Courts Repeatedly Dismiss Cases Where Plaintiffs Are Unable To Plausibly Allege Viable Claims Under The Fair Credit Reporting Act

The entire spectrum of furnishers – from national banks to fintechs, finance companies to servicers, debt purchasers to collection agencies – have faced a recent onslaught of cases filed by consumers under the Fair Credit Reporting Act (“FCRA”). As the defendants in these cases fight back, however, courts have repeatedly dismissed claims where plaintiffs are unable to plausibly allege basic facts that are sufficient to support the essential elements of a FCRA claim. A closer examination of each FCRA complaint may reveal similar shortcomings.

First, it is worth repeating a fundamental (but counterintuitive) fact about the FCRA: although section 1681s-2(a) of the statute obligates furnishers to report complete and accurate information about consumers, the Act does not give consumers the right to sue furnishers for a breach of that duty. This is true even if when consumers directly notify furnishers they dispute the information that is being reported and the furnisher fails to correct or delete the information.¹ Thus, courts routinely dismiss claims that simply allege a furnisher has breached the duty to report accurate information about them.²

Next, although consumers do have standing to pursue claims under section 1681s-2(b) of the FCRA, the pleading requirements of those claims are very specific. The consumer must allege facts which, if proven true, would show the furnisher’s inaccurate information appeared on their credit report, they notified a consumer reporting agency of that inaccuracy, the consumer reporting agency notified the furnisher about the dispute, and the furnisher thereafter failed to conduct a reasonable investigation and failed to update or correct its reporting as necessary.³ Information is only “inaccurate” within the meaning of the FCRA if it is patently incorrect, or is misleading in such a way and to such an extent that it can be expected to adversely affect credit decisions.⁴ Each of these requirements has proven to be a stumbling block for consumers.

Thus, courts have dismissed cases where consumers have listed information they claim is inaccurate (for example, the “past due amount” field is blank), but have failed to plausibly allege facts explaining why the information is patently incorrect or likely to adversely impact credit decisions.⁵

Other courts have dismissed cases where consumers claim they disputed the information directly with furnishers, or with the furnisher’s attorneys, but do not allege they submitted a dispute to the consumer reporting agencies.⁶

Dismissal orders also have been issued where the consumer did not plausibly allege facts indicating the consumer reporting agency notified the furnisher of the dispute, or facts (as opposed to bare legal conclusions) indicating the furnisher failed to conduct a reasonable investigation after receiving notice through the consumer reporting agencies.⁷

Courts have dismissed cases where consumers have not plead any facts which, if proven true, would prove they were damaged by the information reported. Speculative allegations of damage, including claims that the reporting had a “chilling effect” on the consumer’s applications for credit or use of credit, are not sufficient.⁸

Lastly, when consumers have attempted to assert state law claims (such as defamation or negligence) against furnishers who allegedly reported inaccurate information, or allegedly failed to investigate or correct information, courts have correctly dismissed these claims as preempted by section 1681t(b)(1)(F)(ii) the FCRA. State law claims of this type, when filed against furnishers, are inconsistent with Congress’ intent to create a uniform federal regulatory scheme governing credit reporting obligations.⁹

The pace of new FCRA lawsuits filed against furnishers shows no sign of slowing down. In this environment, furnishers who are targeted by FCRA claims should closely analyze the allegations made against them to assess whether the consumer has asserted specific facts to support each element of a viable FCRA claim.