A District Court judge in Michigan has allowed a consumer to proceed with a negligence claim under the Fair Credit Reporting Act after a credit reporting agency allegedly kept a dispute notation on her credit report even after the plaintiff said she no longer disputed the account, while dismissing a companion claim that the agency acted willfully.
The background: The case is one of those “dispute about a dispute” in which a consumer disputes an account, later withdraws the dispute, and then sues because the report keeps showing the account as disputed.
- The plaintiff’s credit report carried a notation showing she disputed a credit card account. The notation was accurate when it first appeared, because the plaintiff had in fact disputed the account.
- Earlier this year, the plaintiff wrote to both the credit reporting agency and the lender that furnished the account, telling each that she no longer disputed it and wanted the notation removed.
- Weeks later, the agency’s dispute results showed it had not removed the notation.
- The plaintiff sued, alleging the lingering notation left her report false and misleading and kept her from obtaining a mortgage or refinancing, because conventional lenders will not lend on a report showing any tradeline as disputed. The plaintiff argued the agency both negligently and willfully violated the FCRA.
- The defendant countered that it was only obligated to add the notation once the furnisher reported the dispute, and that the plaintiff’s sole route to removal was to ask the furnisher directly rather than the agency.
The ruling: Judge Judith E. Levy of the District Court for the Eastern District of Michigan granted the defendant’s motion to dismiss in part, keeping the negligence claim alive while dismissing the willfulness claim with prejudice.
- The central question, Judge Levy wrote, was whether a once-accurate dispute notation could become inaccurate after a consumer withdraws the dispute. The judge found it plausibly could, leaving the report misleading or incomplete enough to support a negligence claim.
- Judge Levy rejected the argument that the agency’s only job was to add the notation when the furnisher reported a dispute, noting the defendant itself conceded the notation could be removed.
- The judge also set aside the argument that the plaintiff’s only remedy was to contact the furnisher directly, pointing out that the plaintiff alleged she had done exactly that. The defendant, the judge wrote, “fails to address” that allegation.
- Judge Levy was unpersuaded by the defendant’s effort to recast a dispute notation as “meta-information” outside its reinvestigation duties, or by its claim that reinvestigating such a notation would be “impossible.”
- On willfulness, the judge came out the other way. Because the statute is silent and courts, including others in the same district, are split on whether an agency must remove a once-accurate notation, the defendant’s reading was not objectively unreasonable. Appeals courts have not always seen these cases the same way; one affirmed dismissal of a similar no-longer-disputed claim a few years ago.
- Judge Levy pointed to the statute’s “less-than-pellucid” text as a reason the willful claim could not stand, and separately flagged the thinness of the complaint, allowing the negligence claim through despite allegations she described as sparse and formulaic.
