent representation by an attorney. People, please, if you need representation, send me an e-mail. If you have a decent case, either I will take it or refer you to a consumer attorney in your state who can represent you. I pretty much know a good consumer lawyer in every state, even Hawaii (but not Alaska, at least not yet).
Josey believed that Sallie Mae imposed an improper interest rate under the Higher Education Act, failed to properly credit Josey's account for payments she has made, falsely and inaccurately reported the loan balance to the big 3 credit bureaus, and violated her rights under the Debt Collection Improvement Act of 1996, her constitutional Due Process rights, right to notice of debtor's rights, and congressionally mandated consumer protections notice of student loan borrowers rights to different payment options and exemptions. I will focus only on the attempt at alleging an FCRA claim but, suffice it say, all the claims failed thanks in part to the lack of legal training of the plaintiff.
Josey would have been well served had she carefully read 15 U.S.C. 1681s-2(b), which requires notice of a dispute to a consumer reporting agency that is then relayed to the furnisher before any duty of the furnisher is triggered under the FCRA.
The Court found that "Josey, however, lacks standing under § 1681s-2(b) because she did not plead in her complaint (or even in her opposition to the instant motion) that Sallie Mae received notification from a consumer reporting agency regarding the accuracy of information furnished by Sallie Mae, as required under the FCRA. See, e.g., Ostrander v. Unifund Corp., 2008 WL 850329 at *3-4 (“[T]he court finds that plaintiff has failed to allege facts to state a plausible claim for relief under FCRA § 1681s-2(b)” because plaintiff did not plead that defendant data furnisher “received notice of the disputed information from a consumer reporting agency.”); Prakash v. Homecomings Fin., 2006 WL 2570900 at *3, 4-5 (“[P]laintiff lacks standing to bring his claims under the Fair Credit Reporting Act” where “nowhere in the complaint or opposition to the instant motion does plaintiff allege that defendant [data furnisher] received notice of the dispute from a credit reporting agency.”).
Furthermore, although Josey alleges that she “sent several notices” and “made phone calls” to Sallie Mae demanding it provide “several copies of documents including the original promissory note, terms and conditions of agreement, payment history and invoices” ... such actions, even if interpreted to constitute receipt of notice of disputed credit information by Sallie Mae, do not establish standing under the FCRA. In order to establish a private right of action under § 1681s-2(b), Josey must allege, which she has not, that a consumer reporting agency notified Sallie Mae."
Josey never disputed the error directly to the credit bureau or, if she had taken this step, she failed to allege that she had taken this step. All it took was an allegation that she had disputed the alleged error to one or more of the credit bureaus (who then would have relayed the dispute to Sallie Mae) to trigger Sallie Mae's duty to perform a reasonable investigation of the dispute pursuant to 15 U.S.C. 1681s-2(b).
Once again, this bad result could have been avoided by some competent representation by an attorney. People, please, if you need representation, send me an e-mail. If you have a decent case, either I will take it or refer you to a consumer attorney in your state who can represent you. I pretty much know a good consumer lawyer in every state, even Hawaii (but not Alaska, at least not yet).
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.
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.
August 06, 2009
New FCRA case - Wimberly v. Select Portfolio Servicing
I am behind on my reporting about the new court opinions being handed down regarding the FCRA but am going to focus on catching up over the weekend.
One new case that I have not reported on yet is Wimberly v. Select Portfolio Servicing. The opinion is penned by Magistrate Judge Wallace W. Dixon of the United States District Court for the Middle District of North Carolina. Once again, the plaintiffs are representing themselves pro se (meaning without a lawyer) and, once again, the result is the same - a loss for the plaintiffs. Although, I feel less harsh toward these particular pro se plaintiffs since I have looked for local counsel in North Carolina experienced in FCRA litigation and have found none to date. So these plaintiffs may have had no other choice (other than move or hire out of state counsel, which they might not have known they could do).
Anyway, the plaintiffs, a Griggs and Aubrey Wimbley, filed a 93 page amended complaint which the Court described as "disorganized, rambling and at times incoherent". The plaintiffs' main beef with Select Portfolio Servicing ("SPS") appears to center around the manner in which SPS applied payments and otherwise handled the plaintiffs' loan. While the Wimbleys brought multiple claims, I will only discuss their FCRA claims which, unfortunately for the Wimbleys, the Court found were time barred.
