Fair Credit Reporting Act

Written By ESR News Blog Editor Thomas Ahearn

On August 11, 2021, the United States District Court, Eastern District of Missouri ruled in the case of PUDIC v. DEPARTMENT STORES NATIONAL BANK on whether the federal Fair Credit Reporting Act (FCRA) preempted a claim under the Missouri Merchandising Practices Act (MMPA) arising from inaccurate reporting on credit reports. The court held that the FCRA did not preempt an MMPA claim and denied Defendant’s Motion to Dismiss.

Plaintiff Pudic claimed Defendants DSNB and Kohl’s, Inc. violated the MMPA by refusing to accept his payment on multiple delinquent credit card accounts, citing a bankruptcy which he had never filed for as the basis for the denial. Plaintiff alleged that Defendants “unfairly combined or linked” his account to his mother who also had credit cards with them, a nearly identical Social Security number (SSN), and had previously filed for bankruptcy.

Plaintiff filed a lawsuit against Defendants alleging violations of the MMPA through “misrepresentations and unfair practice” and claiming his credit score suffered, he could not refinance his vehicle or obtain a reasonable mortgage interest rate, and his credit limit was reduced on other accounts as a result of their misconduct. Defendants moved for a dismissal of these complaints, alleging that the FCRA would preempt these claims.

Plaintiff argued his case should not be preempted by the FCRA because he did not dispute the accuracy of the report, only that Defendants should have accepted his payments. The court agreed and denied the Motion to Dismiss, ruling the FCRA section dealing with responsibilities of furnishers of information to Consumer Reporting Agencies (CRAs) did not address a furnisher’s duty to accept payment and would not preempt state law claims.

“Plaintiff sufficiently identifies the conduct underlying his Petition: Defendants unfairly linked his account to his mother’s and refused to accept payments to keep his account current. Plaintiff pleads that those unfair practices caused other creditors to reduce his credit limits and prevented him from refinancing his vehicle or obtaining a mortgage at a reasonable interest rate,” U.S. District Judge Sarah E. Pitlyk wrote in the Opinion.

“The Court must reasonably infer that Defendants’ refusal to accept Plaintiff’s payments led to continued reporting of debts, which lowered his credit score and limited his credit opportunities elsewhere… Assuming all of Plaintiff’s allegations are true and drawing all reasonable inferences in his favor, he states a plausible claim for relief,” U.S. District Judge Pitlyk concluded. A copy of the Memorandum and Order is available here.

The FCRA 15 U.S.C. § 1681 was enacted by Congress in 1970 to promote the accuracy, fairness, and privacy of consumer information contained in the files of CRAs, protect consumers from the willful and/or negligent inclusion of inaccurate information in their consumer reports, and regulate the collection, dissemination, and use of consumer information, including consumer credit information. A copy of the FCRA is available here.

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