A Magistrate Judge in Oregon has dismissed a Fair Credit Reporting Act lawsuit against a lender, ruling that a consumer who routed his dispute through the Consumer Financial Protection Bureau rather than a credit reporting agency never triggered the furnisher’s duty to investigate.
The background: The plaintiff financed a vehicle through a lender, with the vehicle serving as collateral for the loan.
- Two years ago, the plaintiff petitioned for Chapter 7 bankruptcy relief but sought to exclude the vehicle loan from the proceeding, and he kept making payments on it.
- The plaintiff alleged the defendant coded and reported the loan and the vehicle identification number as bankruptcy-related, which he said caused other lenders to refuse to refinance. The loan was underwater, with the balance exceeding the vehicle’s value.
- Representing himself, the plaintiff sued late last year in state court, claiming the defendant is a furnisher, that he disputed the bankruptcy-related reporting, and that the defendant neither investigated reasonably nor corrected the information. He also claimed the continued misclassification interferes with his “post-bankruptcy rights and financial rehabilitation,” and he sought $50,000 and correction of the reporting.
- The defendant removed the case to federal court in January, five days after a temporary restraining order was entered in the state case directing that the vehicle be returned. The plaintiff’s motion to remand was denied.
- The plaintiff argued the defendant learned of his dispute through the Consumer Financial Protection Bureau (CFPB).
- After the defendant moved to dismiss in May, the plaintiff never responded, and he never answered an order to show cause warning that his silence could be treated as a concession on the merits.
The ruling: Magistrate Judge Jeffrey Armistead of the District Court for the District of Oregon granted the motion to dismiss, finding the plaintiff never cleared the threshold step the FCRA requires before a consumer can sue a furnisher.
- To the extent the plaintiff sued under Section 1681s-2(a), Judge Armistead said there is no private right of action. Those duties are enforceable only by federal or state agencies.
- The Section 1681s-2(b) claim failed because the plaintiff never said whom he disputed with and never alleged he notified a credit reporting agency. A furnisher’s investigation duties arise only after a credit reporting agency passes the dispute along; a dispute sent directly to the furnisher does not start the clock.
- Going to the CFPB did not satisfy the notice requirement either, the judge said, pointing to other courts that have dismissed claims where consumers submitted disputes to the Bureau and to the furnisher but skipped the credit reporting agency.
- The second claim was “entirely conclusory,” Judge Armistead wrote. The plaintiff never identified the source of the post-bankruptcy rights he said were being interfered with, and any state-law claim resting on a furnisher’s credit reporting would likely be preempted by the FCRA.
- The judge denied leave to amend and dismissed the case with prejudice. Amending the subsection (a) and preempted claims would be futile, and because the plaintiff never answered the motion or the show-cause order, the judge treated the remaining FCRA claim as abandoned.
