Blogs

Ambiguity Sufficient to Plead FCRA 1681e(b) Claim

By Alexander Beeby posted 11-13-2020 05:36 PM

  
BANKRUPTCY BULLETIN
Contributing Editors: Berina Altshuler & Deneese Yang, St. Thomas School of Law;
Kesha Tanabe, Tanabe Law; Karl J. Johnson, Taft Stettinius & Hollister LLP

In Alsibai v. Experian Info. Sols., Inc., 20-CV-0963 (ECT/DTS), 2020 WL 5652477 (D. Minn. Sept. 23, 2020), Judge Tostrud denied the defendant’s motion for judgment on the pleadings, holding that the plaintiff alleged a plausible claim under the Fair Credit Reporting Act (FCRA). 

To maintain a claim under § 1681e(b) of the FCRA, a plaintiff must plausibly allege: (1) the reporting agency failed to follow reasonable procedures intended to assure the accuracy of its reports; (2) the reporting agency reported inaccurate credit information about the plaintiff; (3) the plaintiff suffered harm; and (4) the reporting agency’s failure to follow reasonable procedures was the cause of the plaintiff’s harm. The parties and the court focused on the first two elements.  

In this case, the appellant received a chapter 7 discharge in July 2019. A credit report produced by the appellee in September 2019 showed that a bank account was open from February 2011 until September 2013. From March 2014 until August 2019, the status was “charged off,” with a zero-dollar balance. April to June 2019 showed no balance entry at all. Above the table showing the zero-dollar balances, there was a notation of a "High Balance of $5,344" from March 2017 to March 2019 and July to August 2019. The appellant believes this description is inaccurate because it suggests that the appellant still owed a debt. 

The court first addressed whether the credit report produced by the appellee was accurate. Even if a credit report is technically correct, it will be considered inaccurate if it is misleading. The court relied on Morris v. Experian Info. Sols., Inc., F. Supp. 3d , No. 20-cv-604 (PJS/HB), 2020 WL 4703900, (D. Minn. Aug. 13, 2020) for the principle that a credit report is not considered misleading if it unambiguously communicates that the debt did not exist on the date the plaintiff filed for Chapter 7 bankruptcy. Here, reporting that a debt is “charged off” is not the same as saying no debt existed, it could still indicate a debt is owed. Additionally, the statement “High Balance of $5,344," which was listed for months after the discharge, further adds to the ambiguous nature of the credit report.

Next, the court examined whether the appellee “failed to follow reasonable procedures intended to assure the accuracy of its reports.” The appellee relied on White v. Experian Information Solutions, Inc., No. 05-CV-1070 (C.D. Cal. Aug. 19, 2008) to argue that it did not need to report closed accounts as discharged in bankruptcy. White, however, is not binding upon the Minnesota bankruptcy court, and the court noted that the credit report did not just stop at “closed.” The report also included phrases such as “pay status,” “charged  off” and a “high balance,” creating ambiguity.

Co-Editors in Chief
Alexander J. Beeby, Larkin Hoffman Daly & Lindgren Ltd.
Kesha Tanabe, Tanabe Law

0 comments
9 views

Permalink