A District Court judge in New York has granted a defendant’s motion to dismiss claims it violated the Fair Credit Reporting Act when it reported an unpaid insurance debt to the plaintiff’s credit report.
The background: The plaintiff purchased a renters insurance policy, made a payment to the insurance company two days later, but canceled the policy shortly afterward.
- More than a year later, the plaintiff discovered that the company had reported a balance of $61 related to the policy on her credit report. The plaintiff alleged that the reporting lowered her credit score and contributed to multiple denials when she attempted to refinance a loan. The plaintiff also claimed the company shared her information with a third party collection agency, which then appeared on her credit report as well.
- The plaintiff described experiencing stress and rising blood pressure as a result of the credit reporting and sought $1 million in damages. The filings suggested that the plaintiff believed the balance had already been paid and therefore should never have appeared on her credit report.
The ruling: Judge Lawrence J. Vilardo of the District Court for the Western District of New York dismissed the case after determining that the complaint failed to allege one of the most important elements required to bring a private FCRA claim against a furnisher.
- As he explained, the statute creates two general duties for companies that furnish information to credit reporting agencies. One duty involves providing accurate information, while the other involves investigating disputes. However, only the investigation duty creates a private right of action for consumers.
- The investigation duty arises only after a credit reporting agency notifies the furnisher of a consumer dispute.
- Because the plaintiff did not allege that any credit bureau sent a dispute notice to the defendant, the complaint failed to state a plausible claim under the statute, Judge Vilardo ruled.
- The judge also rejected potential emotional distress claims based on the reporting. The judge noted that inaccurate credit reporting alone generally does not qualify as the type of extreme or outrageous conduct required under New York law.
- While he granted the motion to dismiss, Judge Vilardo allowed the plaintiff 45 days to file an amended complaint that addresses the deficiencies.