Claims under the FCRA must be filed no later than 2 years after the plaintiff discovers a violation or 5 years after the violation even if the plaintiff doesn't even know the violation occurred. It used to be a strict 2 year statute of limitations no matter what, but that changed after Congress amended the FCRA after the first FCRA case to make it to the U.S. Supreme Court, i.e. TRW v. Andrews, which held that the 2 year statute of limitations ran regardless of whether the plaintiff knew about the alleged violation. Congress rightfully did not like this result so it changed the law to eliminate the Supreme Court's interpretation in Andrews.
But I digress. The Court in Wimbley found that the plaintiffs knew about the alleged violations by SPS as early as 2002 and thus claims to recover for those violations were barred by the FCRA's statute of limitations.
Right result in a case that should not have been brought, which is another reason why the plaintiffs were probably representing themselves.
Word of advice to potential pro se plaintiffs: Its one thing to bring a case yourself because you can't find a lawyer competent to represent you. Its another matter entirely when there are plenty of competent attorneys but they all refuse to take your case. In that scenario, its probably because your case is a loser.
One new case that I have not reported on yet is Wimberly v. Select Portfolio Servicing. The opinion is penned by Magistrate Judge Wallace W. Dixon of the United States District Court for the Middle District of North Carolina. Once again, the plaintiffs are representing themselves pro se (meaning without a lawyer) and, once again, the result is the same - a loss for the plaintiffs. Although, I feel less harsh toward these particular pro se plaintiffs since I have looked for local counsel in North Carolina experienced in FCRA litigation and have found none to date. So these plaintiffs may have had no other choice (other than move or hire out of state counsel, which they might not have known they could do).
Anyway, the plaintiffs, a Griggs and Aubrey Wimbley, filed a 93 page amended complaint which the Court described as "disorganized, rambling and at times incoherent". The plaintiffs' main beef with Select Portfolio Servicing ("SPS") appears to center around the manner in which SPS applied payments and otherwise handled the plaintiffs' loan. While the Wimbleys brought multiple claims, I will only discuss their FCRA claims which, unfortunately for the Wimbleys, the Court found were time barred.
Claims under the FCRA must be filed no later than 2 years after the plaintiff discovers a violation or 5 years after the violation even if the plaintiff doesn't even know the violation occurred. It used to be a strict 2 year statute of limitations no matter what, but that changed after Congress amended the FCRA after the first FCRA case to make it to the U.S. Supreme Court, i.e. TRW v. Andrews, which held that the 2 year statute of limitations ran regardless of whether the plaintiff knew about the alleged violation. Congress rightfully did not like this result so it changed the law to eliminate the Supreme Court's interpretation in Andrews.
But I digress. The Court in Wimbley found that the plaintiffs knew about the alleged violations by SPS as early as 2002 and thus claims to recover for those violations were barred by the FCRA's statute of limitations.
Right result in a case that should not have been brought, which is another reason why the plaintiffs were probably representing themselves.
Word of advice to potential pro se plaintiffs: Its one thing to bring a case yourself because you can't find a lawyer competent to represent you. Its another matter entirely when there are plenty of competent attorneys but they all refuse to take your case. In that scenario, its probably because your case is a loser.
July 05, 2009
New FCRA case - Rosenthal v. Longchamp Coral Gables
A new FCRA case came out of the United States District Court for the Southern District of Florida on June 29, 2009. The case is styled Yvonne Rosenthal v. Longchamp Coral Gables, LLC. District Judge Moreno handed down the decision.
The Plaintiff alleged in her Complaint that the Defendant had violated 15 U.S.C. 1681c(g) of the Fair Credit Reporting Act. 1681c(g) prohibits the publication of full credit card numbers and expiration dates by merchants on receipts for purchases. See my post about 1681c(g) at http://fcralawyer.blogspot.com/2009/06/15-usc-1681c-part-3.html.
The Defendant filed a motion to dismiss claiming that the Complaint did not properly state a cause of action for a willful violation of 1681c(g). I don't know why it would be so hard to allege a willful violation. Complaints in the federal system (and in most state courts as well) are merely required to be "notice" pleadings. In other words, they are not required to give all the details. They must merely put the defendant on notice of the claims against it. I usually do this by just saying "Defendant willfully violation section __________" and fill in the blank with the section or sections I allege the defendant willfully violated. Some attorneys just say "Defendant willfully violated the FCRA" without even specifying which exact section.
Anyway, the Southern District of Florida found that the plaintiff had alleged a willful violation by citing that a willful violation includes violations committed with reckless disregard of the law. The Court relied on the plaintiff's allegation that Chase (the defendant's credit card merchant) had provided notice to defendant on numerous occasions that it was not supposed to print full credit card numbers or expiration dates. This allegation alone was sufficient to allege a willful violation of the FCRA, which is all that is needed to survive a motion to dismiss. Thus, Judge Moreno got it right when he did not grant the defendant's Motion to Dismiss.
