A District Court judge in Florida has partially denied a defendant’s motion to dismiss claims of defamation in a Fair Credit Reporting Act case in which it was accused of mishandling an identity theft dispute.
The background: The plaintiff alleged that she was a victim of identity theft after her personal information was compromised in a major data breach. The thief used her information to open a credit card account at a jewelry store in Texas. The defendant issued the fraudulent credit card and reported the account to consumer reporting agencies (CRAs). Despite the plaintiff promptly notifying the defendant and the CRAs about the unauthorized account, the defendant allegedly failed to conduct a reasonable investigation and continued to verify the account as valid.
- The plaintiff further contends that the defendant accused her of authorizing or benefiting from the fraudulent activity, even after she provided evidence that she could not have been in Texas at the time the account was opened.
- The plaintiff accused the defendant of violating its responsibilities as an information furnisher by failing to properly investigate her dispute under the FCRA. Additionally, the plaintiff filed a defamation claim based on the defendant’s communications to the CRAs and other third parties, such as the Better Business Bureau (BBB) and law enforcement.
The ruling: Judge Marcia Morales Howard of the District Court for the Middle District of Florida granted the defendant’s motion to dismiss the defamation claims related to the defendant’s communications with CRAs, finding that such claims were preempted by the FCRA’s provisions. Specifically, Judge Howard concluded that the FCRA’s preemption clause bars state-law claims that arise from information furnished to CRAs once the defendant is notified of a dispute.
- However, the judge denied the motion to dismiss the defamation claims related to communications with entities outside the scope of the FCRA, such as the BBB and law enforcement agencies. These entities are not regulated by the FCRA, and therefore, the plaintiff’s defamation claims against the defendant based on those communications were allowed to proceed.
- Judge Howard also noted that the defendant had initially refused to cooperate with law enforcement and resisted providing information that could aid in the investigation of the identity theft. It was only after the plaintiff filed the original complaint in April 2024 that the defendant admitted the debt was fraudulent and took action to remove it from the plaintiff’s credit reports.
