The Court of Appeals for the Third Circuit has upheld the dismissal of a consumer’s Fair Credit Reporting Act lawsuit over a bed-financing account he says he never authorized, ruling that his own exhibits “control” and showed the lender actually investigated his dispute, while his fraud and conspiracy claims amounted to “vague legal conclusions.”
The background: The case began with a bed purchase that turned into a fight over a credit account the consumer says he never agreed to open.
- In December 2021, the plaintiff set out to buy a bed from the retailer and was told he could return it within a 90-day trial period. To finance the purchase, a credit line was opened in his name with a lender. The plaintiff alleges this happened without his knowledge or authorization, and that he never signed any forms or requested any credit. He returned the bed within the trial window after deciding it was defective.
- In March 2022, the plaintiff received a notice of default. His attorney asked the lender to close the account that July, and the lender replied the next month that the account had been properly issued. Counsel then filed disputes with all three major credit bureaus and a separate complaint with the Consumer Financial Protection Bureau.
- Not until October 2023, more than a year after those disputes, did the lender remove the information and ask the bureaus to delete the tradeline.
- The plaintiff sued both the lender and the retailer, raising claims that included violations of the FCRA, common law fraud, and civil conspiracy. A district court judge dismissed every claim with prejudice and denied leave to amend, prompting the appeal.
The ruling: The Appeals Court affirmed the dismissal, though not entirely for the reasons the lower court gave.
- The opinion was written by Judge L. Felipe Restrepo, who wrote that the lower court had gone too far by requiring the plaintiff to prove, at the pleading stage, that a credit bureau had notified the lender of his dispute. That information sits with the bureaus and the furnisher, the judge noted, and the plaintiff had done enough simply by alleging the notification happened.
- Even so, the judge affirmed the dismissal because the documents the plaintiff attached to his own complaint undercut his central claim. Those exhibits showed the lender directed the plaintiff to file a formal written dispute, and ultimately reversed the charges and sought deletion of the tradeline after the CFPB got involved. That, the judge concluded, was a reasonable investigation.
- The fraud and conspiracy claims failed a stricter pleading rule for fraud, which requires a plaintiff to spell out the who, what, when, and how of the alleged deception. The plaintiff never identified who made a misrepresentation, what was said, or how he was misled into thinking the purchase did not involve a credit agreement.
- The judge had little patience for the conspiracy theory, writing that the “conspiracy claim is his fraud claim dressed in the language of common purpose.” With the underlying fraud unpleaded, the conspiracy claim collapsed with it.
