A District Court judge in Louisiana has denied a motion to dismiss filed by two defendants sued for allegedly violating the Fair Credit Reporting Act, ruling that the plaintiff has sufficiently alleged that one of the defendants willfully violated the relevant provisions of the statute and that the other defendant’s failure to respond to a dispute is sufficient for the case against it to continue.
A copy of the ruling in the case of Holliday v. U.S. Bank et al. can be accessed by clicking here.
The plaintiff had an account with the defendant. In 2018, she received a 1099-C form from the bank, notifying her that an alleged debt of $22,219 had been discharged and canceled. The form was entitled “Cancellation of Debt” and included an event code “G” which is used by the Internal Revenue Service to “to identify cancellation of debt as a result of a decision or defined policy of the creditor to discontinue collection activity and cancel the debt.” The plaintiff claimed the cancellation on her tax return and paid thousands of dollars in taxes as a result.
The plaintiff later noticed the debt was being reported on her credit report. During a call with the bank, it confirmed that it was no longer attempting to collect on any balance. The plaintiff then filed disputes with the three major credit reporting agencies. TransUnion received the dispute, but allegedly did not investigate or respond to it.
The bank argued in its motion to dismiss that the information being furnished to the credit bureaus was not inaccurate. But, as Judge Brian A. Jackson of the District Court for the Middle District of Louisiana noted, the plaintiff confirmed with the bank that it was not attempting to collect on the debt. Not only is that sufficient at this stage of the case to defeat a motion to dismiss, it’s enough to meet the threshold for a willful violation, Judge Jackson ruled.