The Plaintiff alleged in her Complaint that the Defendant had violated 15 U.S.C. 1681c(g) of the Fair Credit Reporting Act. 1681c(g) prohibits the publication of full credit card numbers and expiration dates by merchants on receipts for purchases. See my post about 1681c(g) at http://fcralawyer.blogspot.com/2009/06/15-usc-1681c-part-3.html.
The Defendant filed a motion to dismiss claiming that the Complaint did not properly state a cause of action for a willful violation of 1681c(g). I don't know why it would be so hard to allege a willful violation. Complaints in the federal system (and in most state courts as well) are merely required to be "notice" pleadings. In other words, they are not required to give all the details. They must merely put the defendant on notice of the claims against it. I usually do this by just saying "Defendant willfully violation section __________" and fill in the blank with the section or sections I allege the defendant willfully violated. Some attorneys just say "Defendant willfully violated the FCRA" without even specifying which exact section.
Anyway, the Southern District of Florida found that the plaintiff had alleged a willful violation by citing that a willful violation includes violations committed with reckless disregard of the law. The Court relied on the plaintiff's allegation that Chase (the defendant's credit card merchant) had provided notice to defendant on numerous occasions that it was not supposed to print full credit card numbers or expiration dates. This allegation alone was sufficient to allege a willful violation of the FCRA, which is all that is needed to survive a motion to dismiss. Thus, Judge Moreno got it right when he did not grant the defendant's Motion to Dismiss.
July 04, 2009
New FCRA case - DiMedio v. HSBC Bank
Yet another case where the Plaintiff represented himself or herself ... poorly. This case was decided by District Judge Simandle for the United States District Court for the District of New Jersey.
The Plaintiff Ben DiMedio, representing himself, filed a lawsuit against HSBC, alleging violations of 15 U.S.C. 1681s-2(a) and 1681s-2(b) arising from some alleged errors surrounding charges and payments on his credit card with HSBC. HSBC moved to dismiss the Plaintiff's FCRA claims. Judge Simandle correctly dismissed the Plaintiff's 15 U.S.C. 1681s-2(a) claim because there is no private right of action for violations of this subsection (a) of 1681s-2. In other words, violations may only be enforced by certain governmental agencies, not private consumers (even though it is the private consumer who is injured and thus has the incentive to seek enforcement).
The Court also dismissed the Plaintiff's 15 U.S.C. 1681s-2(b) claims because, apparently, Mr. DiMedio did not fully appreciate the steps required to have been taken before a claim under 1681s-2(b) arises. 1681s-2(b) requires a furnisher of credit information (in this case HSBC) to investigate disputes lodged with the credit bureau(s) regarding the information furnished by the furnisher to the credit bureau. So in this case, DiMedio was required to dispute the erroneous account information not to HSBC (although its good to do that too) but directly to the credit bureau(s) reporting the erroneous information on DiMedio's credit report(s). This is called a 1681i dispute and is a prerequisite to a claim under 1681s-2(b). Because DiMedio did not follow the requirements of 1681s-2(b) before filing suit, Judge Simandle correctly dismissed DiMedio's 1681s-2(b) claim as well.
Dismissal could have easily been avoided by simply understanding 15 U.S.C. 1681s-2(b), which is why DiMedio should have hired an attorney before filing his lawsuit.
The Plaintiff Ben DiMedio, representing himself, filed a lawsuit against HSBC, alleging violations of 15 U.S.C. 1681s-2(a) and 1681s-2(b) arising from some alleged errors surrounding charges and payments on his credit card with HSBC. HSBC moved to dismiss the Plaintiff's FCRA claims. Judge Simandle correctly dismissed the Plaintiff's 15 U.S.C. 1681s-2(a) claim because there is no private right of action for violations of this subsection (a) of 1681s-2. In other words, violations may only be enforced by certain governmental agencies, not private consumers (even though it is the private consumer who is injured and thus has the incentive to seek enforcement).
The Court also dismissed the Plaintiff's 15 U.S.C. 1681s-2(b) claims because, apparently, Mr. DiMedio did not fully appreciate the steps required to have been taken before a claim under 1681s-2(b) arises. 1681s-2(b) requires a furnisher of credit information (in this case HSBC) to investigate disputes lodged with the credit bureau(s) regarding the information furnished by the furnisher to the credit bureau. So in this case, DiMedio was required to dispute the erroneous account information not to HSBC (although its good to do that too) but directly to the credit bureau(s) reporting the erroneous information on DiMedio's credit report(s). This is called a 1681i dispute and is a prerequisite to a claim under 1681s-2(b). Because DiMedio did not follow the requirements of 1681s-2(b) before filing suit, Judge Simandle correctly dismissed DiMedio's 1681s-2(b) claim as well.
