Fair Credit Reporting Act: Eleventh Circuit Rules on Issue of First Impression

In a case of first impression, the Eleventh Circuit has ruled that a consumer’s credit report does not have to be published to a third party in order to recover actual damages for a negligent violation of 15 U.S.C. 1681i(a).  In Collins v. Experian Information Solutions, the consumer sued the credit reporting agency alleging both negligent and willful violations of the Fair Credit Reporting Act’s duty to conduct a reasonable reinvestigation of disputed information contained in the consumer’s credit file. Collins v. Experian Information Solutions, 2015 U.S. App. LEXIS 50 (11^th Cir. Jan. 5, 2015).  In 2010, Collins was sued by a debt buyer to collect on an account. The small claims court, after a trial on the merits, ruled in Collins’ favor.  Within days of the court’s decision, Collins disputed the debt’s entry on his credit report, explaining:

I don’t owe any money to Equable Ascent Financial…This account is wrong….Equable Ascent sued me for this debt in small claims court of Jefferson County, Alabama, case #SM-10-2973,…judgment was entered for defendant, you can call the court for more information at 205-325-XXXX or the attorney for Equable Ascent at 205-250-XXXX. 

Collins, at *3.  Because of a zip code discrepancy on the envelope, Experian sent Collins a letter seeking verification that he had in fact sent the dispute notification.  Collins responded indicating again that he didn’t owe the debt, that Equable had lost its suit to collect on the debt and requesting deletion of the debt.  Collins additionally included copies of his driver’s license and social security card, and listed his birth date.  Experian then sent an automated consumer debt verification form to Equable who responded that the debt was valid.  Relying upon the creditor’s verification, Experian took no further action to investigate and continued to report the account.  Collin subsequently filed suit alleging that Experian’s investigation of the dispute was unreasonable and that Experian was liable for both negligent and willful violations of the FCRA.  

On appeal, the issue before the court was “whether an allegation of a violation of 1681i(a)…requires the consumer reporting agency to have disclosed the consumer’s credit report to a third party in order for q consumer to recover actual damages.”  Collins at *1-2.  15 U.S.C. 1681o meanwhile provides for the recovery of actual damages for any negligent violation of the FCRA. 15 U.S.C. 1681o(a)(1).  In distinguishing Collins from the majority of cases requiring a showing that the inaccurate information was published to a third party, the court relied upon the distinction between the terms “consumer report” and “file.” The court noted that 15 U.S.C. 15 U.S.C.1681i(a) sets forth the credit reporting agency’s duty to conduct a reasonable investigation of the completeness or accuracy of any item of information contained in a consumer's file.  1681e(b), under which the majority of cases had been decided, required the consumer reporting agency to follow reasonable procedures to assure the maximum accuracy of a consumer report.  A consumer report is defined by the FCRA as being

any written, or other communication of any information by a consumer reporting agency bearing on a consumer’s credit worthiness, credit standing, credit capacity…which is used or expected to be used or collected in whole or part for the purposes of serving as a factor in establishing the consumer’s eligibility for…credit or insurance…

 

15 U.S.C. 1681a(d)(1) (emphasis added).  A file, on the other hand, “when used in the connection with information on any consumer means all of the information on that consumer recorded and retained by a consumer reporting agency regardless of how the information is stored.” 15 U.S.C. 1681a(g) (emphasis added).  Because a “consumer report” requires communication to a third party and a file does not, the court held that “the plain language of the FCRA contains no requirement that the disputed information be published to a third party in order for a consumer to recover actual damages under 16 U.S.C. 1681i(a).”  Collins at *13.