A District Court judge in Washington has granted a defendant’s motion for summary judgment in a Fair Credit Reporting Act case over how the defendant handled reporting information to the credit bureaus related to merchandise that was purchased using the defendant’s credit product and then subsequently returned by the plaintiff.
At the center of the case was a relatively small transaction that turned into a much larger dispute.
The background: The plaintiff purchased three items totaling $47.15 using the defendant’s branded credit card and returned all three items shortly after. However, rather than having the refunds applied back to the credit account, the plaintiff elected to receive the refunds in the form of electronic gift cards credited to his online shopping account.
- After the returns were processed, the plaintiff received a statement reflecting the original balance still due on the credit account. The plaintiff contacted customer service and asserted that he did not owe the balance because the items had been returned. Despite this, no payment was made. Late fees and interest accrued over the following months, and the defendant reported the account as delinquent to the credit reporting agencies.
- The plaintiff disputed the reporting through the credit bureaus, triggering an investigation. During that process, the defendant confirmed with the merchant that the refunds had been issued as gift card credits, not as credits to the underlying credit account. The records also showed that the plaintiff had already used those gift card funds for other purchases.
- The defendant ultimately applied provisional credits during its investigation and even over-credited the account, resulting in a temporary positive balance. It also removed any reported delinquencies after completing its review. Still, the plaintiff alleged that the earlier reporting caused harm to his credit profile, including reductions in credit limits by other lenders.
The ruling: Judge James L. Robart of the District Court for the Western District of Washington focused heavily on a threshold issue that continues to shape FCRA litigation: whether the information furnished was actually inaccurate. The judge emphasized that to proceed on an FCRA claim, a plaintiff must first show that the reported information was either patently incorrect or materially misleading.
- Here, Judge Robart found no such inaccuracy. Because the plaintiff chose to receive refunds as store credit rather than as a payment back to the credit account, the original balance remained legitimately owed.
- That distinction proved decisive. The judge concluded that the defendant’s reporting of a delinquent balance was accurate at the time it was made. As a result, the judge ruled he did not need to evaluate whether the defendant’s investigation was reasonable, noting that “if there is no inaccuracy, then the reasonableness of the investigation is not in play.”