Dismissal could have easily been avoided by simply understanding 15 U.S.C. 1681s-2(b), which is why DiMedio should have hired an attorney before filing his lawsuit.
New FCRA case - Daniels v. Experian, S.D. Georgia
On June 24, 2009, District Judge J. Randall Hall of the United States District Court for the Southern District of Georgia, Augusta Division, released an opinion which once again shows why consumers should hire an attorney to represent them and not proceed pro se. The case is styled Roberta Ann Daniels v. Experian Information Solutions, et al, 2009 WL 1811548 (D. Ga. June 24, 2009).
Roberta Ann Daniels, the plaintiff, filed claims against all three of the national credit bureaus (i.e. Experian, Trans Union and Equifax), alleging that the credit bureaus failed to "mask" her Social Security number which was part of her student loan account number. The Court noted that the FCRA does not require "masking" of the entire Social Security number but merely requires that the first five digits be truncated. The Plaintiff contends that she meant truncate when she alleged "masked" in her complaint. She sought various items of injunctive and declaratory relief which, unfortunately, are not available types of relief under the FCRA.
The Court dismissed the plaintiff's claims for injunctive and declaratory relief but did allow the Plaintiff to amend her complaint to allege the failure to truncate her Social Security number rather than the incorrect failure to "mask" the Social Security number.
Roberta Ann Daniels, the plaintiff, filed claims against all three of the national credit bureaus (i.e. Experian, Trans Union and Equifax), alleging that the credit bureaus failed to "mask" her Social Security number which was part of her student loan account number. The Court noted that the FCRA does not require "masking" of the entire Social Security number but merely requires that the first five digits be truncated. The Plaintiff contends that she meant truncate when she alleged "masked" in her complaint. She sought various items of injunctive and declaratory relief which, unfortunately, are not available types of relief under the FCRA.
The Court dismissed the plaintiff's claims for injunctive and declaratory relief but did allow the Plaintiff to amend her complaint to allege the failure to truncate her Social Security number rather than the incorrect failure to "mask" the Social Security number.
June 21, 2009
Willie Smith v. Busch Entertainment Corporation
The new FCRA case styled Willie Smith v. Busch Entertainment Corporation was released on June 3, 2009 (i.e. Ode to Billy Joe day, but that's another story entirely) from the United States District Court for the Eastern District of Virginia, Richmond Division, District Judge Henry E. Hudson penning the decision.
This case arises from an employment application submitted by Willie Smith to Water Country USA, which was owned and operated by the Defendants Busch Entertainment Corporation and Anheuser-Busch Companies, Inc. The employment application asked whether Smith had any felony convictions and to list any such felony convictions within the last seven years. Smith indicated on the application that he had been convicted of a felony and listed an "assault charge" as the only such conviction within the last seven years. Despite his felonious background, Smith was conditionally hired subject to a background check, which the Defendants obtained from Central Criminal Records Exchange ("CCRE"). Based upon the background check, the Defendants withdrew their employment offer.
The Defendants moved to dismiss the claims against the CCRE for providing the background check, claiming that the CCRE is not a consumer reporting agency and thus not subject to the FCRA. Amazingly (and wrongly I might add), the Court agreed that CCRE is not a consumer reporting agency even though it clearly is.
The Court stated that the "Virginia General Assembly created the CCRE, a division of the Virginia State Police, to be the 'sole criminal record-keeping agency of the Commonwealth.'
Va.Code Ann. § 19.2-387. It is required to 'receive, classify, and file criminal history
record information' primarily for use by state agencies and other entities for law enforcement purposes. ... Along with the numerous agencies and entities to which it is authorized to
disseminate criminal history information, the CCRE may, upon written request, provide the conviction data of a person to an employer or prospective employer at the employer's cost, provided that the person on whom the data is being obtained consents to the request in writing."
A company is a consumer reporting agency if it assembles or evaluates information on consumers for the purpose of furnishing consumer reports to third parties. The Court decided that CCRE was not a consumer reporting agency since its primary function was not to furnish consumer reports to third parties. Apparently, the Court does not consider numerous state agencies and law enforcement entities to be third parties but that is exactly what they are. The sole purpose of the CCRE is to compile information about consumers (i.e. their criminal histories) and then provide that history to pretty much anyone (state agencies, law enforcement and even prospective employers) that asks for it. I must respectfully say that the Court sure got it wrong on this one. But, despite the clear language of the FCRA and the Court's own description of what the CCRE does, it decided it was not a consumer reporting agency and dismissed (wrongly) the Plaintiff's claims against the CCRE.
