Major Consumer Reporting Agency Disputes Proposed Class Actions Allegations

July 24, 2023

A major consumer reporting agency (CRA) faces a proposed class action lawsuit over alleged violations of the Fair Credit Reporting Act (FCRA). In response, it filed a memorandum of law with the court disputing the basis of the allegations. The memorandum questions the “threadbare” allegations of the named plaintiff. Based on the complaint’s allegations, the agency did not violate the FCRA.

The named plaintiff filed on behalf of a class of individuals impacted by the CRA. This class requested that the CRA reinvestigate alleged mistakes in their reports or disclose the files to them. The plaintiff explained that the issue began with the bank they refinanced an auto loan. 

According to the complaint, it refused to accept payments due to system errors. Though corrected later, the error reported the plaintiff as months behind in payments. The bank then furnished this information to the CRA, harming the plaintiff’s credit score. In response, the plaintiff’s attorney filed a dispute.

The CRA deemed this request “suspicious” and requested the plaintiff verify his identity. After confirmation, the CRA contacted the bank, which claimed the information accurate. This result led the plaintiff to file this lawsuit.

This complaint outlined three alleged violations of the FCRA. First, the CRA violated Section 1681i because the statute has no exception for verifying “suspicious mail.” However, the CRA claimed a settled case law proved that CRAs may adopt identity verification procedures to guard against threats like identity theft.

Secondly, the plaintiff claimed the CRA did not perform a reasonable investigation. The CRA’s rebuttal pointed to a case law, which established that “[a]ccurate reporting by a credit reporting agency is a complete defense to claims under… 1681i(a).” It also claimed accurate reporting based on the undisputed fact that the plaintiff never paid on the loan. As such, claims concerning the bank’s system failures that led to declined payments did not involve the CRA. Instead, the CRA held no obligation to resolve such legal disputes.

Third, the plaintiff claimed the CRA violated the FCRA by reporting information it could not verify. However, the plaintiff acknowledged that the CRA forwarded the dispute and received accuracy verification from the bank. The CRA countered this claim and requested dismissal without leave to amend because it did not believe it violated the FCRA.

As this case illustrates, FCRA compliance is a must, and this is true for all types of consumer reporting, including background checks for employment. The best way to ensure employment screening programs remain FCRA compliant is to partner with a background check provider experienced with FCRA compliance.

Background checks are made easy with JDP. Ask any questions you may have and learn more by contacting a sales rep today.