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Financial Services Law Insights and Observations

District Court: Failure to investigate duplicate reporting dispute could violate the FCRA

Courts FCRA Consumer Finance Dispute Resolution Credit Report Credit Reporting Agency Debt Collection


On March 10, the U.S. District Court for the Southern District of Illinois ruled a defendant credit union failed to properly report an individual’s debt to a consumer reporting agency or investigate his dispute. Plaintiff obtained a credit card from the defendant but fell behind on his payments. After his account was later sent to a third-party collection agency, the plaintiff obtained a copy of his credit report where he noticed that his credit card debt was listed twice—once as a “individual” and “revolving” account with a balance of $10,145, and another time as an “open” collections account with a different balance. Plaintiff sent identical dispute letters to the three major credit reporting agencies (CRAs), acknowledging the delinquent credit card but expressing confusion as to why the account was listed twice. He submitted additional similar disputes with the CRAs, claiming that the error caused him to be denied the opportunity to rent an apartment and made it difficult for him to obtain a mortgage. During discovery, two corporate witnesses testified on behalf of the defendant—one of whom is responsible for reviewing consumer credit disputes and verified the information being reported was accurate. A second witness also testified that while the defendant understood that the plaintiff was alleging inaccuracies due to the debt being reported twice, it chose to focus its investigation on verifying that the information in the plaintiff’s credit report matched the information in its internal system. 

In denying the defendant’s motion for summary judgment, the court noted that while the U.S. Court of Appeals for the Seventh Circuit “has not decided whether double-reporting of a single debt on a credit report is an FCRA violation, district courts across the country have found that whether the practice is misleading and violates the FCRA is an issue of fact.” The court explained that an issue of fact exists as to whether double reporting the debt created a misleading impression that the plaintiff has two separate debts totaling $22,000 rather than a single debt of roughly $10,000. Moreover, even though the plaintiff’s dispute contained the message “duplicate,” the defendant did not address this issue nor did it request that a change be made to the plaintiff’s credit report. “A jury could reasonably conclude [] that [defendant’s] investigation was inadequate under the FCRA,” the court wrote. “[W]hether [defendant’s] investigation or protocol may qualify as a willful violation giving rise to statutory or punitive damages is an issue for a jury as well.”