The Court of Appeals for the Second Circuit yesterday affirmed the dismissal of a consumer’s Fair Credit Reporting Act lawsuit that accused a credit reporting agency of inaccurately reporting his accounts, including by showing balances on debts that had already been charged off and closed.
The background: The plaintiff, who represented himself, claimed the way the defendant presented his accounts violated the FCRA.
- He took issue with several features of his report: account numbers and other details were partially redacted, the report did not list a balance or past-due amount for every month his accounts were open, and several accounts that had been charged off and closed still showed outstanding balances.
- He disputed the information with the credit reporting agency before going to court.
- He then sued, alleging the agency failed to follow reasonable procedures to ensure accuracy, failed to conduct a reasonable reinvestigation of his disputes, and willfully violated the statute.
- A District Court judge in Connecticut dismissed the case at the early screening stage, and the plaintiff appealed.
The ruling: The Appeals Court affirmed, holding that the plaintiff never identified an actual inaccuracy in his report, which is the threshold every FCRA accuracy claim has to clear.
- The court explained that a report is inaccurate “either when it is patently incorrect or when it is misleading in such a way and to such an extent that it can be expected to have an adverse effect.”
- Partial redactions and the absence of month-by-month balances did not meet that bar.
- On the charged-off accounts, the court made the point most relevant to collectors and debt buyers: “the fact that an account has been charged off and closed does not resolve an outstanding debt with respect to that account.” A charge-off, the court noted, simply reflects that a lender moved the balance from a receivable to a loss on its own books; it does not wipe out what the consumer owes.
- The reinvestigation claim failed because the record showed the agency did reinvestigate the disputes, modified the report, and reported back the results.
- With no underlying violation, the willfulness claim could not stand.
- One procedural wrinkle: the plaintiff’s appeal of the order denying his motion for reconsideration arrived a day late, 31 days after it was entered instead of 30, so the court ruled it could not review that order.
