The Court of Appeals for the Seventh Circuit has affirmed the rulings from District Court judges in a consolidated appeal of seven Fair Credit Reporting Act cases in which the plaintiffs sued credit reporting agencies because they allegedly did not properly investigate claims that debts being reported by debt buyers on the plaintiffs’ credit reports were actually owned by those creditors.
A copy of the ruling in the cases of Chuluunbat v. Experian Information Solutions, Rodas v. TransUnion Data Solutions, Molina v. TransUnion, Hoyos v. Equifax Information Services & TransUnion, Soyinka v. Equifax Information Services, Amorah v. Equifax Information Services & TransUnion Data Solutions, and Cowans v. Equifax Information Services & TransUnion Data Solutions can be accessed by clicking here.
In each case, the plaintiff had an unpaid credit card debt that was subsequently purchased by a debt buyer. The debt buyers began reporting the unpaid debts to the credit reporting agencies. The plaintiffs contacted the defendants and disputed the accuracy of the information being furnished. The credit reporting agencies contacted the creditors, who confirmed they were the legitimate owners of the debts in question. The creditors did not provide any additional information to substantiate their claim of ownership. The plaintiffs then filed suit, alleging the defendants had violated the FCRA by not fully investigating the disputes. In each case, a District Court judge found for the defendants, citing Denan v. TransUnion — which held that ownership of a debt is a legal question and determining ownership of a debt is a legal question and not a duty imposed on the furnishers under the FCRA. Each of the plaintiffs appealed, arguing that ownership was a factual question, not a legal one.
In their appeal, the plaintiffs argued that all the defendants had to do was request a copy of the purchase and sale agreements for each debt to determine whether the creditors were correctly claiming ownership of the debt.
The Seventh Circuit built its ruling on attempting to answer “whether the alleged inaccuracy turns on applying law to facts or simply examining the facts alone.” Ultimately, whether a creditor possesses the proper legal relationship to a debt is a task for a court to decide, not a credit reporting agency, the panel ruled.
“Contrary to the plaintiffs’ assertions, any investigation into whether the creditors were assigned the debts involves more than just determining if an assignment agreement exists,” the Court wrote. “It also involves interpreting the legal validity of any assignment agreement. An assignment is a creature of law: to have a valid assignment parties must meet certain legal requirements.”
