Appeals Court Affirms Dismissal of Lawsuit Claiming Violations of FCRA

Fair Credit Reporting Act (FCRA)

Written By ESR News Blog Editor Thomas Ahearn

On August 10, 2020, the U.S. Court of Appeals for the Second Circuit affirmed a September 2019 Connecticut district court decision that dismissed a lawsuit claiming violations of the federal Fair Credit Reporting Act (FCRA) because a consumer had not notified a Credit Reporting Agency (CRA) of an alleged error in his credit report.

In Sprague v. Salisbury Bank and Trust Company filed in the U.S. District Court of the District of Connecticut, the plaintiffs borrowed money from defendant Salisbury Bank and Trust Company to purchase a home. After several years, Salisbury initiated foreclosure proceedings and the parties agreed to a $40,000 deficiency judgment.

The complaint claimed that when one of the defendants noticed his credit report improperly listed the mortgage as still open, he notified Salisbury, who acknowledged the error and informed him that a correction had been made on the report. However, Salisbury did not correct the erroneous information until several months later.

The complaint claimed Salisbury violated the FCRA by “negligently and willfully” failing to perform a reasonable reinvestigation and correction of inaccurate information and by engaging in “behavior prohibited by FCRA by failing to correct errors in the information that it provided to credit reporting agencies” after notified of the error.

However, the district court dismissed the complaint because the plaintiffs did not allege that they reported the discrepancy to a CRA or that a CRA notified Salisbury of the complaint. The appellants appealed the dismissals of their complaint against Salisbury, alleging that Salisbury violated the FCRA by failing to correct information.

The three-judge panel of the Second Circuit affirmed the district court’s conclusions because the appellants did not claim a CRA notified Salisbury Bank of their dispute, nor did they claim that they notified a CRA of the discrepancy, so they did not allege facts sufficient to state a claim under the FCRA. The full opinion is here.

Enacted by Congress in 1970, the FCRA promotes the accuracy, fairness, and privacy of consumer information contained in the files of Consumer Reporting Agency (CRAs), protects consumers from the willful and/or negligent inclusion of inaccurate information in their consumer reports, including consumer credit information.

Employment Screening Resources® (ESR) – a leading global background check provider – offers background screening solutions that comply with the FCRA as well as whitepapers on how employers may avoid FCRA lawsuits and on how CRAs may avoid FCRA lawsuits. To learn more about ESR, visit www.esrcheck.com.

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