Courts Hold Contract Disputes Not Actionable Under FCRA

• Published date: 04 October 2021
• Subject Matter: Consumer Protection, Litigation, Mediation & Arbitration, Consumer Law, Arbitration & Dispute Resolution
• Law Firm: Foley & Lardner
• Author: Ms Christi Lawson, John J Atallah and Andrew C. Gresik

A recent string of U.S. District Court decisions has clarified liability for furnishers of credit information under the Fair Credit Reporting Act (FCRA), specifically 15 U.S.C. ' 1681s-2(b), in situations where consumers dispute the legal validity of a reported debt. In those cases, the courts held that legal challenges to the validity of the contract underlying a reported debt did not amount to the factual inaccuracy required to raise a ' 1681s-2(b) claim.

Recent cases have decided claims against furnishers under 15 U.S.C. ' 1681s-2 in a variety of factual circumstances. In Edwards v. Med-Trans Corporation, Case No. 2:20-CV-00114-CLM, 2021 WL 1087228 (N.D. Ala. Mar. 22, 2021), the Northern District of Alabama considered a claim that an air ambulance company ("Med-Trans") violated ' 1681s-2 by continuing to report a debt as delinquent even after the consumer disputed the validity of the underlying contract. The plaintiff, Edwards, was flown from Chattanooga to Birmingham by Med-Trans while in a medically-induced coma following a heart attack. When Med-Trans sought to collect amounts charged for Edwards's air ambulance flight, Edwards claimed that the debt was invalid because he did not have a valid contract with Med-Trans. The court found that Edwards was not alleging that the amount of the reported debt was inaccurate, but rather than he was not contractually obligated to pay the reported amount. As with similar claims against CRAs (see Chuluunbat v. Experian Info. Sols., Inc., 4 F.4th 562, 568 (7th Cir. 2021)), this contractual dispute required resolution by a court of law. Accordingly, the court dismissed Edwards's FCRA claim against Med-Trans, with prejudice, for failure to state a claim.

Other district courts across the country have similarly held that furnishers were not liable under ' 1681s-2(b) for continuing to report a debt over a variety of consumers' legal objections, such as: that the consumer's prepayments on a loan rendered the scheduled payments in question inapplicable (Wilson v. SunTrust Bank, Inc., No. 2:20-CV-20, 2021 WL 2525585, at *3 (S.D. Ga. Apr. 9, 2021)); that the note evidencing the reported debt was a forgery (Uppal v. Wells Fargo Bank, NA, Case No. 8:19-cv-1334-T-02JSS, 2020 WL 6150923 (M.D. Fla. Oct. 20, 2020)); that the amount owed was offset by a statutory penalty (Scaife v. National Credit Systems, Inc., Case No. 1:20-cv-00379-CLM, 2021 WL 1610620, at *6 (N.D. Ala. Apr. 26, 2021)); and, that the consumer was not required...