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.

President Obama must be reading my blog!

Remember the post I did about how to really get your free credit report. See http://fcralawyer.blogspot.com/2009/05/free-credit-reports-are-generally-not.html if you don't remember. Apparently, President Obama or someone in his administration read it. Ok, illusions of grandeur aside, I don't really think the President read my article. But they sure got the issue right in the credit card reform bill passed late last month.

As you all know (from reading my article perhaps), FreeCreditReport.com advertised through TV and radio commercials using a catchy jingle that led consumers to believe credit reports ordered on the site were actually free. Many people fell for the ruse, ordering their "free" credit report only to be forced to sign up for a $15 a month credit monitoring service to be able to get their "free" report.

The credit card reform law requires the Federal Trade Commission (FTC) to issue revised rules that require advertisers such as FreeCreditReport.com and others to acknowledge AnnualCreditReport.com as the only way to get a truly free credit report. Thanks to the new law, new FreeCreditReport.com commercials will include a statement that the credit report they provide for "free" is not the free credit report provided for by Federal law.

President Obama is carrying through with his promises to level the playing field for consumers, such as his excellent action of reversing the preemption being including in federal regulations. See http://fcralawyer.blogspot.com/2009/05/excellent-news-on-preemption-front.html and http://fcralawyer.blogspot.com/2009/05/more-on-president-obamas-preemption.html. That was big for consumers and the credit card bill is another great example of fair litigation for consumers. Once again, thank you President Obama, since I know you will read this. :)

More on President Obama's preemption memo

A few of the highlights from the executive memorandum regarding preemption:

• Heads of departments and agencies should not include in regulatory preambles statements that the department or agency intends to preempt State law through the regulation except where preemption provisions are also included in the codified regulation.

• Heads of departments and agencies should not include preemption provisions in codified regulations except where such provisions would be justified under legal principles governing preemption, including the principles outlined in Executive Order 13132.

• Heads of departments and agencies should review regulations issued within the past 10 years that contain statements in regulatory preambles or codified provisions intended by the department or agency to preempt State law, in order to decide whether such statements or provisions are justified under applicable legal principles governing preemption. Where the head of a department or agency determines that a regulatory statement of preemption or codified regulatory provision cannot be so justified, the head of that department or agency should initiate appropriate action, which may include amendment of the relevant regulation.
  

This is great news for all of us who have been fighting federal regulatory attacks our states consumer protection laws. Now, we need to get those regulatory heads to undo the terrible preemption work done over the last decade.

Excellent news on the preemption front!

As you may know, the Bush administration adopted a policy of including preemption provisions in federal regulations, unilaterally taking away your right to your day in court. These preemption provisions effectively circumvented any state laws designed to protect you, the consumer. They were neither voted on by you, nor passed by your representatives in Congress, nor even reviewed by the judicial branch. It was basically a terrible example of the executive branch legislating instead of governing.

Yesterday, the Obama administration took the first large step in correcting the preemption attrocities of the Bush administration. President Obama issued an executive memorandum to all federal agencies, mandating that no provisions for federal preemption shall be included in federal regulations except under extraordinary circumstances. Also, the executive memorandum requires that all preemption provisions enacted or written by any federal agency in the past ten years be rewritten to provide that state laws are not pre-empted.

This, my friends, is big. Thank you, President Obama, for leveling the playing field for consumers like us.