A District Court judge in Pennsylvania has granted judgment on the pleadings in favor of a credit reporting agency and a lender that were accused of violating the Fair Credit Reporting Act by reporting past-due balances on charged-off accounts.
The background: The plaintiff’s credit reports showed three closed accounts from different lenders carrying past-due balances of $3,408, $2,507, and $13,949.
- The plaintiff claimed the reports contained “unverifiable charge-off balances” and said he submitted timely disputes to the credit reporting agencies challenging the information.
- Last year, he filed suit against one of the credit reporting agencies and one of the lenders, alleging violations of the FCRA and the Gramm-Leach-Bliley Act, along with state law claims for constructive fraud, misrepresentation, breach of fiduciary duty, and violations of the Pennsylvania Commercial Code. In support of the state claims, he asserted that he “received no lawful United States money” from the lender and that the lender “concealed securitization, collateralization, and monetization” of his notes.
- While the defendants’ motions were pending, the plaintiff filed a notice of appeal, claiming the judge had issued an injunction barring him from filing motions. The judge noted that no injunction was ever issued and called the filing “a transparent attempt to manufacture appellate jurisdiction.”
The ruling: Judge Gerald J. Pappert of the District Court for the Eastern District of Pennsylvania granted the defendants’ motions for judgment on the pleadings.
- The FCRA claims failed at the threshold because the plaintiff never identified anything inaccurate in his credit reports. Charging off a debt is an accounting step a creditor takes when payment is unlikely, the judge wrote; it does not make the debt disappear or diminish the creditor’s right to collect it. Reporting a correct past-due balance on a charged-off account is factually accurate, and the plaintiff never alleged the balances themselves were wrong.
- The claim against the lender also failed because the plaintiff never alleged that any of the credit reporting agencies notified the lender of his disputes, which is what triggers a furnisher’s duty to investigate, and his assertion that the lender failed to conduct a reasonable investigation was a conclusory statement unsupported by any facts.
- The Gramm-Leach-Bliley Act claim failed because private plaintiffs cannot sue to enforce that statute, and the state law fraud claims against the lender were preempted by the FCRA because they targeted its conduct as a furnisher of credit information.
- The breach of fiduciary duty claim failed because a creditor ordinarily owes no fiduciary duties to a borrower, as it acts in its own financial interest, and the plaintiff never alleged the lender gained substantial control over his affairs.
