Consumer Finance Litigation

The U.S. District Court for the Middle District of Alabama joined a growing number of courts dismissing FCRA claims based upon a furnisher’s alleged failure to remove an “account in dispute” notation from consumer credit reports.  In Griffin v. Experian Information Solutions, Inc., No. 1:20-cv-801-RAH-SMD, 2021 WL 3782141 (M.D. Ala. Aug. 26, 2021), the plaintiff had four accounts that were marked as “in dispute.”  The plaintiff decided to dispute the “account in dispute” notation by contacting consumer reporting agencies (CRAs) rather than the furnishers directly.  When the furnishers refused to remove the “account in dispute” notations, the plaintiff filed suit alleging the furnishers violated § 1681s-2(b) of the FCRA.

One of the furnishers, Pennsylvania Higher Education Assistant Agency (PHEAA) moved to dismiss the plaintiff’s claims, arguing that it complied with the FCRA because when a consumer notifies a furnisher that he or she is disputing its reporting, § 1681s-2(a)(3) requires furnishers to report that the account is in dispute.  Thus, consumers must contact furnishers directly to have dispute notations removed.

Addressing PHEAA’s motion, the court noted that the FCRA imposes two separate duties on furnishers.  First, § 1681s-2(a) requires furnishers to submit accurate information to CRAs.  Second, § 1681s-2(b) requires furnishers to investigate and respond promptly to notices of consumer disputes.  Specifically, the FCRA requires furnishers to conduct a reasonable investigation within 30 days after receiving notice of a dispute and report its findings to the CRA.  The court further acknowledged that when a consumer disputes credit reporting directly to the furnisher, the furnisher must report the account as disputed pursuant to § 1681s-2(a)(3).

To determine whether the plaintiff stated a claim under § 1681s-2(b), the court had to resolve whether PHEAA’s investigation of the plaintiff’s dispute was unreasonable.  In turn, the court was required to determine what PHEAA’s investigation could have uncovered and, specifically, whether it would have discovered that the information it reported was inaccurate or incomplete.  Because the complaint lacked critical allegations, such as what kind of investigation PHEAA should have performed, what it should have reviewed, and what it should have discovered, the court concluded that the plaintiff’s complaint failed to state a claim.  Accordingly, the court dismissed the plaintiff’s FCRA claim.

In reaching its conclusion, Middle District of Alabama recognized that the plaintiff “appear[ed] to be creating a cause of action by self-manufacturing inaccuracies in her credit report by disputing and then un-disputing certain tradelines.”  Griffin, 2021 WL 3782141, at *1 n.1.  By rejecting the plaintiff’s “failure to remove the dispute notation” theory of liability, the Middle District of Alabama joins the U.S. District Courts for the District of Arizona, the Northern District of Georgia, and the Western District of Texas, which suggests that courts are increasingly unwilling to entertain manufactured consumer claims.