A District Court judge in New York has granted a defendant’s renewed motion to compel arbitration in a consumer’s Fair Credit Reporting Act lawsuit after discovery showed that charges on a credit card the plaintiff claimed an identity thief opened in her name lined up, day by day, with her own international travel as a flight attendant.
The background: The dispute traces back to a retail credit card a lender issued in 2015 under the plaintiff’s name, Social Security number, date of birth, and then-current address.
- Account statements followed the plaintiff when she moved to Manhattan in 2016, and by 2017 the account was enrolled in $100 monthly automatic payments from a bank account the plaintiff said she did not recognize.
- The plaintiff flew for an international airline between New York and Pakistan, with layovers in Toronto. More than two dozen charges in 2018, at Toronto duty-free shops and drugstores, an airport taxi service, and merchants near JFK airport, fell on the exact days that Customs and Border Protection records placed her in those cities.
- In 2019 the account’s address changed to a Long Island address the plaintiff said she never lived at. Two years later she filed a police report claiming several cards had been opened in her name. That same year the account was charged off and sold to the defendant, a debt buyer, with a balance of about $6,248.
- The plaintiff sued the lender, the debt buyer, and the buyer’s servicer under the FCRA. All three moved to compel arbitration, but the judge deferred ruling in March and ordered discovery on whether the plaintiff had ever used the card. The plaintiff later settled with the lender.
- The plaintiff argued the lender’s records were inadmissible hearsay, that her police report established fraud in forming the contract, and that the debt buyer forfeited arbitration by previously suing her in state court to collect the debt.
The ruling: Judge Paul A. Engelmayer of the District Court for the Southern District of New York held that no reasonable factfinder could conclude the plaintiff had not received the cardholder agreement and used the card, which under New York law binds a consumer to an arbitration clause even without a signature.
- The lender’s standard mailing practice created a presumption of receipt, and the plaintiff never squarely denied receiving the agreement at her Queens address. She denied receiving statements at her Manhattan address, then admitted receiving statements there for a department store card.
- Confronted with the travel-matched charges, the plaintiff’s answers “vacillated between ‘I don’t remember’ and ‘Yes, maybe or maybe not.'” Her only alternative theory was that a thief tailed her along the airline’s route structure, which the judge called “manifestly unreasonable.”
- Even assuming the account was compromised in 2019, that did not undo a contract formed years earlier. The police report reflected “nothing more than [the plaintiff’s] statements.”
- The earlier collection suit did not waive arbitration, because waiver requires prior litigation of the same legal and factual issues.
- The agreement’s coverage of assignees let the debt buyer invoke arbitration, and its servicer could do so as the buyer’s agent. Whether the claims fall within the clause was delegated to the arbitrator. The case is stayed.
