Fair Credit Reporting Act (FCRA)

Written By ESR News Blog Editor Thomas Ahearn

On September 13, 2021, the United States Court of Appeals for the Sixth Circuit reversed a district court’s ruling for the defendant in a lawsuit filed for alleged violations of the federal Fair Credit Reporting Act (FCRA) and held that a “reasonable jury” could find the defendant “willfully and negligently” violated the FCRA by incorrectly reporting a past due account status to the consumer reporting agencies (CRAs) that provide credit reports.

According to the ruling, the servicer for plaintiff’s mortgage loan continued to tell CRAs that the loan was past due for more than a year even though they knew it had been discharged in bankruptcy. The plaintiff’s credit score hovered in the low 500s as a result. After trying and failing to have the reports corrected, the plaintiff filed a lawsuit alleging that the defendant had “willfully and negligently” breached their duties under the FCRA.

In September 2020, the U.S. District Court for the Eastern District of Michigan granted summary judgment to the defendant, holding that the plaintiff lacked standing to assert his negligence claim and that he lacked evidence that the defendant willfully violated the FCRA. The plaintiff appealed the decision. The U.S. Court of Appeals for the Sixth Circuit respectfully disagreed with the district court and reversed the ruling in favor of the plaintiff.

The Sixth Circuit found the plaintiff had standing to assert a negligence claim under the FCRA since the plaintiff’s credit score increased by almost 100 points once the incorrect information was removed and that a “reasonable jury” could find a negligent and willful violation. The Court of Appeals also found that a “reasonable jury” could therefore find that the defendant “was either incompetent or willful in its failure to correct its reports sooner.”

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