A District Court judge in Wisconsin has denied motions to dismiss filed by three defendants in a consumer’s Fair Credit Reporting Act lawsuit, ruling that without the defendants’ actual dispute responses in the record, there was no way to tell whether inconsistencies across the plaintiff’s three credit reports came from the furnishers or from the credit reporting agencies.
The background: The plaintiff, who is representing himself, had three accounts with the defendants: a home mortgage with a lender, a home equity line of credit with a credit union, and a credit card with a second lender.
- Last summer, the plaintiff pulled his credit reports from all three credit reporting agencies and found the tradelines for the accounts did not match. One agency reported the mortgage balance as $733,413 while the other two showed $724,061. One agency listed the mortgage term as zero months instead of 348. The HELOC’s credit limit showed as $0 at one agency and $233,700 at the other two, and the credit card’s high credit appeared as $31,120 at two agencies and $0 at the third. Dates of last payment and last activity differed by weeks, and in one case by nearly a month.
- Between June and August of last year, the plaintiff disputed the accounts in writing with all three credit reporting agencies, identifying the specific data he believed was wrong.
- In August, the plaintiff applied to a bank for a $1 million loan and was turned down. He alleged the bank told him it “pulled [his] credit report and found inconsistencies” that led to the denial.
- In October, one of the credit reporting agencies wrote back that the disputed items were “verified as accurate; however, we updated: Balance; Date Updated; Last Payment Made; Rating.” The plaintiff argued that response amounted to an admission the earlier data was wrong.
- The plaintiff sued the credit reporting agencies and the three furnishers under the FCRA. His first amended complaint, which ran 53 pages, was dismissed as to the furnishers because it listed only headings such as “Date Opened” and “Credit Limit” without saying what was actually inaccurate. He then filed a second amended complaint, and the three furnishers moved to dismiss again, relying heavily on that earlier ruling.
The ruling: Judge William C. Griesbach of the District Court for the Eastern District of Wisconsin held that the second amended complaint cured the defects of the first by alleging the specific dollar figures, loan terms, and dates that conflicted from one report to the next.
- The judge noted that pleading standards exist because “Defense of federal lawsuits is expensive,” and that “A plaintiff cannot avoid early dismissal of a fatally flawed case by hiding the ball.” But he found the plaintiff was no longer hiding anything.
- The defendants leaned on a Seventh Circuit decision holding that a furnisher’s accuracy is judged by the content of its ACDV response, not by what ends up on the credit report. Judge Griesbach pointed out that case was decided on summary judgment, with the furnisher’s ACDV responses in the record. Here, the defendants submitted only their letters to the plaintiff, not the responses they presumably sent to the credit reporting agencies.
- Without those responses, the judge wrote, the court “cannot determine from the pleadings whether the alleged inaccuracies in the three credit reports were because the Defendant Furnishers provided inaccurate information or because the CRAs failed to accurately report the information they furnished.” The fact that the errors allegedly sat uncorrected for months “at least raises the inference that the Defendant Furnishers were at fault.”
- The credit union argued it was improbable that a furnisher sending bad data would have two of three credit reporting agencies reporting it correctly. The judge agreed that would be true only if the furnishers sent the same information to each agency at the same time, which the record did not establish. “Whether improbable or not,” he wrote, the complaint states a claim.
