Is FCRA the Next Notorious California Lemon Law?: 9 Separate Cases, in The Same District, Involving the Same Claims Against the Same Defendant, Represented by The Same Counsels… What Is Going On?
“It appears that there are at least eight cases in this District where the plaintiffs make the same claims against Michigan First. And in each case, the plaintiffs are represented by the same counsel. And in each case, Michigan First is represented by the same counsel,” the Honorable Laurie J. Michelson of the Eastern District of Michigan, Southern Division, commented in Rider v. Equifax Info. Servs. LLC, No. 2:19-cv-13660, 2020 U.S. Dist. LEXIS 89359(E.D. Mich. May 21, 2020.) The Rider decision is truly interesting not only because it begs the question of what was/is going on with Michigan First’s credit reporting, but also because of the court’s resolution focused ruling.
Plaintiff Danielle Rider obtained a credit report from Equifax which listed a tradeline – i.e. a credit account listing – showing monthly payments of $151 to Michigan First. Rider disputed the accuracy of this tradeline as she was no longer obligated to make these payments. As a result, she sent a letter to Equifax, explaining that her account with Michigan First had been “paid and closed,” and that the tradeline on her credit report should show the payments to be $0, instead of $150. Equifax forwarded her complaint to Michigan First. After waiting a few months, Rider ordered another credit report, which did not show a $0 payment under the Michigan First tradeline-however, Rider did not indicate what exactly was reported under the Michigan First tradeline. Rider subsequently filed a lawsuit, alleging (amongst other claims) Michigan First violated the FCRA as a result of their negligent investigation, or alternatively, willfully failing to review all relevant information.
As we know, the FCRA mandates furnishers not to furnish any information relating to a consumer if they know, or have a reasonable cause to believe, that the information is inaccurate. The FCRA does not however provide precise instructions to furnishers on how to report the information. And in fact, if Rider’s credit reports showed a non-zero monthly payment amount to Michigan First without any clarifying information, it could well have been plausible that the Michigan First tradeline was inaccurate or incomplete. But if the tradeline stated “historical” and “closed,” or similar language, it probably was not inaccurate or incomplete. And that critical piece of information was missing in either parties briefing– i.e. what exactly was reported in Rider’s subsequent credit report?!
In addition to the overarching duty of furnishing accurate information, after receiving a notice disputing the completeness OR accuracy of any information that has been provided by the furnisher, a furnisher must:
(A) conduct an investigation with respect to the disputed information;
(B) review all relevant information provided by the consumer reporting agency…;
(C) report the results of the investigation to the consumer reporting agency;
(D) if the investigation finds that the information is incomplete or inaccurate, report those results to all other consumer reporting agencies to which the person furnished the information and that compile and maintain files on consumers on a nationwide basis; and
(E) if an item of information disputed by a consumer is found to be inaccurate or incomplete or cannot be verified after any reinvestigation under paragraph (1), for purposes of reporting to a consumer reporting agency only, as appropriate, based on the results of the reinvestigation promptly—
(i) modify that item of information;
(ii) delete that item of information; or
(iii) permanently block the reporting of that item of information.
See 15 U.S.C § 1681 for the detailed statute
The FCRA also requires furnishers to establish and implement reasonable written policies and procedures concerning the accuracy and integrity of the information it furnishes to consumer reporting agencies. The guidelines are provided under Appendix A to Furnisher Rule Part 660.
In response to her complaint, Michigan First argued that Rider did not adequately plead that the tradeline is “inaccurate,” or that Michigan First conducted an “inadequate investigation,” or that she was “damaged,” and requested that the complaint be dismissed. While acknowledging Michigan First’s argument, taking on a resolution focused approach, the Court ordered Rider to docket the two credit reports so the Court could ascertain if the credit reporting was in fact inaccurate, or alternatively, asked Rider to dismiss her complaint by May 29, 2020.
For any Furnisher, it is incumbent to have solid compliance policies governing credit reporting disputes. If Michigan First had successfully convinced the Court that the reporting was in fact accurate, it is possible that the Court may not have requested Plaintiff to supplement her complaint with the two credit reports. Arguably, the Court felt the need to review the credit reports before it could rule on the FCRA violations alleged. It is rare for the courts to go so far in a 12(b)6 motion, but always refreshing to see creative resolutions to run-of-the-mill disputes. All to say, it’s unlikely that the FCRA is turning into the notorious California Lemon Law, just yet, but it’s still a heavily litigated statute, so STAY TUNED, while we help decipher all the developments for you!