Appeals Court Reverses Ruling in FCRA Suit Over Mis-Reported Debt

The Court of Appeals for the Sixth Circuit has reversed a lower court’s summary judgment ruling in favor of a defendant, determining that the defendant willfully and knowingly violated the Fair Credit Reporting Act by continuing to report an unpaid debt as delinquent for a year after it had been charged off as part of a bankruptcy filing.

A copy of the ruling in the case of Krueger v. Experian Information Solutions and Cenlar can be accessed by clicking here.

The plaintiff filed for Chapter 13 bankruptcy protection and made all of his payments required under his reorganization plan. Once the bankruptcy was discharged, the plaintiff planned to purchase a new car. But when he checked his credit report, he found that the mortgage was being reported as delinquent and his credit score was significantly lower than expected. The plaintiff disputed the tradeline and the dispute was forwarded to Cenlar, the mortgage servicer. Cenlar knew the the loan had been discharged but kept reporting it as past due for more than a year.

The plaintiff filed suit, alleging the defendants violated the FCRA. But a District Court judge ruled that no jury would find that the servicer had violated the statute and that the plaintiff lacked standing to sue, granting the defendant’s motion for summary judgment.

The defendant argued that the plaintiff lacked standing because he never applied for a car loan and could not prove that its reporting the debt as past due affected the interest rate the plaintiff would have obtained. The plaintiff’s credit score did increase by more than 100 points once the tradeline was amended. “That Krueger chose not to obtain a loan with higher interest than he could have obtained absent Cenlar’s error does not make him at ‘fault’ for the harm of driving his old car,” the Appeals Court wrote.

“… Cenlar knew that Krueger’s loan had been discharged but for more than a year told the credit-reporting agencies that the loan was past due. A jury could therefore find that Cenlar was either incompetent or willful in its failure to correct its reports sooner. Cenlar contends that its actions were not willful because it had implemented policies that guided its analysts in the resolution of credit disputes. But the mere existence of those policies hardly disproves as a matter of law that Cenlar acted willfully.”

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