Who among us hasn’t entered a wrong digit when setting up autopay? A District Court judge in New York has ruled that credit reporting agencies did not violate the Fair Credit Reporting Act when they reported late payments tied to an autopay error, finding the information was accurate and not misleading even under unusual circumstances.
The background: The case centers on a consumer who set up automatic payments on multiple credit card accounts but mistakenly entered a bank account number that was off by one digit. That number belonged to an unrelated third party. For several months, payments were successfully withdrawn from that third party’s account, keeping the balances current in practice.
- When the error was discovered, the plaintiff contacted the creditor, which reversed the prior payments and credited the third party’s account. Only after those reversals were completed did the consumer pay the outstanding balances.
- Credit reports later reflected that several monthly payments were late. The consumer disputed those notations with the credit reporting agencies, providing documentation from his bank showing he had sufficient funds and had acted promptly to correct the mistake. He argued that reporting the payments as late without additional context was misleading and did not reflect his willingness or ability to pay.
The ruling: Judge Joanna Seybert of the District Court for the Eastern District of New York dismissed the claims, emphasizing a key threshold in FCRA cases: whether the reported information is inaccurate or materially misleading.
- Here, the judge found it was neither. The payments were, in fact, not made by the consumer when due. As the judge explained, “the parties do not dispute Plaintiff’s failure to pay the Recorded Payments until November 2024 after they were due,” making the late designations “literally accurate.”
- The judge also rejected the argument that the reporting was misleading. She noted that while the situation was sympathetic, the law focuses on whether the report conveys a false or contradictory impression.
- Importantly, Judge Seybert dismissed the idea that intent or available funds should change the analysis. The fact that a third party’s account temporarily covered the balances did not satisfy the consumer’s obligation to make timely payments himself. The judge also found that claims related to the agencies’ reinvestigation efforts failed because there was no underlying inaccuracy to correct.
