Appeals Court Upholds Ruling for Defendant in FCRA Case Over BK Notation on Credit Report

The Court of Appeals for the Sixth Circuit has upheld a lower court’s summary judgment ruling in favor of a credit reporting agency that was accused of violating the Fair Credit Reporting Act because it erroneously reported a father’s bankruptcy on his son’s credit report because the original petitions both had the son’s Social Security number, determining that the agency followed reasonable procedures to assure maximum possible accuracy of the reported information.

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

The father and son both filed for Chapter 7 bankruptcy protection on the same day. The attorney who submitted the petitions actually included the son’s Social Security number on both documents. A day later, when he realized what he had done, the attorney submitted a statement to correct the error. But the damage was already done. The original information had already been sent to Experian and it paired the father’s petition with the son’s credit report. When the bankruptcies were discharged, only the father’s was correctly reported. The son’s credit file indicated an unresolved bankruptcy for nine years.

When the son noticed the error — while attempting to refinance his mortgage — he sent the defendant a letter and demanded a sum in settlement. The defendant removed the father’s bankruptcy filing from the son’s credit report.

The son sued two credit reporting agencies, alleging they violated Section 1681e(b) of the FCRA. One of the agencies settled with the plaintiff. The other granted the defendant’s motion for summary judgment, which the plaintiff appealed.

This case marks the first time the Sixth Circuit has addressed what makes a credit reporting agency’s verification procedure’s reasonable under the FCRA.

Ultimately, because the defendant gathered information from reliable sources and because someone “with at least some legal training” would have had to manually review the docket to notice that the Social Security number had been updated, the defendant did not run afoul of the FCRA, the Appeals Court ruled. Even the speed with which the defendant updated the plaintiff’s credit report after it had been notified of the error is testament to the reasonableness of its process, the Appeals Court pointed out. “Experian’s processes strike the right balance between ensuring accuracy and avoiding ‘an enormous burden’ on consumer credit reporting agencies,” the Appeals Court wrote.

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