A District Court judge in North Carolina has denied a defendant’s motion to dismiss a Fair Credit Reporting Act suit, ruling the plaintiff’s inability to subsequently get approved for an apartment sufficient for her to have standing, and questioned the defendant’s dispute investigation process is enough to keep the case alive.
The background: The case centers on an alleged misreporting of a debt that the plaintiff never incurred. In 2019, the plaintiff and her then-boyfriend applied for an apartment together. However, the plaintiff did not sign the lease after ending the relationship due to domestic violence. Despite never signing the lease or living in the apartment, her ex-boyfriend used her information on the lease and subsequently failed to pay rent. The apartment complex then assigned the supposed debt to a collection agency — the defendant — for collections.
- The defendant reported the debt to a credit reporting agency, listing it as unpaid, which led to various issues for the plaintiff, including the denial of multiple credit applications. Despite repeated disputes from the plaintiff and even submitting a police report to document the identity theft, the defendant continued to report the debt as accurate until early 2024, when it was finally removed from her credit report. The plaintiff claims these actions caused her both economic and emotional damages, including loss of time and financial resources in disputing the information.
The ruling: The defendant sought to have the case dismissed on multiple grounds, including a lack of subject matter jurisdiction and failure to state a claim. However, Judge Louise W. Flanagan of the District Court for the Eastern District of North Carolina found that the plaintiff’s claim of being denied an apartment due to the alleged false reporting of the debt was a sufficient injury to establish standing.
- Furthermore, the judge rejected the defendant’s argument that its investigation into the debt was adequate. The FCRA requires data furnishers, like the defendant, to conduct a reasonable investigation into disputed debts. Judge Flanagan noted that the reasonableness of an investigation is generally a question for a factfinder, making it premature to dismiss the case at this stage. She pointed to several instances where the plaintiff had notified the defendant of the disputed debt, and yet, the defendant reaffirmed the accuracy of the information without any apparent substantive investigation.
