On September 18, 2015, Margaret M. Okamoto (“Plaintiff”) filed a complaint (the “Complaint”) in The United States District Court for the District of Nevada alleging violations of the Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq. (the “FCRA”), against, inter alia, Bank of America, N.A. (“BOA”), Mutual of Omaha Bank (“MOB”), and Experian Information Solutions, Inc. (collectively, “Defendants”). See Okamoto v. Bank of America et al., No. 2:15-cv-01800-GMN-GWF (Sept. 18, 2015).
The Complaint alleges that Defendants violated the FCRA by reporting and failing to correct inaccurate and derogatory information on Plaintiff’s credit report after Plaintiff filed for bankruptcy on October 31, 2013 (the “Bankruptcy”). According to the Complaint, Plaintiff had several past-due accounts with BOA, MOB, and other named defendants, that were scheduled in the Bankruptcy and effectively discharged through the Bankruptcy on February 4, 2014. However, Plaintiff alleges that Defendants reported “CO-Charge Off” on Plaintiff’s credit report after the Bankruptcy was filed, and that reporting such derogatory information after the date that the Bankruptcy was filed did not comply with reporting standards set by the Consumer Data Industry Association (the “CDIA”) Metro 2. Specifically, Plaintiff argues that CDIA standards “direct furnishers to report an account status as it existed at the time the bankruptcy petition was filed and not the account status as it would have existed in the months following the filing of the petition if the petition had not been filed.” Plaintiff further alleges that reporting “CO-Charge Off” was “inaccurate and misleading” and Defendants should have, instead, reported “zero balance.”
The Complaint states that, upon learning of the false information through an Experian credit report, Plaintiff reported the inaccurate information to Defendants and demanded that Defendants conduct an investigation and ultimately remove the derogatory information from Plaintiff’s credit report. Specifically, Plaintiff requested that Defendants delete the derogatory information from Plaintiff’s credit report, reflect all discharged debt as “current” with account balances of “$0,” remove all “post-bankruptcy activity” reported on each account, or, in the alternative, “include a 100-word statement in [Plaintiff’s] credit report” detailing Plaintiff’s dispute. Plaintiff alleges that Defendants continued to report the information despite receiving notice of Plaintiff’s dispute, failed to conduct a reasonable investigation pursuant to the FCRA, failed to review all relevant information provided by Plaintiff pursuant to the FCRA, failed to correct and update Plaintiff’s credit report, and failed to take appropriate measures upon notice of the disputed debt as outlined in the FCRA.
The Complaint asserts a single cause of action alleging “numerous and multiple willful, reckless or negligent violations of the FCRA,” and seeks actual and statutory damages pursuant to 15 U.S.C. § 1681n(a)(1), punitive damages pursuant to 15 U.S.C. § 1681n(a)(2), and reasonable attorney’s fees and costs pursuant to 15 U.S.C. § 1681n(a)(3).
We continue to see an uptick in actions brought for violations of the FCRA, and nuances in the law continue to trouble lenders. See In re Helmes , 336 B.R. 105, 109 (Bankr. E.D. Va. 2005) (holding that furnishers of credit information may be in violation of a bankruptcy discharge injunction unless “a debt discharged in bankruptcy [is] reported to a credit reporting agency with the notation ‘Discharged in bankruptcy’ and with a zero balance due.”); Groff v. Wells Fargo Home Mortgage , Inc., No. 14-12250, 2015 WL 2169811, at *4 (E.D. Mich. May 8, 2015) (holding that “[t]here was nothing false or ‘inaccurate’ about [a] bank’s reporting of [a] mortgage loan account as closed, with a zero balance” where note had been discharged pursuant to bankruptcy);see also 16 C.F.R. pt. 600 app. § 607(b)(6) (2010) (“A consumer report may include an account that was discharged in bankruptcy (as well as the bankruptcy itself), as long as it reports a zero balance due to reflect the fact that the consumer is no longer liable for the discharged debt.”)
In this case, Plaintiff cites to CDIA and industry reporting standards in support of her proposition that, in bankruptcy situations, furnishers should report the status of an account as it existed at the time that bankruptcy proceedings are commenced. While it is true that courts often look to industry standards for guidance in deciding complex regulatory matters, such methods are not controlling and it will be interesting to see whether the Court grants deference to CDIA reporting standards in this action.
Further the CFPB has indicated an interest in facts and allegations such as those at issue in the Complaint. In its February 27, 2014, bulletin, the CFPB states that it “will continue to monitor furnishers’ compliance with the FCRA regarding consumer disputes of information they have furnished to [consumer reporting agencies], [and] [f]urnishers should take immediate steps to ensure they are fulfilling their obligations under the law.” The FCRA’s Requirement That Furnishers Conduct Investigations of Disputed information , CFPB Bulletin 2014-01 (Feb. 27, 2014). Through the courts and regulatory agencies such as the CFPB, the interpretation and enforcement of the FCRA has been rapidly evolving. Thus, lenders must ensure that their credit reporting practices remain in compliance with the prevailing case law and to guidance promulgated by the CFPB and other regulatory agencies.