A District Court judge in Michigan has partially granted a defendant’s motion to dismiss a Fair Credit Reporting Act lawsuit that was filed after the plaintiff claimed the defendant failed to remove a dispute flag on a tradeline after claiming she no longer was disputing the debt.
The background: The plaintiff alleged that a credit reporting agency continued to report a dispute notation on a tradeline tied to a credit account, even after she had notified both the agency and the furnisher that she no longer disputed the debt.
- The plaintiff allegedly sent a letter directly to the furnisher requesting removal of the dispute notation and separately asked the defendant to reinvestigate and update her credit file.
- When the notation remained, she filed suit under the FCRA, asserting violations tied to accuracy requirements and reinvestigation obligations.
- The defendant moved to dismiss on several grounds, arguing that it was required under the FCRA to report dispute notations once notified of a dispute and that any removal obligation rested with the furnisher, not itself. It also argued that dispute notations are not “items of information” that trigger reinvestigation duties and that the plaintiff failed to plausibly allege a willful violation of the statute.
The ruling: Judge Laurie J. Michelson of the District Court for the Eastern District of Michigan rejected several of the defendant’s arguments, allowing key portions of the case to proceed. While acknowledging that the FCRA requires agencies to include dispute notations when notified of a dispute, the judge emphasized that this obligation is not absolute.
- Judge Michelson noted that the defendant itself recognized that continued reporting is only required “unless, and until the consumer directly notifies the furnisher it no longer wishes for the notation to be reported.”
- Here, the plaintiff specifically alleged that she had done just that, curing a defect that had led to dismissal arguments in earlier pleadings. As a result, the judge found that the statutory requirement to report disputes did not automatically shield the defendant from liability.
- The judge also rejected the argument that dispute notations fall outside the scope of reinvestigation duties. Citing prior case law, she explained that credit reporting agencies must treat dispute notations as “items of information” subject to reinvestigation. In doing so, she pointed to precedent where agencies fulfilled their obligations by forwarding disputes to furnishers and relying on their verification responses.
- However, Judge Michelson drew a clear line on the willfulness allegation. She dismissed the plaintiff’s claim that the defendant willfully violated the FCRA, finding that the agency’s interpretation of its obligations had “a foundation in the statutory text” and was not objectively unreasonable.
