Consumer may file suit against lender under California law for giving false information to credit agencies

Law Reporter, Dec 2003

CONSUMER PROTECTION

Hussey-Head v. World Sav. & Loan Ass'n, 4 Cal. Rptr. 3d 171 (Ct. App. 2003).

A California appellate court held that a consumer may sue a lender for providing false information to credit agencies.

Here, Hussey-Head sued World Savings and Loan (World Savings) under the California Consumer Credit Reporting Agencies Act, Cal. Civ. Code §§ 1785.1 et seq., alleging that defendant was furnishing false, negative information about her credit history to credit reporting agencies. At trial, plaintiff presented numerous credit agency reports that showed she had been falsely marked as delinquent on her loan payments. The trial court granted defendant summary judgment, crediting its declaration that it had never provided a notice of default regarding plaintiff to credit agencies.

Reversing, the appellate court found that the trial court had disregarded evidence that, while defendant might not have supplied a notice of default to credit agencies, it did issue incorrect information on its monthly credit report to the agencies. The act prohibits the furnishing of incomplete or inaccurate information to credit agencies and provides that consumers must be notified when negative credit information is submitted. Here, the court noted, plaintiff's expert testified that defendant did not comply with industry standards, and plaintiff introduced evidence that the credit agencies received false information. This evidence contradicted defendant's declaration that it had not provided negative information to credit agencies. As such, there were triable issues of material fact regarding defendant's procedures for disseminating information, the court said.

Defendant further argued that the suit is preempted by federal Office of Thrift Supervision regulations that govern the operation of federal savings associations. Dismissing this argument, the court held that preemption does not apply here because the act is not a lending regulation and does not affect the way a federal savings association can run its business.

Accordingly, the court remanded.

Plaintiff's Counsel

Robert N. Ives,

Barbara W. Ravitz, and

Laura Boudreau, all of Los Angeles, Cal.