Metro 2 is the standard system used by furnishers of credit information for reporting consumers' account information to credit reporting agencies. This system requires the input of several different codes, including an Account Status code, a Payment Rating code, and various others indicating the current balance, payment amounts, and amount past due. When an account is closed or paid off, the codes are set to reflect the outstanding balance and past due amount as zero, and the Account Status code is set to 13, reflecting that the account was paid or closed with a zero balance. Additionally, pursuant to the guidelines in the Credit Reporting Resource Guide ("CRRG"), the industry practice is to set the Payment Rating to a code of 0 if the account was current on the closing date or to a code of 1-6 reflecting that the account was past due when it was paid off. This forms the basis of recent claims under the Fair Credit Reporting Act ("FCRA") brought by plaintiffs who claim that this standard method of reporting is inaccurate because the Payment Rating code suggests that the account is still past due even though it is closed. How are district courts handling this type of claim?

The Early Trend in Favor of Defendants

Early cases to consider this issue resulted in a grant of summary judgment for the defendant upon a finding that the data was accurately reported according to the CRRG guidelines. In Moulton v. Americredit Financial Services, Inc., No. C 04-02485 JW, 2006 WL 8459731 (N.D. Cal. Dec. 29, 2006), the plaintiff had made multiple late payments on her car loan before paying the loan off entirely. On the day the plaintiff made her final payment, the account was more than sixty days past due. Moulton, at *1. Under the Metro 2 reporting format, the plaintiff's account balance was zero, the Account Status code was set to 13, and the Payment Rating was a 2, reflecting that the account was over sixty days delinquent. Id. at *3. Judge Ware entered summary judgment for the defendant, stating that the Payment Rating code was "indicative of the status of the paid or closed account while the account was still active, not at the time that a consumer's credit report is accessed," and therefore the reporting was accurate. Id. at *3-4.

Judge Sheridan in the District of New Jersey made a similar finding in Grossman v. Barclays Bank Delaware, No. 12-6238 (PGH) (LHG), 2014 WL 647970 (D.N.J. Feb. 19, 2014). There, the plaintiff had entered into a settlement agreement with the defendant to settle his outstanding credit card debt after the plaintiff had been delinquent for several months. Grossman, at *2. Plaintiff made the payments as agreed and the debt was discharged. Id. at *3. The defendant updated the account to show that the scheduled monthly payment, current balance, and past due amounts were zero. The Account Status code was 13, and the Payment Rating showing delinquency of 120 days at the time of final payment. Id. The judge entered summary judgment for the defendant, agreeing that the report followed the CRRG guidelines and was "not patently incorrect or misleading." Id. at *10.

A Change in Macik v. JPMorgan Chase Bank, N.A.

In May of 2015, Judge Froeschner of the Southern District of Texas departed from these holdings when he denied summary judgment in Macik v. JPMorgan Chase Bank, N.A., No. 14-cv-00044, 2015 WL 12999728 (S.D. Tex. May 28, 2015). The plaintiff had paid off her mortgage in its entirety following three past due payments. Macik, at *1. Using Metro 2, the defendant reported that the loan had a zero balance, the Account Status code was set to 13, and the Payment Rating code was a 3 reflecting that the account had been ninety days past due. Id. In its motion for summary judgment, the defendant cited several provisions of the CRRG guidelines of 2013, including descriptions of the Payment Rating field and the method of reporting closed accounts. Defendant's Motion for Summary Judgment & Brief in Support at 38-43, Macik, No. 3:14-cv-00044 (S.D. Tex. Mar. 24, 2016), Docket No. 125-1. Judge Froeschner rejected the defendant's interpretation of these guidelines, stating that the language "as of the date the account was paid" actually supported the plaintiff's claim—upon payment on that date, the account was current. Macik, at *4.

After the rejection of the defendant's motion for summary judgment, the case went to trial where the jury found for the plaintiff all claims, including the FCRA claim and a claim for defamation based on this reporting. See Jury Charge at 9-13, Macik, No. 3:14-cv-00044 (S.D. Tex. June 15, 2016), Docket No. 163. This case highlights how a judge might have a different interpretation of the CRRG guidelines and the difficulty of explaining these guidelines to a jury if the case makes it to trial.

The Treatment of Claims Post-Macik

Macik has recently been cited by multiple plaintiffs as support for their FCRA claims, but the district judges have not found its reasoning persuasive. In Settles v. Trans Union LLC, No. 3:20-cv-00084, 2020 WL 6900302 (M.D. Tenn. Nov. 24, 2020), the plaintiff's account had not been paid off when it was closed but was instead transferred after default, and Judge Campbell relied on this to distinguish Macik. Settles, at *1, 5. He dismissed the plaintiff's claim and stated, "the Court finds it implausible that a creditor would be misled into believing Plaintiff is currently 120 days past due on his payment obligation each month when the reporting of the account states that the account was closed in February 2014 and has a zero-dollar balance." Id. at *5.

In Hernandez v. Transunion, LLC, the same plaintiff's attorney from Macik brought a similar claim in the Northern District of Florida. The defendant filed a motion for summary judgment and the plaintiff opposed, relying heavily on the outcome of Macik as support. Plaintiff Response & Memorandum to Ocwen's Motion for Summary Judgment at 7-9, Hernandez v. Transunion, LLC, No.  3:19-cv-01987-RV-EMT (N.D. Fla. Aug. 21, 2020), Docket No. 66. In his order granting summary judgment for the defendant, Judge Vinson omitted any reference to Macik and instead adopted the reasoning in Settles, finding that the reporting was accurate. Order at 6-8, Hernandez, No. 3:19-cv-01987-RV-EMT (N.D. Fla. Dec. 10, 2020), Docket No. 82.

Both Hernandez and Settles provided the reasoning relied on by Judge Cogan in the most recent case to address this issue, Gross v. Private National Mortgage Acceptance Co., No. 20-cv-4192 (BMC), 2021 WL 81465, (E.D.N.Y. Jan. 9, 2021). Judge Cogan distinguished Macik and dismissed the plaintiff's claim, determining that the past due Payment Rating was accurate and not misleading. Gross, at *3.

Taken together, these cases demonstrate that many judges do not find this industry standard of reporting to be misleading or inaccurate. Macik appears to be an outlier, although it highlights one understanding that judges or juries might have of the Metro 2 format and the meaning of the CRRG standards. The reliance of plaintiffs on Macik suggests that more of these claims may be filed in the near future.