Thursday, May 15, 2008

consumer - Fair Credit Reporting Act - degree of accuracy - causation of damages

Krajewski v. American Honda Finance Corp. and Trans Union, LLC - ED Pa. - May 2008

Plaintiff and her ex-husband bought a car, which got repossessed by AHFC after their adult son was arrested and the car, in the son's possession at the time, was seized by the police under the Controlled Substances law. AHFC then reported this to Trans Union, a credit reporting agency (CRA), which in turn marked plaintiff's consumer report as "RPO" meaning repossession.

Plaintiff disputed the characterization of "repossession," alleging that she had never missed any payments and that her credit report should not reflect a repo. Plaintiff tried to get a loan to pay the debt and redeem the car and alleges that she could not because of the "repossession" notation on the credit report. She filed two notices of dispute with the CRA.

Plaintiff sued AHFC and Trans Union on multiple causes of action. AHFC's motion for summary judgment was declined on most claims, because of disputed factual and legal issues, included whether plaintiff "exposed" the car to seizure, as prohibited in the contract.

Plaintiff's claims agains Trans Union included the following issues.

Fair Credit Reporting Act - 15 USC 1681 et seq. - technical accuracy v. maximum possible accuracy
Under sec. 1681e(b) of the FCRA, "[w]henever a consumer reporting agency prepares a consumer report it shall follow reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the report relates.”

To prevail on a claim of negligent failure to comply with § 1681e(b), a plaintiff must show the following four elements: (1) that “inaccurate information was included in a consumer’s credit report,” (2) that “the inaccuracy was due to defendant’s failure to follow reasonable procedures to assure maximum possible accuracy,” (3) that “the consumer suffered injury,” and (4) that “the consumer’s injury was caused by the inclusion of the inaccurate entry”....Trans Union argues that it is entitled to summary judgment because the information was accurate, meaning that plaintiff cannot show the first element.

A plaintiff cannot sustain a claim to enforce § 1681e(b) without showing an inaccuracy in her credit report. Whether the accuracy requirement of § 1681e(b) merely requires technical accuracy or requires something more has not been clarified by either the United States Supreme Court or the Third Circuit. Plaintiff urges this court to follow the D.C. Circuit’s reasoning in Koropoulos v. The Credit Bureau, Inc., 734 F.2d 37 (D.C. Cir. 1984), which rejected the technical accuracy defense in the context of a consumer reporting agency defendant. The court denied summary judgment for the consumer reporting agency where “there is a genuine issue of fact as to whether the report was sufficiently misleading so as to raise the issue of whether [the defendant’s] procedures for assuring ‘maximum possible accuracy’ were reasonable.” Id. at 42.

In rejecting the technical accuracy defense as applied to consumer reporting agencies, the D.C. Circuit based its conclusion on the FCRA’s requirement that consumer reporting agencies employ reasonable procedures to assure more than mere accuracy....The FCRA provides: “Whenever a consumer reporting agency prepares a consumer report it shall follow reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the report relates.” 15 U.S.C. § 1681e(b) (emphasis added). District courts in the Eastern District of Pennsylvania have applied Koropoulos....I, too, will follow Koropoulos and deny summary judgment if “there is a genuine issue of material fact as to whether the report was . . . misleading.” 734 F.2d at 42.

Whether the credit report in the instant case is accurate and not misleading depends on the meaning of “repossession” as used in the report. “Repossession” is not defined by federal or Pennsylvania statute. It is defined by the dictionary as “the act of resuming possession of property when the purchaser fails to keep up payments on it.” Webster’s Third New International Dictionary 1926 (1981) (emphasis added). Similarly, one dictionary definition of the verb “repossess” is “to resume possession of (an item purchased on installment) in default of the payment of installments due.” Id. (emphasis added). Given these definitions, and applying the Koropoulos approach, a reasonable jury could conclude that Trans Union’s reporting was so misleading as to be inaccurate. Therefore, I will not grant Trans Union’s motion for summary judgment on the basis of the alleged accuracy of the report.

Trans Union asserts in the alternative that “Trans Union is entitled to summary judgment on [p]laintiff’s claims of damages relating to credit denials in August 2006 because these allegedly occurred prior to her disputes”....Trans Union also asserts that “there is no evidence that an actual recipient of [p]laintiff’s consumer report was misled or would have acted on [p]laintiff’s application for credit differently if the reason why the repossession occurred had been included in [p]laintiff’s report.”

Plaintiff argues that, in the context of damages, Trans Union erroneously conflates § 1681i(a)’s reinvestigation requirement with § 1681e(b)’s reasonable procedures requirement. I agree. Section 1681 relates to “reasonable procedures to assure maximum possible accuracy” in reporting generally, 15 U.S.C. § 1681e(b), and so the time at which a consumer disputes the information is irrelevant to the § 1681e(b) analysis.

With respect to causation, a plaintiff need not “satisfy his burden only by introducing direct evidence that consideration of the inaccurate entry was crucial to the decision to deny credit”...Instead, a plaintiff need only “produce evidence from which a reasonable trier of fact could infer that the inaccurate entry was a ‘substantial factor’ that brought about the denial of credit.”