A District Court judge in Illinois has denied a motion to dismiss filed by three credit reporting agencies accused of violating the Fair Credit Reporting Act over the inclusion of a disputed finance charge on the plaintiff’s credit card bill and credit report.
The background: The case stems from a credit card account opened by the plaintiff in late 2023. After making purchases and initiating payment of her balance on the due date, the payment posted one business day later because the due date fell on a Sunday. As a result, the account reflected a late fee and interest charges on the next billing statement.
- The plaintiff contacted the furnisher, which agreed to reverse the late fee and interest charges, according to the complaint. Those reversals appeared as credits on subsequent statements, and the plaintiff paid the remaining balance in full. She also stopped using the card altogether.
- Despite this, a new interest charge of $22.47 appeared on the following statement, even though the plaintiff alleges there was no remaining balance on which interest could accrue.
- Over the next several months, additional interest and late fees were assessed, eventually resulting in a charged-off balance of more than $200.
- The plaintiff disputed the balance with the credit reporting agencies, which forwarded the disputes to the furnisher. Each time, the information was verified as accurate and left unchanged on the credit reports.
The ruling: In denying the motion to dismiss, Judge Lindsay C. Jenkins of the District Court for the Northern District of Illinois focused on the distinction between legal inaccuracies and factual inaccuracies under the FCRA. While credit reporting agencies are not required to resolve legal disputes or interpret contracts, they are obligated to address factual errors, such as the amount owed on an account.
- Here, Judge Jenkins ruled that the plaintiff’s allegations did not require legal interpretation of the cardholder agreement. Instead, they raised a factual question about whether interest was charged when no balance existed. As she put it, the plaintiff alleged that the agencies could have uncovered the issue through “some simple arithmetic.”
- Judge Jenkins acknowledged the case was a close call but emphasized that, at the pleading stage, the court must accept the plaintiff’s allegations as true. It was therefore plausible that the agencies reported a balance due when the plaintiff “in fact owed nothing.”
- Because a reasonable reinvestigation could have uncovered the alleged error, the FCRA claims were allowed to proceed.
