The Court of Appeals for the Sixth Circuit has reversed a lower court’s ruling in favor of a defendant that was sued for violating the Fair Credit Reporting Act, ruling that the defendant did not follow reasonable procedures to ensure the accuracy of information in the plaintiff’s credit report.
The Background: The suit originated when the plaintiff discovered that his efforts to refinance student loans and obtain personal loans were thwarted by inaccurate information in his credit report. The defendant had reported that the plaintiff owed child and spousal support, despite the plaintiff obtaining court orders stating that these obligations were abated. These orders were provided to the defendant, but the information in the plaintiff’s credit report remained unchanged, prompting the plaintiff to file a dispute. After multiple disputes and the submission of court documents to the defendant, the plaintiff’s report still reflected the incorrect support obligations, leading to the lawsuit.
The lower court initially ruled in favor of the defendant, reasoning that the FCRA required the reporting of any information received from state child support agencies. The court concluded that because the defendant had verified the information with the Michigan Office of Child Support (OCS), the plaintiff’s claims were not actionable.
The Ruling: On appeal, the lower court’s decision was reversed, with the appeals court finding that the defendant had not fulfilled its obligation to ensure the maximum possible accuracy of the information in the plaintiff’s report. The court emphasized that the FCRA mandates that consumer reporting agencies must adopt reasonable procedures to ensure the accuracy and completeness of the information they report.
- In this case, the court found that simply verifying the information with OCS, without considering the plaintiff’s court orders that contradicted the OCS’s records, was not a reasonable procedure.
- The court noted that the FCRA’s goal is to promote accuracy, and that incomplete information can be just as damaging as inaccurate information. Therefore, the defendant’s failure to account for the court orders in the plaintiff’s credit report was materially misleading and could have had adverse effects on the plaintiff’s creditworthiness.
