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CRAs Have A Duty To Report Debt Accurately, But Are Not The Judge And Jury

Schuh v. American Express Bank, FSB, 2018 WL 3751467 (S.D. Fla. May 3, 2018), provides a good example of the interplay between the FCRA’s requirement that consumer reporting agencies (“CRAs”) following reasonable procedures to ensure maximum possible accuracy of information and court orders which may impact the validity of a debt.

Under the facts of this case, American Express (“AMEX”) filed suit against the Plaintiff in state court to collect on unpaid credit card debt, but AMEX’s complaint was dismissed because it failed to file a mediation form in a timely manner.  Plaintiff (in that case a defendant) sought attorneys’ fees in the state court, and AMEX settled the matter by paying Plaintiff $2,500.

Later, because the consumer reporting agencies continued to report the debt on Plaintiff’s credit report, Plaintiff brought suit against them pursuant to the FCRA for allegedly failing to follow reasonable procedures to ensure maximum possible accuracy of information contained in consumer reports as required by 15 U.S.C. 1681e(b).  The Court dismissed this claim because Plaintiff’s dispute merely asserted a legal challenge to the validity of an existing debt and did not assert a factual inaccuracy in the CRA’s report of the debt.  In other words, Plaintiff did not claim that the CRAs misreported the facts of the underlying debt; instead, he claimed that the CRAs misreported the debt due to the state court order.  In addition, the Court ruled that even if, as Plaintiff argued, one takes the position that the debt was not factually owed after the state court ruling, Plaintiff’s claim still fails because CRAs are not required  to resolve legal issues, and this argument would require the CRAs to resolve the meaning of the state court dismissal order.

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About this Author

Chad Ewing, Womble Carlyle, business fraud attorney, negligent misrepresentation lawyer,

Chad is an attorney in our business litigation group with more than ten years of experience representing clients in state and federal courts, including all North Carolina federal district courts and the North Carolina Business Court. Recently, Chad has represented business clients in cases involving breach of contract, fraud, negligent misrepresentation and unfair and deceptive trade practices. In addition, Chad maintains an active creditor-focused bankruptcy practice.