Fair Credit Reporting Act permits consumer to sue provider of inaccurate or incomplete credit information to reporting agency

Law Reporter, Aug 2002

Fair Credit Reporting Act permits consumer to sue provider of inaccurate or incomplete credit information to reporting agency.

Nelson v. Chase Manhattan Mortgage Corp., 282 EM 1057 (9th Cir. 2002).

The Ninth Circuit Court of Appeals held that a consumer can file suit under the Fair Credit Reporting Act (FCRA), 15 U.S.C. section 1681, against an entity that furnished inaccurate or incomplete information to a credit reporting agency.

Here, a co-obligor on a mortgage loan obtained a report on his credit history from a credit reporting agency and disputed a statement on it suggesting that he had declared bankruptcy. He filed suit under the FCRA against the bank that had furnished the disputed information. The trial court dismissed the complaint on the ground that the statute did not create a private right of action for consumers against those who furnish credit information.

Reversing, the court noted the statute's provision that any person who willfully fails to comply with any requirement imposed under the law with respect to any consumer is liable to that consumer. One section of the law specifies the duties of those who furnish information to reporting agencies after the information is disputed by a consumer. Defendant argued that because consumers are unmentioned by name in this section, it does not impose a requirement with respect to consumers, so no private right of action is created. But the completeness or accuracy of credit information is certainly of prime concern to consumers, the court observed. Congress provided a filtering mechanism requiring a consumer to notify the reporting agency of any dispute; as long as this mechanism is complied with, the right of a consumer to seek redress should not be limited, the court said.

The argument for a private right of action was strengthened by a 1996 amendment to the statute, the court found. Before the amendment, the law allowed suits against a reporting agency or a user of credit information, but not against a furnisher of the information. When the statute was amended, "any person" was made open to suit. In any credit transaction there are only the consumer, the reporting agencies, the user of the credit reports, and the furnishers of the credit information. As consumers would not be made subject to suit by consumers, and as reporting agencies and users were already suable, Congress must have had furnishers of information in mind when it amended the statute, the court reasoned. Given the overall purpose of the statute to protect consumers from inaccurate and incomplete credit reporting, the court concluded that the FCRA authorizes private lawsuits against those who furnish information to reporting agencies.

Accordingly, the court remanded the case for further proceedings.

Plaintiff's Counsel

Richard J. Rubin, Santa Fe, N.M.

Mitchell D. Gliner, Las Vegas, Nev.

Joanne Faulkner, New Haven, Conn.

Amicus Curiae Counsel

John F. Daly, Washington, D.C.