The Ninth Circuit Overturns District Court of Nevada’s Dismissal of FCRA Claim

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In Davis v. Experian Information Solutions, No. 20-15667, 2021 WL 2375933 (9th Cir. June 10, 2021), Plaintiff alleged that Experian violated sections 1681e and 1681i of the Fair Credit Reporting Act (“FCRA”) by “failing to report the timely payments she made on her Carrington Mortgage Services, LLC (CMS) account and by failing to conduct a reasonable reinvestigation into the account to correct her information” following her dispute.  454 F. Supp. 3d 996, 1000 (D. Nev. 2020).

In 2011, Plaintiff filed for bankruptcy and ultimately received a discharge in 2013. In 2017, Plaintiff’s Experian consumer disclosure reflected her CMS account as “discharged through Chapter 13 bankruptcy/never late.” Plaintiff contended that the CMS account was not discharged in bankruptcy and was in fact exempted from the discharge.  After receiving this 2017 disclosure, Plaintiff sent Experian a letter identifying the disputed mortgage debt and including documents relevant to her dispute.  

Under Section 1681i, if a consumer disputes the accuracy of information in his/her file, a credit reporting agency (“CRA”) must conduct a reasonable investigation within thirty days of the dispute. The District Court found that Plaintiff failed to notify Experian of the inaccuracy she asserted as the basis of her dispute and, therefore, Experian was not obligated to reinvestigate whether her CMS account was discharged in her bankruptcy. The Ninth Circuit disagreed, holding “a notice of dispute does not require precise language and an inadequate notice does not eliminate the duty to reinvestigate altogether.” 2021 WL 2375933 at *1 (cleaned up).  The Ninth Circuit reasoned that “one could plausibly infer from the documents Plaintiff provided that she disputed whether Experian had mischaracterized her mortgage debt as discharged.”  Id.

Section 1681e provides that “[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 bring a claim under this provision, a consumer must demonstrate that a CRA prepared a report containing inaccurate information. The District Court found that Plaintiff had not “plausibly alleged that Experian failed to follow reasonable procedures” to determine whether her CMS account had been discharged because Plaintiff’s letter “did not put Experian on notice of the nature of her dispute and ... the furnisher's letter and the bankruptcy documents provided no contrary information.” 454 F. Supp. 3d at 1004 (D. Nev. 2020).  The Ninth Circuit again disagreed, holding it was unclear whether the mortgage was in fact discharged and whether Experian reasonably should have been able to determine that fact.  Therefore, the Ninth Circuit reversed the District Court's finding that Experian “exercised reasonable diligence” in determining Davis's mortgage status as premature.

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