A District Court judge in Maine has granted a defendant’s motion to dismiss claims it violated the Fair Credit Reporting Act in a case involving the plaintiff being scammed out of nearly $60,000. The ruling narrows a lawsuit brought by a consumer who alleged that a credit union improperly investigated and reported a home equity line of credit balance that arose after she fell victim to a sophisticated fraud scheme. While the court allowed a narrow claim under the Electronic Fund Transfer Act to proceed related to timing requirements, it dismissed the FCRA claim.
The background: The plaintiff was targeted by fraudsters who convinced her that unauthorized transactions had occurred and persuaded her to install software granting them remote access to her computer. Using that access, the fraudsters helped set up online banking and initiated transfers between the plaintiff’s own accounts, including advances from a home equity line of credit. The plaintiff later withdrew cash and deposited it at ATMs at the fraudster’s direction, resulting in a total loss of nearly $60,000.
- After realizing she had been scammed, the plaintiff reported the activity to law enforcement and disputed the resulting HELOC balance with both the defendant and credit reporting agencies.
- She alleged that the defendant violated the FCRA by continuing to report the HELOC debt as outstanding, failing to conduct a reasonable investigation, and failing to note that the debt was the result of fraud.
The ruling: Judge Lance E. Walker of the District Court for the District of Maine rejected the plaintiff’s arguments, emphasizing that a furnisher’s liability under the FCRA hinges on factual inaccuracies, not unresolved legal disputes over who should ultimately bear a loss. While the plaintiff argued that the reporting was misleading because the debt arose from fraud, the court found that the reported information was factually accurate. The HELOC advances were made to the plaintiff’s account in the amounts stated.
- As Judge Walker explained, a furnisher is not required to resolve questions of legal liability through credit reporting. The judge noted that even if the circumstances were unfortunate, reporting the balance as owed was not materially misleading and did not constitute an actionable inaccuracy. The FCRA, the judge said, does not serve as a mechanism to adjudicate fault in fraud losses.
