The Court of Appeals for the Eleventh Circuit yesterday issued a ruling in a long-awaited Fair Credit Reporting Act reasonable investigation case, but side-stepped the issue that everyone was hoping it would decide, instead affirming the District Court’s ruling in favor of the defendant, but for an entirely different reason.
The Background: Two consumers bought timeshares from the defendant and then stopped making payments. When they stopped making payments, the plaintiffs considered the agreements to be canceled. The defendant disagreed and continued to report the debts to a credit reporting agency. The plaintiffs disputed the debt with the defendant but were unsuccessful in getting the disputes resolved, so they each filed suit, accusing the defendant of violating Section 16812s-2 of the FDCPA, claiming the defendant was inaccurately reporting that the plaintiffs owed the debts and that the defendant failed to reasonably investigate their disputes.
- A District Court judge granted summary judgment for the defendant, ruling the alleged inaccuracies were legal disputes and therefore not actionable under that section of the FCRA.
The Ruling: The industry was hoping to get a ruling from the Eleventh Circuit on whether FCRA claims could be based on legal disputed or only on factual inaccuracies. But instead, the Eleventh Circuit said that whether the inaccuracy was legal or factual was beside the point. What mattered is whether the alleged inaccuracy was objectively and readily verifiable. In this case, it wasn’t, the Appeals Court ruled.
- “Because Holden and Mayer cannot identify inaccurate or incomplete information that Holiday provided to the consumer reporting agencies, they cannot prevail,” the Appeals Court wrote.
- The issue is how the FCRA defines “accuracy.” The FCRA requires “maximum possible accuracy,” which means the highest degree attainable.
- Ultimately, the disagreement os over whether the debt was due and collectible.
