A District Court judge in California has granted a defendant’s motion for summary judgment in a Fair Credit Reporting Act and California Consumer Credit Reporting Agencies Act case, finding that the defendant accurately reported two loans as charged off and that the plaintiff failed to establish any inaccuracy in the reporting.
The background: The plaintiff obtained a personal loan and an auto loan in 2019 and defaulted on both. After months of missed and partial payments, the defendant charged off the personal loan in November 2020 and the auto loan in November 2021. Repayment plans were later established for each loan, with monthly payments far lower than the amounts required under the original loan agreements.
- The defendant repeatedly informed the plaintiff that the “outstanding default will continue to be reported to the credit bureaus until the agreement is complete and satisfied.”
- Despite these notices, the plaintiff disputed the charged off reporting with the credit reporting agencies and later sued, alleging violations of the FCRA and CCCRAA.
- The plaintiff argued that by entering into repayment arrangements, he became current on his obligations and that the new arrangements “superseded” the original loan terms, making the charged off reporting inaccurate.
The ruling: Judge Thomas J. Whelan of the District Court for the Southern District of California rejected the plaintiff’s theory and held that the reporting was accurate. Relying heavily on the Eleventh Circuit’s decision in Felts v. Wells Fargo, the judge emphasized that a furnisher’s obligation is to report compliance with the original loan terms, not with separate repayment agreements unless those agreements legally modify the original contracts.
- Judge Whelan wrote that the plaintiff’s argument “misconstrues [the furnisher’s] reporting obligation,” explaining that the defendant was required to report payment history under “the first, original agreement,” and the plaintiff’s compliance with later repayment arrangements “has no bearing on the accuracy” of the reporting.
- The Court also found no evidence that the repayment plans legally modified the original loans. Instead, the record showed the opposite, including explicit written statements that the delinquency would continue to be reported until the plans were completed.
- Even after filing the lawsuit, the plaintiff admitted the loans had not been fully paid, reinforcing that the charged-off status remained accurate, Judge Whelan noted.
