Factual vs. Legally Inaccurate, the Difference Matters: Court Dismisses FCRA Claims Based on Disputed Legal Issue | Troutman pepper


On January 21, 2021, the United States District Court for the Northern District of Illinois granted TransUnion Data Solutions LLC’s (Trans Union) motion for judgment on the pleadings, dismissing the claims of Blue Sobenes (Sobenes ) against Trans Union under sections 1681i(a) and 1681e(b) of the Fair Credit Reporting Act (FCRA).

In Sobenes v. Transunion Data Sols., Sobenes debited goods and services to a credit card issued in his name by Comenity Bank, which subsequently debited and then sold the account. The debt buyer then sued Sobenes in state court to collect the account; however, six days before the scheduled arbitration, the state court lawsuit was dismissed without prejudice. After this voluntary dismissal, the debt buyer continued to provide account information to consumer reporting agencies, including Trans Union.

Sobenes, through counsel, advised Trans Union that the information on its credit report regarding the Comenity Bank debt was inaccurate and provided supporting documentation, including the motion to dismiss the action in court without prejudice. After conducting an investigation, which revealed that Sobenes still owed the debt, Trans Union refused to remove the debt from Sobenes’ credit report. Sobenes then sued Trans Union alleging that it failed to conduct a proper and reasonable re-investigation regarding the inaccurate information in Sobenes’ credit report after Sobenes informed it of the dispute; failed to consider all relevant information submitted by Sobenes regarding the disputed inaccurate information; and failed to remove the inaccurate information from Sobenes’ credit file after further investigation, all in violation of Section 1681i(a) of the FCRA. She further alleges that Trans Union failed to employ and follow reasonable procedures to ensure the maximum possible accuracy of Sobenes’ credit information and file, in violation of Section 1681e(b) of the FCRA.

The Court began its analysis by reiterating that to state a claim under Section 1681i(a) or Section 1681e(b) of the FCRA, a plaintiff must sufficiently allege that the credit report contains factual information. and not legally inaccurate. It further defined factually inaccurate information as information that includes inaccurate amounts, business line items not immediately deleted upon release, and inaccurately updated loan terms. The Court defined legal inaccuracies to include the validity of a debt or a dispute regarding the person to whom the debt was assigned. Finally, he continued his inquiry by stating that in order to distinguish between the two types of inaccuracies, one must consider whether the defendant could have discovered the inaccuracy if he had reasonably investigated the matter.

Having established this basis, the Court held that Sobenes does not allege factual inaccuracies. She did not dispute that she incurred the debt, the amount of the debt, or that the debt was ever forgiven. Instead, it argued that the debt buyer had provided insufficient documentation to prove that it owned the Comenity Bank debt. In answering its own question, the Court determined that Trans Union could not have discovered the alleged inaccuracy had it reasonably investigated the matter, and further determined that Trans Union had reasonably investigated the matter and correctly included the findings of this investigation in its credit report. . The Court found that it was unreasonable to expect Trans Union to determine whether the bill of sale was defective or to infer that the buyer of the debt did not own the debt from his voluntary request for dismissal without prejudice.

In summary, plaintiffs in the District of Illinois must plead factual inaccuracies in their FCRA section 1681i(a) and 1681e(b) claims to withstand judicial review.


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