Appeals Court Upholds Dismissal of FCRA Suit Because Plaintiff Failed to Dispute Debt With CRA

Because an individual chose to only dispute a debt to the furnisher and did not notify a credit reporting agency of the dispute, the individual does not have standing to sue under Section 1681-2(b) of the Fair Credit Reporting Act, the Third Circuit Court of Appeals ruled yesterday in affirming a lower court’s dismissal of the suit.

A copy of the ruling in the case of Sprague v. Salisbury Bank & Trust Co., can be accessed by clicking here.

The plaintiff’s house was foreclosed on by the defendant. Two years after the foreclosure was finalized, the plaintiff checked his credit report and found that the mortgage was still being reported as open and that payments had not been made in two years. He notified the defendant of the error and the bank said it would supply updated information to the credit bureaus. But that did not happen for eight more months. The plaintiff filed suit, alleging the defendant violated the FCRA by failing to perform a reasonable investigation and correct inaccurate information.

At this point, it’s appropriate to stop and discuss two important subsections of the FCRA. Section 1681-2(a) details a furnisher’s responsibility to provide accurate information, including a duty to refrain from knowingly reporting inaccurate information and to correct information that is inaccurate. The one thing it does not include is a private right of action. There is a private right of action under Section 1692-2(b) of the FCRA, which outlines a furnisher’s duties following a dispute regarding the completeness or accuracy of a consumer’s credit report. But that provision is only triggered when the furnisher is notified of the dispute by the credit reporting agency.

Back to this case. Because the plaintiff only ever notified the defendant of the error and never notified a credit reporting agency, the plaintiff can not claim a violation of Section 1681-2(b), the Appeals Court ruled.

“In alleging that Salisbury violated the FCRA by continuing to furnish inaccurate information after receiving notice of an error directly from the consumer, Appellants effectively seek to employ the private right of action permitted under Section 1681s–2(b) as a means of enforcing Salisbury’s general obligation under Section 1681s–2(a) not to knowingly furnish inaccurate information,” the Appeals Court wrote. “Section 1681s–2(b) imposes on Salisbury a more specific duty, triggered only by a proper chain of notice.”

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