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Reseller Liability: An Update

October 2, 2015 Leave a comment

A year ago, I concluded a series on whether resellers – who create “tri-merge” reports that contain credit data from Experian, Equifax, and Trans Union – can be liable under 15 USC 1681e(b) if one bureau reports inaccurate information, the other two don’t, and the reseller reports it all without comment.

In recent weeks, two courts have issued new opinions on this question, one on one side and one on the other.  This post will briefly explain each opinion and then comment on them together.

In Baker v. Experian Info. Solutions, Inc., No. 14-cv-1011, 2015 U.S. Dist. LEXIS 82845 (C.D. Cal. June 22, 2015), plaintiff Danny Baker alleged that when he applied for a loan, the lender obtained tri-merge reports from Credco which contained accurate data from Equifax and Trans Union, but inaccurate data from Experian.  Specifically, he alleged that Experian’s reports listed a number of his late father’s debts as pertaining to him, and that by repeating this, Credco’s tri-merge report prevented him from getting credit.  Id. at **5-8.  

The court stated that “The essence of Plaintiff’s argument is that if Defendant gets information from Experian, Equifax, or TransUnion that is not included on a report by the other, then that provides notice that the information is inaccurate information” and, under existing precedent, is enough to make the reasonableness of Credco’s procedures a jury question for trial.  However, the court disagreed with this argument and found that Credco’s “procedures were reasonable as a matter of law.”  The court reached this conclusion as follows: there is no evidence that all three credit bureaus need to report the same information, which means that “the type of information reported by Experian does not by its existence show inaccuracy,” which means that Credco’s reports did not contain a “patent error” and were not “incorrect on their face,” which means that Credco, as an intermediary, had no duty to notice or correct the latent errors.  Id. at **12-14.  Notably, the court considered some of the decisions going the other way (discussed in my prior posts), but distinguished them on the grounds that they involved reports with patent errors.

In Ocasio v. CoreLogic Credco, LLC, No. No. 14-cv-1585, 2015 U.S. Dist. LEXIS 130990 (D.N.J. Sept. 29, 2015), plaintiff Gardenia Ocasio alleged that when she applied for a loan, the lender obtained tri-merge reports from Credco which contained debts that pertained to her grandmother and not to her, and that she was unable to obtain credit for this reason.  Id. at *2.  Unlike the Baker court, the Ocasio court did not note whether all three bureaus had been reporting her grandmother’s accounts as pertaining to her, or just one or two.  Id.  

The Ocasio court found that “Plaintiff has shown the inaccuracy of this information was obvious on the face of her credit reports which reported accounts owned by individuals with different birth years (1938 vs. 1987).”  Id. at *8.  For this reason, the court rejected Credco’s argument that “its procedures were reasonable as a matter of law because it accurately complied and reported information collected from the credit bureaus.”  Id.  (The court also rejected another legal argument, which has been rejected by other courts in the past, namely that “the statutory definition of ‘reseller’ exempts resellers from the duties of consumer reporting agencies,” id. at *11).

In comparing these two decisions, the most obvious difference (besides the fact that one granted Credco’s motion for summary judgment and the other court denied it) is the fact that the Baker court did not find discrepancies between the bureau reports to be “patent errors” which made the reports “incorrect on their face,” whereas the Ocasio court did.

Does the fact that the Ocasio reports contained credit accounts belonging to people with different birthdays mean that Credco could have decided which accounts were right, and which were wrong?  The court seemed to think so.  But without looking at the Ocasio reports, which were not re-printed in the court’s opinion, it is hard to know whether to agree. Even if the bureaus reported credit accounts that belonged to people with different birthdays, it does not necessarily follow that Credco had the power to see which accounts belonged to the person born in 1938, and which to the person born in 1987.  The Ocasio court apparently thought that Credco had the ability to do this, but the opinion doesn’t say why.

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