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Seventh Circuit Reiterates Its Position on an FCRA Plaintiff’s Burden of Proof

September 4, 2015 Leave a comment

The FCRA requires that every consumer reporting agency follow “reasonable procedures to assure maximum possible accuracy” of the information that it reports.  15 U.S.C. Sec. 1681e(b).  If a plaintiff can prove that a CRA didn’t follow reasonable procedures, then he or she can obtain actual damages and/or punitive damages, plus costs and fees.  Id. at Secs. 1681n, 1681o.

In general, the federal courts have never been very clear about what evidence the plaintiff must have to show that a CRA didn’t follow reasonable procedures.  Most of them say that it varies depending on the circumstances and is therefore usually a question for juries to decide.  See, e.g., Philbin v. Trans Union Corp., 101 F.3d 957 (3d Cir. 1996).

The Seventh Circuit is a notable exception to this general reluctance to tell parties what sort of evidence is sufficient to show a “reasonable procedures” violation.  In Sarver v. Experian Info. Solutions, 390 F.3d 969 (7th Cir. 2004), the plaintiff argued that Experian didn’t use reasonable procedures, because it reported that one of his credit accounts had been listed in bankruptcy, while at the same time showing that he had no public record of having filed for bankruptcy.  The plaintiff suggested that a reasonable procedure would have been for “each computer-generated report [to] be examined for anomalous information,” such as a conflict between an account in bankruptcy and an absence of a bankruptcy filing “and, if it is found, an investigation be launched.”  Id. at 972.  The Seventh Circuit rejected this position and said that the plaintiff had to present evidence “of prevalent unreliable information from a reporting lender, which would put Experian on notice that problems exist.”  Id. at 972.  In other words, merely saying that a computer process might allow inaccurate reports to be created is not enough: the plaintiff must go further and show that the defendant had notice of a problem with the computer process but hadn’t taken steps to correct it.

Recently, the Seventh Circuit followed (but didn’t cite) Sarver in Childress v. Experian Information Solutions, Inc., 790 F.3d 745 (7th Cir. 2015).  In Childress, the plaintiff argued that Experian’s practice of tracking bankruptcy court filings was unreasonable.  Experian used a computer to track electronic court records which showed when a person filed for bankruptcy, and later, what the outcome of that filing was (e.g., the petition for bankruptcy was dismissed or granted).  The plaintiff argued that this process was unreasonable because it didn’t show whether, when a bankruptcy petition was dismissed, that happened because the consumer withdrew it, or because the court deemed it insufficient.  The plaintiff argued for a manual system in which every time a bankruptcy petition was dismissed, someone would look at it and record whether that dismissal was voluntary or not.

The Seventh Circuit rejected this argument and stated that requiring a manual review of every court record “would put an enormous burden on the consumer credit-reporting agencies. Or so it seems; it was the plaintiff’s burden to establish the reasonableness of her proposed procedure.” 790 F. 3d at 747.

This decision is helpful to FCRA defense lawyers in two ways.  First, it suggests that CRAs are not required across the board to manually review the information they report before they report it.  Second, it reiterates that plaintiffs have the burden to prove that a different procedure would be reasonable, especially where the procedure seems like one that would impose “enormous costs” on the CRAs for little if any gains in accuracy.

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