A Magistrate Court judge in California has recommended granting a defendant’s motion to dismiss a Fair Credit Reporting Act lawsuit, ruling that a payment reported after an account was charged off is not a contradiction and that a lower credit score, standing alone, is not an injury.
The background: The plaintiff reviewed his credit report from a credit reporting agency and discovered a tradeline furnished by a lender for an installment account for recreational merchandise, reported as a charge-off with an involuntary repossession notation and a past due balance of $57,265.
- The tradeline listed a date of last payment more than a year and a half after the account was reported as charged off, which the plaintiff claimed was contradictory because, in his words, “an account cannot receive a payment after it has been charged off.”
- The plaintiff disputed the tradeline with the credit reporting agency, which responded that the information had been verified and would remain on his file, while the lender wrote that the tradeline reflected the balance and status consistent with its records.
- The plaintiff, representing himself, then filed suit, alleging the credit reporting agency failed to reasonably reinvestigate his dispute and the lender failed to reasonably investigate, noting his FICO score from the defendant credit reporting agency was 532 while another agency reported it as 810, and seeking only declaratory and injunctive relief plus costs.
The ruling: Judge Chi Soo Kim of the District Court for the Eastern District of California recommended granting the lender’s motion to dismiss and dismissing the entire complaint, including the claim against the credit reporting agency, which had not filed its own motion.
- Judge Kim raised the question of standing on her own, noting the only harm alleged was the lower credit score, with no allegation that the score was shared with any third party or affected any past or imminent transaction, which was not enough to establish a concrete injury.
- Even on the merits, the plaintiff failed to identify an inaccuracy, the judge wrote, because a consumer may continue paying down a debt after it has been charged off, so a payment date following a charge-off date creates no inherent contradiction.
- The plaintiff’s complaint that the tradeline lacked any “adjudicated liability” was a legal challenge to the debt rather than a factual inaccuracy, and without an inaccuracy, the reasonableness of an investigation never comes into play, the judge noted, because “if there is no inaccuracy, then the reasonableness of the investigation is not in play.”
- The judge also noted that declaratory and injunctive relief, the only remedies the plaintiff requested, are not available to private plaintiffs under the FCRA.
- The complaint was recommended for dismissal without prejudice, with the plaintiff given 30 days to file an amended complaint once the findings are adopted.