The Court did correctly deny the motions to dismiss filed by Anheuser-Busch Company and InBev Corporation, who claimed they were merely parent companies of Busch Entertainment and thus had nothing to do with the decision to hire or not to hire Smith. The Court correctly held that the Plaintiff's allegations that Anheuser-Busch and InBev did have a role in the decision not to hire Smith was enough to survive a motion to dismiss.
This case arises from an employment application submitted by Willie Smith to Water Country USA, which was owned and operated by the Defendants Busch Entertainment Corporation and Anheuser-Busch Companies, Inc. The employment application asked whether Smith had any felony convictions and to list any such felony convictions within the last seven years. Smith indicated on the application that he had been convicted of a felony and listed an "assault charge" as the only such conviction within the last seven years. Despite his felonious background, Smith was conditionally hired subject to a background check, which the Defendants obtained from Central Criminal Records Exchange ("CCRE"). Based upon the background check, the Defendants withdrew their employment offer.
The Defendants moved to dismiss the claims against the CCRE for providing the background check, claiming that the CCRE is not a consumer reporting agency and thus not subject to the FCRA. Amazingly (and wrongly I might add), the Court agreed that CCRE is not a consumer reporting agency even though it clearly is.
The Court stated that the "Virginia General Assembly created the CCRE, a division of the Virginia State Police, to be the 'sole criminal record-keeping agency of the Commonwealth.'
Va.Code Ann. § 19.2-387. It is required to 'receive, classify, and file criminal history
record information' primarily for use by state agencies and other entities for law enforcement purposes. ... Along with the numerous agencies and entities to which it is authorized to
disseminate criminal history information, the CCRE may, upon written request, provide the conviction data of a person to an employer or prospective employer at the employer's cost, provided that the person on whom the data is being obtained consents to the request in writing."
A company is a consumer reporting agency if it assembles or evaluates information on consumers for the purpose of furnishing consumer reports to third parties. The Court decided that CCRE was not a consumer reporting agency since its primary function was not to furnish consumer reports to third parties. Apparently, the Court does not consider numerous state agencies and law enforcement entities to be third parties but that is exactly what they are. The sole purpose of the CCRE is to compile information about consumers (i.e. their criminal histories) and then provide that history to pretty much anyone (state agencies, law enforcement and even prospective employers) that asks for it. I must respectfully say that the Court sure got it wrong on this one. But, despite the clear language of the FCRA and the Court's own description of what the CCRE does, it decided it was not a consumer reporting agency and dismissed (wrongly) the Plaintiff's claims against the CCRE.
The Court did correctly deny the motions to dismiss filed by Anheuser-Busch Company and InBev Corporation, who claimed they were merely parent companies of Busch Entertainment and thus had nothing to do with the decision to hire or not to hire Smith. The Court correctly held that the Plaintiff's allegations that Anheuser-Busch and InBev did have a role in the decision not to hire Smith was enough to survive a motion to dismiss.
June 18, 2009
Another pro se case under the FCRA
Why is it that so many people think they can adequately represent themselves in Fair Credit Reportin Act litigation? This is by far the most complicated area of law that I have encountered in my ten years of practicing law. And this is the LAST area of law that I would recommend any non-lawyer trying to represent himself or herself.
Here's another case where a consumer represented himself - Pulliam v. American Express Travel Related Services Co., Inc., which was handed down by District Judge Matthew F. Kennelly of the United States District Court for the Northern District of Illinois, Eastern Division.
Representing himself, Pulliam alleged violations of the Fair Credit Reporting Act and the Fair Debt Collection Practices Act, as well as common law fraud, breach of contract, and intentional interference with prospective economic advantage. American Express moved to dismiss all the Plaintiff's claims.
Pulliam had an account with American Express. American Express offered to settle the amount owed on the account for less than the full value owed. Plaintiff took American Express on its offer and allegedly paid the settlement amount agreed upon.
The Plaintiff subsequently learned that American Express had a judgment against him. American Express had also reported three charged off accounts to the credit bureaus for inclusion on the Plaintiff's credit reports. The Plaintiff then disputed the American Express judgment and charged off accounts to the credit bureaus, among others. When American Express refused to correct the Plaintiff's credit report, the Plaintiff sued American Express alleging the claims listed above.
