A District Court judge in Illinois has granted summary judgment in favor of a furnisher in a Fair Credit Reporting Act case after finding that the company reasonably investigated a dispute over conflicting payment dates and properly corrected inaccurate information with one credit reporting agency. The judge also addressed common misconceptions about charged off accounts, IRS Form 1099-C reporting, and whether automation alone can create FCRA liability.
The background: The plaintiffs alleged that inconsistent reporting on a joint auto loan hurt their attempts to obtain mortgage financing. One credit reporting agency listed the last payment date on the loan as January 1, 2020, while two others reported January 31, 2020. The account was also reported as “charged off.”
- The plaintiffs disputed the information with the credit reporting agencies and later with the furnisher itself. They also argued that because the account was charged off or written off, the defendant should have issued an IRS Form 1099-C.
- The dispute expanded after one of the plaintiffs submitted a complaint with the Consumer Financial Protection Bureau and allegedly received records belonging to another individual with a similar name from Texas.
- The plaintiffs later filed a police report concerning identity theft after learning that a loan application they claimed not to have submitted had been denied.
The ruling: Judge Matthew F. Kennelly of the District Court for the Northern District of Illinois concluded that the defendant satisfied its obligations under the FCRA because the Automated Consumer Dispute Verification forms showed that it reviewed the disputes and corrected the inaccurate information with one of the credit reporting agencies while confirming the correct date with the other two credit reporting agencies.
- Importantly, the judge emphasized that the plaintiffs never argued that January 31, 2020 was actually inaccurate.
- Judge Kenelly also rejected arguments attacking the company’s use of automated processes and redacted ACDV forms. The judge noted that the FCRA “does not prohibit automation,” undercutting the plaintiffs’ argument that the investigation was deficient because it may not have involved human review.
- The judge also addressed the plaintiffs’ belief that a charged-off account required issuance of a Form 1099-C, writing the plaintiffs “fundamentally misunderstand[] the meaning of a ‘charge off’ or ‘write off.’”
- The judge also dismissed claims under the Gramm-Leach-Bliley Act and Consumer Financial Protection Act after concluding neither statute provides a private right of action.
