Fifth Circuit Affirms Dismissal FCRA Claims Based on Failure to Include a Single Credit Item on Credit Reports

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In Hammer v. Equifax, the Fifth Circuit affirmed the district court’s dismissal of FCRA claims against Experian and Equifax in a September 9, 2020 published decision.

Accepting the allegations of the twice amended complaint as true, Plaintiff obtained a Capital One credit card in 2010 and made timely payments every month thereafter.  Equifax, Experian, and TransUnion reported the Capital One account until 2017.  After discovering that the Capital One account was no longer on his credit report, Plaintiff requested all three CRAs to restore it.  TransUnion was the only CRA to comply with his request.  Hammer continued to file disputes with Experian and Equifax based on their refusal to include the Capital One account in his credit report.  For unexplained reasons, Equifax added the Capital One account to his credit report but then removed it a week later.  Plaintiff alleged the failure to include this favorable credit item led to a lower credit score which then caused him to be denied credit. 

On these facts, plaintiff alleged three separate violations of FCRA: (1) failure to follow reasonable procedures to assure maximum possible accuracy of his credit report against Equifax; (2) failure to investigate against both Equifax and Experian, (3) a failure to notify claim against Equifax based on its alleged failure to notify him when it reinserted the Capital One account in his credit report. 

The three-judge panel dispensed with all three claims.

As to the reasonable procedures claim, the court noted that § 1681e(b) is a not a strict liability statute and that a CRA is not liable for all inaccuracies.  After reviewing Fifth Circuit precedent on when a credit report becomes inaccurate, the panel held “the omission of a single credit item does not render a report ‘inaccurate’ or ‘misleading.’”  Further expounding, the panel concluded that it would be “impossible for a CRA to satisfy” a standard where a credit report is required to contain all relevant information regarding a consumer because creditors report information on a voluntary basis.

As to the failure to investigate claim, the panel found that §1681i(a) was not triggered because plaintiff did not dispute an “item of information” in his credit file.  Rather, plaintiff was disputing the omission of the Capital One account from his credit report.  Because he was only disputing the overall completeness of his credit report, and not a line item, the statutory duty to investigate did not apply.   

As to the failure to notify claim, the court rejected plaintiff’s argument that Equifax was required to notify him when it reinserted the Capital One account in his credit report pursuant to §1681i(a)(5)(B)(ii).  §1681i(a)(5)(B)(ii) only applies to items deleted and then reinserted into a credit file.  The panel concluded Equifax had no duty to plaintiff because plaintiff “repeatedly argued . . . Equifax had not removed the Capital One card from his credit file but only excluded it from his credit report.”  The panel rejected plaintiff’s request to amend his pleading to cure any deficiency with his failure to notify claim because it would be futile.  Plaintiff had already been afforded two opportunities to amend the complaint and continually maintained that Equifax never deleted the Capital One account from his credit file.

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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