A District Court judge in Illinois has denied a defendant’s motion to dismiss claims it violated the Fair Credit Reporting Act over how it handled a dispute investigation and for failing to mark the account as disputed with the credit reporting agencies. The ruling centers on whether the plaintiff plausibly alleged that the defendant failed to conduct a reasonable investigation and continued reporting inaccurate information after receiving notice of a dispute. At this early stage, the court made clear that the burden remains on the defendant to show dismissal is warranted, not on the plaintiff to prove the full merits of the case.
The background: The plaintiff alleged that the defendant, an auto financing company, furnished inaccurate information to credit reporting agencies, including incorrect account balances, delinquency details, and dispute status.
- The plaintiff allegedly disputed the tradeline with two major credit reporting agencies in September 2023. The plaintiff claimed those disputes were transmitted to the defendant, or alternatively that the defendant failed to properly process them. Despite this, the account allegedly continued to reflect the same inaccuracies and was not marked as disputed when the plaintiff checked again the following month.
- The plaintiff sought damages for financial harm as well as emotional and reputational injury, arguing that the defendant’s investigation was either insufficient or never properly conducted.
The ruling: Judge Jeremy C. Daniel of the District Court for the Northern District of Illinois denied the defendant’s motion to dismiss, finding that the plaintiff had alleged enough facts to state a plausible claim under the FCRA. Importantly, the judge emphasized that whether a furnisher conducted a “reasonable investigation” is a factual question that is not appropriate for resolution at the motion to dismiss stage.
- The judge pointed to the plaintiff’s allegations that inaccuracies remained and that the account was not marked as disputed as supporting an inference that a reasonable investigation may not have occurred. As Judge Daniel noted, when viewed in the light most favorable to the plaintiff, these facts were sufficient to move the claim “from mere speculative possibility to plausibility.”
- The defendant also argued that the case should be dismissed based on the statute of limitations. However, the court declined to do so, noting uncertainty around whether the operative complaint related back to an earlier filing that may have been within the allowable time period.
