Reseller liability: reseller’s report is not automatically “accurate” if bureau data is inaccurate
This post will be the last (at least for now) in our series on whether resellers can be liable for violating 15 USC 1681e(b) if they report data from one credit bureau that: i) is inconsistent with what the other bureaus are reporting; and ii) is allegedly inaccurate. I say the last “for now” because I will do a round-up post next month, and because there may be more cases on this issue down the road.
The last case in our series is Starkey v. Experian Info. Solutions, Inc., No. 8:13-cv-59, 2014 U.S. Dist. LEXIS 107917 (C.D. Cal. Jan. 8, 2014). In that case, plaintiff applied for a home loan from Quicken, which obtained a tri-merge credit report from Credco, which showed that Experian was reporting adverse public records about plaintiff, which the other two bureaus (Equifax and Trans Union) were not reporting about her. Quicken denied plaintiff a loan due to the public records. Plaintiff contacted Experian (not Credco) to dispute the public records, and while the court filings don’t tell us what Experian did in response, we do know that: i) Experian contended that its report was accurate (i.e., the public records really did belong to plaintiff, even though she said otherwise, and even though the other bureaus weren’t reporting them); and ii) plaintiff ultimately got a loan for a good interest rate.
Despite ultimately getting the loan she wanted, plaintiff sued Experian and Credco for providing an inaccurate credit report about her. Credco moved for summary judgment on the issue that we’ve been addressing here recently: i.e., it argued that it was not liable under 15 USC Sec. 1681e(b) for providing information from one bureau (Experian) that was inconsistent with the other bureaus.
Credco’s argument was, to my mind, a bit like the unsuccessful arguments that we have addressed in the last three posts: it mixed some good points with some less good ones. Credco argued that: i) Credco’s report was not “inaccurate” because it correctly reported to Quicken what Experian had reported to it; ii) the FCRA at 1681e(b) does not require resellers to reconcile inconsistent information from multiple sources; and iii) plaintiff’s failure to dispute her report with Credco bars her from suing Credco for creating an inaccurate report.
The court rejected these arguments and thus denied Credco’s request for summary judgment. The court took time at the outset to cover case law principles that are plaintiff-friendly and that Credco had not raised and addressed in its initial brief: namely that plaintiffs can sue under 1681e(b) if they contend that a report is inaccurate; that a report is inaccurate if the information is incorrect or just misleading; and questions about whether a defendant like Credco used “reasonable procedures to assure maximum possible accuracy of the information” in its reports should usually be resolved by the jury at trial, not by the court at summary judgment.
The court then specifically addressed two of Credco’s three arguments.
First, the court found that on the issue of whether information is “accurate,” the question is not whether Credco correctly told Quicken what Experian had told Credco, but rather whether the plaintiff had the public records that Experian (and then Credco) said she did. Because Credco hadn’t argued that she didn’t, the court refused to find that Credco’s report was accurate. Another way of putting it would be to say that the court used the common sense of the word “accurate” (i.e., is this information correct?) and not the technical sense that Credco wanted to use (i.e., Credco’s report was technically “accurate” so long as it correctly said what Experian was saying).
Notably, the court never specifically addressed Credco’s second argument, which was that the FCRA does not require resellers to do more than tell their clients what the bureaus are telling it. The court seems to have conflated that with the first argument and addressed it in passing. The court explained its position as follows:
While it is true that the FCRA sets forth different requirements for resellers of information (for example, § 1681 i), nowhere does the FCRA set forth a different standard in § 1681e (b).” Waterman v. Experian Info. Solutions, Inc., No. CV 12-01400 SJO (PLAx), 2013 U.S. Dist. LEXIS 35455, 2013 WL 675764, *2 (C.D. Cal. Feb. 25, 2013). The FCRA, therefore, requires that this Court apply the same the definition of “inaccurate” to a report prepared by reseller that it would apply to a report prepared by any other credit reporting agency. As noted above, a credit reporting agency’s report is “inaccurate” if it contains information that is “patently incorrect.” Gorman, 584 F.3d at 1163. No matter how many times “patently incorrect” information is accurately reproduced, it remains incorrect, and therefore “inaccurate” under the FCRA.
Starkey, 2014 U.S. Dist. LEXIS 107917 , at **7-8.
In short, it seems that the court saw Credco’s first two arguments – that its report was “accurate” because it correctly stated what Experian was reporting, and that the FCRA requires no more – as being contradicted by the traditional definition of “inaccurate.”
Finally, the court addressed and rejected Credco’s third argument – that plaintiff’s failure to contact Credco and dispute her report before filing suit, precluded her from successfully suing Credco under 15 USC 1681e(b). The court noted that if plaintiff had contacted Credco to dispute her report, any claim for its failure to handle her dispute would have been under 1681i, which requires that a plaintiff give the defendant prior notice of the dispute before suing, not 1681e(b), which does not require such notice. The court then held that if a defendant shows the court that it was following “reasonable procedures” to create its reports, the fact that a plaintiff never gave prior notice that she disputed the report may help convince a court to grant the defendant summary judgment. But here, Credco never argued that its procedures were reasonable, so the court rejected Credco’s notice argument on the basis that 1681e(b) does not require a plaintiff to give a defendant notice of an inaccuracy before filing suit. Id. at **11-12.
Once again, I will use my position as Monday-morning quarterback to suggest that the court might have decided this case differently if Credco had made its arguments differently. From my perspective, Credco’s first and third arguments were very weak. It is hard to convince a court that the word “accurate” should be understood in a special technical sense and not in the way that most people and most courts have used it; and it is hard to convince a court hat a statute (1681e(b)) which says nothing about notice in the text, nevertheless requires a plaintiff to give notice of a problem before filing suit.
Credco’s second argument was stronger, but the court largely ignored it because it was so unimpressed by the first and third arguments. The second argument wasn’t perfect – Credco argued at one point that 1681e(b) “requires” resellers to simply tell clients what the bureaus are telling it, when in fact it doesn’t “require” that at all. You can (and probably should) find that if a reseller correctly tells its clients what the bureaus were telling it, then the reseller has met its duty under 1681e(b), but meeting one’s duty under a statute by doing X is not the same as the statute “requiring” you to do X. The FCRA at 1681e(b) never uses the word “require,” and the court might have seen Credco’s argument that 1681e(b) imposes a requirement – when the text says no such thing – as another sign that Credco was making a weak argument.