The Court correctly held that the facts do support a claim against American Express pursuant to 15 U.S.C. 1681s-2(a) and 15 U.S.C. 1681s-2(b) but also correctly held that there is no private cause of action for a violation of 15 U.S.C. 1681s-2(a). There is a private cause of action for American Express failing to perform a reasonable investigation pursuant to 1681s-2(b). The Court dismissed the Plaintiff's claims brought pursuant to 1681s-2(a) but allowed the Plaintiff's 1681s-2(b) claim to survive. The Plaintiff's 15 U.S.C. 1681b claim for American Express obtaining a copy of his credit report without a permissible purpose also survived because the Court correctly did not buy American Express' argument that the fact that the Plaintiff at one time had an open account with American Express gave American Express the right to pull the Plaintiff's credit report.
Suprisingly, American Express did not argue that the Plaintiff's state law claims were preempted by 15 U.S.C. 1681t(b)(1)(F). However, the Plaintiff's state law claims were dismissed for other grounds.
Overall, a good decision regarding the differences between a claim pursuant to 1681s-2(a) and one brought pursuant to 1681s-2(b).
Here's another case where a consumer represented himself - Pulliam v. American Express Travel Related Services Co., Inc., which was handed down by District Judge Matthew F. Kennelly of the United States District Court for the Northern District of Illinois, Eastern Division.
Representing himself, Pulliam alleged violations of the Fair Credit Reporting Act and the Fair Debt Collection Practices Act, as well as common law fraud, breach of contract, and intentional interference with prospective economic advantage. American Express moved to dismiss all the Plaintiff's claims.
Pulliam had an account with American Express. American Express offered to settle the amount owed on the account for less than the full value owed. Plaintiff took American Express on its offer and allegedly paid the settlement amount agreed upon.
The Plaintiff subsequently learned that American Express had a judgment against him. American Express had also reported three charged off accounts to the credit bureaus for inclusion on the Plaintiff's credit reports. The Plaintiff then disputed the American Express judgment and charged off accounts to the credit bureaus, among others. When American Express refused to correct the Plaintiff's credit report, the Plaintiff sued American Express alleging the claims listed above.
The Court correctly held that the facts do support a claim against American Express pursuant to 15 U.S.C. 1681s-2(a) and 15 U.S.C. 1681s-2(b) but also correctly held that there is no private cause of action for a violation of 15 U.S.C. 1681s-2(a). There is a private cause of action for American Express failing to perform a reasonable investigation pursuant to 1681s-2(b). The Court dismissed the Plaintiff's claims brought pursuant to 1681s-2(a) but allowed the Plaintiff's 1681s-2(b) claim to survive. The Plaintiff's 15 U.S.C. 1681b claim for American Express obtaining a copy of his credit report without a permissible purpose also survived because the Court correctly did not buy American Express' argument that the fact that the Plaintiff at one time had an open account with American Express gave American Express the right to pull the Plaintiff's credit report.
Suprisingly, American Express did not argue that the Plaintiff's state law claims were preempted by 15 U.S.C. 1681t(b)(1)(F). However, the Plaintiff's state law claims were dismissed for other grounds.
Overall, a good decision regarding the differences between a claim pursuant to 1681s-2(a) and one brought pursuant to 1681s-2(b).
June 17, 2009
New FCRA case regarding inaccurate credit reporting
A new opinion was released on June 15, 2009 by the United States District Court for the Middle District of Florida. The case is styled Welch v. Target National Bank. District Judge John E. Steele penned the decision. Dianne M. Welch, the Plaintiff in this case, had a Target credit card that was included in her Chapter 7 bankruptcy. The debt to Target was discharged in the Plaintiff's bankruptcy.
Despite the discharge, Target continued to report the discharged debt to the credit bureaus as having a current past due balance of over $6000. Target should have reported the account as "included in bankruptcy" with a $0 balance and no late payment history. Despite numerous disputes, Target refused to correct the way the account was being reported on the Plaintiff's credit reports.
The Plaintiff brought three claims, one under the Fair Credit Reporting Act, one under the Florida Consumer Collection Practices Act and one for violation of the discharge injunction. Target moved to dismiss all three claims.
The Court correctly held that the Plaintiff's FCRA claim should not be dismissed because there is no restriction that only a consumer reporting agency may provide notice of a dispute. It is unclear from the facts what exactly happened as far as the disputes so I am not sure what the Court meant by this statement. Regardless, the Plaintiff's FCRA claim survived.
