A District Court judge in Arizona has dismissed a Fair Credit Reporting Act lawsuit against a credit reporting agency, ruling that it is not required to resolve underlying contractual disputes between a consumer, a retailer, and a credit card company when reporting charged-off debt information. The judge granted judgment on the pleadings in favor of the defendant after finding the plaintiff failed to plausibly allege that the reporting itself was inaccurate.
The background: The plaintiff purchased an exercise bike through a retailer’s website using a credit card and later returned the bike after paying off the balance. The retailer approved a refund but ultimately issued the plaintiff a gift card instead of crediting the account.
- The plaintiff alleged the credit card company later reversed an earlier credit tied to the disputed purchase, charged the balance back to the account, and eventually suspended and closed the account after the balance remained unpaid. The credit reporting agency later reported the account as charged off with an $811 balance.
- The plaintiff disputed the reporting with the defendant multiple times and provided supporting documentation, including proof the bike had been returned and communications regarding the refund approval. The defendant sent Automated Consumer Dispute Verifications to the credit card company, which verified the reporting as accurate.
The ruling: Judge Susan M. Brnovich of the District Court for the Arizona ruled that the plaintiff failed to establish the threshold requirement of showing an actual inaccuracy in the credit reporting.
- The judge emphasized that the dispute centered on whether the plaintiff should ultimately be responsible for the debt, not whether the defendant inaccurately reported the status the credit card company furnished.
- Citing Ninth Circuit precedent, the judge wrote: “Credit reporting agencies are not tribunals. They simply collect and report information furnished by others.”
- The opinion explained that determining whether the consumer had a valid defense to the debt or whether the retailer properly handled the refund would require contractual interpretation and legal analysis beyond a CRA’s obligations under the FCRA.
- The judge also rejected the plaintiff’s argument that the dispute was “objectively and readily verifiable,” finding the issue could not be resolved through straightforward factual verification alone because it required interpreting multiple agreements and determining whether the gift card satisfied the retailer’s refund obligations.
