A District Court judge in Nebraska has granted a motion for judgment on the pleadings filed by three credit reporting agency defendants in a Fair Credit Reporting Act case, while also denying the plaintiff’s motion to amend her complaint, ruling that her objections to how a lender reported her accounts were legal disputes, not factual inaccuracies, and that a machine-to-machine dispute verification process is reasonable as a matter of law.
The background: The plaintiff, a dentist, held three credit card accounts with the same lender, all of which were reported as charged off.
- One was a business account opened in the name of her dental practice but reported on her personal credit file. The plaintiff claimed the lender granted her a CARES Act accommodation on that account during the pandemic, deferring and restructuring her payments, but began reporting the account as delinquent anyway. When her representative called to dispute the reporting and invoke the CARES Act, a representative of the lender allegedly responded, “INFORMED WE CNNOT [sic] DO THAT.”
- A second account was the subject of litigation that ended in a court-filed stipulation and confession of judgment with a payment schedule, which the plaintiff said she honored while the account remained reported as charged off.
- A credit repair company working on the plaintiff’s behalf disputed the reporting on all three accounts with each of the defendants, which allegedly reduced the disputes to a single generic code sent to the lender and accepted the coded verification responses that came back. The plaintiff claimed one defendant’s entire internal investigation record consisted of the notation “999-NO ID SCAN.”
- The plaintiff argued the automated process could not qualify as a reasonable reinvestigation, writing that “a machine does not ‘consider’ anything. It processes data.”
- The defendants argued the plaintiff never identified a factual inaccuracy, asserting that “the only fact the CRA Defendants are required to know is that Plaintiff did not pay.”
- The plaintiff sued the defendants, and later sought to amend her complaint after the defendants moved for judgment on the pleadings.
The ruling: Judge Brian C. Buescher of the District Court for the District of Nebraska sided with the defendants on every claim.
- Whether the CARES Act required the account to be reported as current was a legal question between the plaintiff and the lender, Judge Buescher ruled, and inaccuracies that turn on legal disputes are not cognizable under the FCRA. Consumer reporting agencies are not tribunals and cannot be expected to preemptively determine the validity of reported debts.
- Reporting the business account on the plaintiff’s personal file was not plausibly inaccurate because she was personally the member on the account.
- The stipulation’s payment schedule covered only one account, undercutting the plaintiff’s claim that a growing balance on the business account was internally inconsistent with her payments. The judge noted she never alleged making payments during the two-year window she cited.
- The judge also observed that many courts have held the automated dispute verification process is reasonable as a matter of law, and that the plaintiff’s claim that no human reviewed anything was hard to square with her own exhibits showing three different processors at the lender entered responses.
- The notice claim failed because the FCRA only requires a description of reinvestigation procedures if the consumer requests one, which the plaintiff never alleged she did.
- The plaintiff’s state deceptive trade practices claim was dismissed as conclusory.
