Well-drafted arbitration provisions are a tried and true way of avoiding litigation of FCRA claims.  However, as seen by Garry v. Credit Acceptance Corp., there are limitations to these provisions in the context of identity theft.  No. 19-CV-12386, 2020 U.S. Dist. LEXIS 65931 (E.D. Mich. Apr. 15, 2020).

In Garry, plaintiff filed suit regarding a retail installment contract she purportedly entered into for the purchase of a used car.  Id. at *2.  The retail installment contract contained an arbitration provision.  Id.  Plaintiff claimed that she never entered into the transaction at issue and her identity had been stolen by an acquaintance who prepared plaintiff’s taxes.  Id.  Plaintiff filed suit under the Fair Credit Reporting Act (“FCRA”) against the third-party who had been assigned the retail installment contract in addition to asserting other state law claims.  Id.

The third party filed a motion to compel arbitration of the FCRA claim.  Id.  In opposing arbitration, plaintiff asserted that she never entered into the contract at issue and therefore had not agreed to arbitrate.  Id. at *4.  The plaintiff submitted to the court a police report of identity theft, a timesheet from her employer showing that she was at work when the vehicle was purportedly purchased, and an affidavit.  Id.

In response, the defendant challenged that the evidence plaintiff relied upon was unreliable and called plaintiff’s credibility into question (including, for example, noting that plaintiff waited five months to file a report of identity theft after learning of the vehicle purchase at issue).  Id.

The court denied defendant’s motion to compel arbitration of plaintiff’s FCRA claim.  The court noted that “[w]here there is a genuine issue of material fact as to the existence of an arbitration agreement, the court must proceed to trial to resolve the issue” and “[c]ourts have routinely rejected attempts to bind victims of identity theft to agreements unknowingly entered in their names.”  Id. (citations omitted).

In regards to the arguments the defendant raised regarding plaintiff’s credibility and the persuasiveness of the evidence she submitted, the court said those arguments could be raised at the future trial of whether plaintiff agreed to arbitrate.  Id. at *5.  However, they were inadequate for the court to find there was no genuine issue of material fact regarding arbitration at the current stage of the proceedings.  Id.

As FCRA claims continue to rise, disputes regarding the validity of arbitration provisions precluding litigation of such claims are likewise expected to increase.  Stay tuned.