The Court also correctly held that the Plaintiff's claim under the Florida Consumer Collection Practices Act should survive. Target claimed that the FCRA preempts the Florida Consumer Collection Practices Act. The Court correctly disagreed. While the FCRA does preempt state credit reporting acts (except for the two that are excluded from preemption), the Florida state law at issue governed collection of debts, not credit reporting. Thus, Judge Steele correctly held that the FCRA does not preempt the Florida Consumer Collection Practices Act.
Finally, the Court held that the Plaintiff's claim that Target violated the bankruptcy's discharge injunction against collecting a discharged debt could only be heard in a bankruptcy court, so the Court dismissed this claim.
Despite the discharge, Target continued to report the discharged debt to the credit bureaus as having a current past due balance of over $6000. Target should have reported the account as "included in bankruptcy" with a $0 balance and no late payment history. Despite numerous disputes, Target refused to correct the way the account was being reported on the Plaintiff's credit reports.
The Plaintiff brought three claims, one under the Fair Credit Reporting Act, one under the Florida Consumer Collection Practices Act and one for violation of the discharge injunction. Target moved to dismiss all three claims.
The Court correctly held that the Plaintiff's FCRA claim should not be dismissed because there is no restriction that only a consumer reporting agency may provide notice of a dispute. It is unclear from the facts what exactly happened as far as the disputes so I am not sure what the Court meant by this statement. Regardless, the Plaintiff's FCRA claim survived.
The Court also correctly held that the Plaintiff's claim under the Florida Consumer Collection Practices Act should survive. Target claimed that the FCRA preempts the Florida Consumer Collection Practices Act. The Court correctly disagreed. While the FCRA does preempt state credit reporting acts (except for the two that are excluded from preemption), the Florida state law at issue governed collection of debts, not credit reporting. Thus, Judge Steele correctly held that the FCRA does not preempt the Florida Consumer Collection Practices Act.
Finally, the Court held that the Plaintiff's claim that Target violated the bankruptcy's discharge injunction against collecting a discharged debt could only be heard in a bankruptcy court, so the Court dismissed this claim.
June 16, 2009
New FCRA case - Tobler v. Equifax and Auto Club Insurance Agency
District Judge Denise Page Hood issued a new opinion in a new Fair Credit Reporting Act case from the United States District Court for the Eastern District of Michigan, Southern Division. The case is styled Tobler v. Equifax and Auto Club Insurance Agency and was released on May 27, 2009.
This case makes clear yet again that it is foolish for consumers to represent themselves, especially in the complicated field of Fair Credit Reporting Act litigation. The pro se plaintiff (pro se means the plaintiff represented himself) filed a lawsuit against Equifax, ChoicePoint and Auto Club Insurance Agency (a.k.a. AAA). The claims against Equifax and ChoicePoint were for violating the FCRA for failing to correct errors on Tobler's credit report. The Court's opinion, however, focuses on Tobler's claims against Auto Club Insurance Agency, which Tobler claimed overcharged him based upon the erroneous credit reporting of Equifax and/or ChoicePoint.
The problem is that, even if the plaintiff's allegations agaisnt Auto Club Insurance Agency are 100% factually accurate, there still is no valid claim under the FCRA. The only duty of a user of a consumer report in relation to an adverse action is to give the required notice to the consumer who suffered the adverse action. This duty is found in 15 U.S.C. 1681m. Moreover, there is no private cause of action under 1681m because that right was taken away when the FCRA was amended a few years ago. Now, only certain governmental agencies have a right to sue for a violation of 15 U.S.C. 1681m. Consumers no longer have that right.
Thus, the plaintiff's claims against Auto Club Insurance Agency were doomed to fail, even if the plaintiff's last ditch effort to amend his complaint to add a claim under 15 U.S.C. 1681m had been granted. The Court correctly ruled that Tobler's claims against Auto Club Insurance Agency should be dismissed and granted Auto Club's motion to dismiss.
This case makes clear yet again that it is foolish for consumers to represent themselves, especially in the complicated field of Fair Credit Reporting Act litigation. The pro se plaintiff (pro se means the plaintiff represented himself) filed a lawsuit against Equifax, ChoicePoint and Auto Club Insurance Agency (a.k.a. AAA). The claims against Equifax and ChoicePoint were for violating the FCRA for failing to correct errors on Tobler's credit report. The Court's opinion, however, focuses on Tobler's claims against Auto Club Insurance Agency, which Tobler claimed overcharged him based upon the erroneous credit reporting of Equifax and/or ChoicePoint.
