A District Court judge in Illinois has granted a defendant’s motion to dismiss claims it violated the Fair Credit Reporting Act in a class-action lawsuit over how it handled the request to remove dispute notifications made by the plaintiff, largely over missing statements that were not included in the plaintiff’s complaint.
The background: The case centers on dispute notations that appeared on the plaintiff’s credit report after she challenged several items in 2019 and early 2020. After those disputes were filed, the defendant placed dispute indicators on the relevant tradelines.
- When the plaintiff attempted to obtain a mortgage in August 2020, a lender allegedly told her that the active disputes could affect the type of mortgage she could obtain. The plaintiff then contacted the defendant by phone and by letter asking that the dispute notations be removed because she no longer disputed the accounts.
- The plaintiff alleges that the defendant did not remove the notations and instead sent alerts to creditors suggesting that the plaintiff disputed the accounts as not belonging to her. The plaintiff alleged that this action violated the defendant’s internal policy of removing dispute notations when consumers request their removal and claimed that an outdated system allowed the notations to remain on files affecting as many as 250,000 consumers.
- The plaintiff brought claims under sections 1681e(b) and 1681i of the FCRA, alleging the defendant failed to follow reasonable procedures to assure maximum accuracy and failed to conduct a reasonable reinvestigation after being notified that the disputes should be removed.
The ruling: Judge Thomas M. Durkin of the District Court for the Northern District of Illinois rejected several of the defendant’s arguments but ultimately dismissed the FCRA claim because the complaint failed to allege that an inaccurate credit report was ever sent to a third party after the plaintiff asked for the dispute notations to be removed.
- The judge noted that under FCRA precedent, a consumer generally cannot show injury from inaccurate credit information unless it is actually communicated to a third party.
- While the complaint suggested that a lender viewed the plaintiff’s credit report when she sought a mortgage, the court pointed out that the dispute notations were accurate at that time because the plaintiff herself had initiated the disputes. The alleged inaccuracy only arose later, after she asked for the notations to be removed.
- Judge Durkin wrote that the plaintiff “does not allege that, thereafter, [the defendant] published to a third party a credit report that continued to report the allegedly inaccurate dispute notations.”
- Without allegations that a lender or another party pulled a credit report containing the disputed notations after the removal request, the claim could not proceed. The judge dismissed the complaint without prejudice, giving the plaintiff 21 days to file an amended complaint that addresses the deficiencies identified in the ruling.
