Appeals Court Affirms Rulings for Defendant in FCRA Cases

The Court of Appeals for the Eighth Circuit has affirmed lower court rulings for the defendants in a pair of Fair Credit Reporting Act cases, ruling that injuries allegedly suffered by the plaintiffs because of issues related to bankruptcy notations on their credit reports were not sufficient to confer standing or create a genuine fact dispute on damages.

A copy of the ruling in the case of Rydholm v. Equifax Information Services, Experian Information Solutions, and TransUnion can be accessed by clicking here. A copy of the ruling in the case of Peterson v. Experian Information Solutions and Equifax Information Services can be accessed by clicking here.

In Rydholm, the plaintiff filed for Chapter 7 bankruptcy protection, and after his debts were discharged, he checked his credit report. One debt was still being reported as “Current; Paid or Paying as Agreed” with an outstanding balance. The plaintiff filed suit, alleging the defendants violated Section 1681e(b) of the FCRA for not maintaining reasonable procedures to ensure debts that are derogatory prior to a consumers’ bankruptcy filing do not continue to report balances owing or past due amounts when those debts are almost certainly discharged in bankruptcy. The plaintiff claimed to suffer emotional distress and was denied credit several times and obtained credit at less favorable rates. Ultimately that was “too thin” for the plaintiff to have standing to sue, the Appeals Court ruled. It is not the credit reporting agencies’ job to “wade into individual bankruptcy dockets to discern whether a debt survived discharge,” the Appeals Court wrote.

In Peterson, the plaintiff filed for Chapter 7 bankruptcy protection, and after the debts were discharged, the plaintiff’s credit report still listed one debt with an outstanding balance and was “open” and “past due.” The plaintiff filed suit, alleging the defendants violated Section 1681e(b) of the FCRA, seeking damages as a result of emotional distress, credit denials, and a lower credit score. It was the bankruptcy, not the information in her credit report, that led to her applications for credit cards being denied, the Appeals Court ruled. As for the emotional distress she claimed to have suffered, the plaintiff suffered no physical injury, was not medically treated for any psychological or emotional injury, and no other witness could corroborate any “outward manifestation” of emotional distress, the Appeals Court noted.

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