The problem is that, even if the plaintiff's allegations agaisnt Auto Club Insurance Agency are 100% factually accurate, there still is no valid claim under the FCRA. The only duty of a user of a consumer report in relation to an adverse action is to give the required notice to the consumer who suffered the adverse action. This duty is found in 15 U.S.C. 1681m. Moreover, there is no private cause of action under 1681m because that right was taken away when the FCRA was amended a few years ago. Now, only certain governmental agencies have a right to sue for a violation of 15 U.S.C. 1681m. Consumers no longer have that right.
Thus, the plaintiff's claims against Auto Club Insurance Agency were doomed to fail, even if the plaintiff's last ditch effort to amend his complaint to add a claim under 15 U.S.C. 1681m had been granted. The Court correctly ruled that Tobler's claims against Auto Club Insurance Agency should be dismissed and granted Auto Club's motion to dismiss.
June 10, 2009
New FCRA case regarding 15 U.S.C. 1681e(b)
New case regarding the Fair Credit Reporting Act from the Federal Court for the District of Columbia. Wilson v. Prudential Financial, et al., 2009 U.S. Dist. LEXIS 26483 (D. DC March 30, 2009).
Defendant CARCO Group, Inc. (“CARCO”), a consumer reporting agency that does background checks on consumers, prepared a background report on Plaintiff Derek T. Wilson for Prudential Financial Services (“Prudential”) related to Plaintiff’s offer of employment with Prudential. The background report’s criminal history section listed a criminal charge as "pending". Based on the erroneous background report, Prudential withdrew the Plaintiff's job offer. CARCO amended the background report on Plaintiff and sent it to Prudential indicating that Plaintiff had no past or pending criminal charges but Prudential refused to re-extend the offer.
Plaintiff sued CARCO alleging that CARCO violated 15 U.S.C. 1681e(b) of the Fair Credit Report Act which requires consumer reporting agencies to use reasonable procedures to assure the maximum possible accuracy of the consumer reports they create. CARCO filed a motion for summary judgment seeking dismissal of the lawsuit because the Plaintiff had not provided sufficient evidence to establish the elements of his 15 U.S.C. 1681e(b) claim.
The court denied Defendant’s motion, finding that the Plaintiff had present sufficient proof that the Defendant failed to follow reasonable procedures to assure the maximum possible accuracy of the consumer report regarding the Plaintiff. Plaintiff's evidence created a material question of fact that only the jury could decide.
Overall, a good result and a well rationed opinion from the Court.
Defendant CARCO Group, Inc. (“CARCO”), a consumer reporting agency that does background checks on consumers, prepared a background report on Plaintiff Derek T. Wilson for Prudential Financial Services (“Prudential”) related to Plaintiff’s offer of employment with Prudential. The background report’s criminal history section listed a criminal charge as "pending". Based on the erroneous background report, Prudential withdrew the Plaintiff's job offer. CARCO amended the background report on Plaintiff and sent it to Prudential indicating that Plaintiff had no past or pending criminal charges but Prudential refused to re-extend the offer.
Plaintiff sued CARCO alleging that CARCO violated 15 U.S.C. 1681e(b) of the Fair Credit Report Act which requires consumer reporting agencies to use reasonable procedures to assure the maximum possible accuracy of the consumer reports they create. CARCO filed a motion for summary judgment seeking dismissal of the lawsuit because the Plaintiff had not provided sufficient evidence to establish the elements of his 15 U.S.C. 1681e(b) claim.
The court denied Defendant’s motion, finding that the Plaintiff had present sufficient proof that the Defendant failed to follow reasonable procedures to assure the maximum possible accuracy of the consumer report regarding the Plaintiff. Plaintiff's evidence created a material question of fact that only the jury could decide.
Overall, a good result and a well rationed opinion from the Court.
May 03, 2009
Pintos v. Experian
A new ruling from the Ninth Circuit Court of Appeals regarding an impermissible pull (15 U.S.C. 1681b) case.
"Experian loses ruling that could strengthen Fair Credit Reporting Act
The U.S. 9th Circuit Court of Appeals rules in favor of a woman who had been pursued by a collection agency that used an Experian credit report to try to recover a towing fee owed by her son." - rest of story at http://www.latimes.com/business/la-fi-experian-privacy1-2009may01,0,3821982.story
Looks like a good one for consumers.
"Experian loses ruling that could strengthen Fair Credit Reporting Act
The U.S. 9th Circuit Court of Appeals rules in favor of a woman who had been pursued by a collection agency that used an Experian credit report to try to recover a towing fee owed by her son." - rest of story at http://www.latimes.com/business/la-fi-experian-privacy1-2009may01,0,3821982.story
Looks like a good one for consumers.
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