In Green v. Innovis Data Solutions, Inc., 2021 US Dist LEXIS 176996 (N.D. Tex. Sep. 17, 2021), the plaintiff filed suit against Innovis Data Solutions (“Defendant”) and other entities arising out of Defendant’s conduct (or lack thereof) relating to Plaintiff’s tradeline with a financial institution as reported on Plaintiff’s consumer report, and alleges that Defendant violated 15 U.S.C. § 1681e(b) and 1681(i). Read on to learn more.

Plaintiff secured a mortgage for a piece of property located in Florida. The original mortgage was secured with a bank and then the mortgage was subsequently acquired by a third-party financial institution in 2006. In 2018, Plaintiff missed a mortgage payment, resulting in his account falling into delinquency. In response, the financial institution approved Plaintiff for a loan modification in September 2018. When November 2019 came around, Plaintiff obtained his credit report where he contends that there were some inaccuracies—including several late payments between January and July 2018. Plaintiff followed up by sending Defendant a dispute letter contending he “may have missed one payment, if that.” Plaintiff also requested Defendant “reinvestigate[]” his tradeline and report, “in the interim” that the account is “in dispute.”

Defendant responded to Plaintiff’s letter and included an updated credit report reflecting its removal of Plaintiff’s account with the financial institution. Defendant maintains that it contacted the financial institution regarding the dispute, but the financial institution verified the information it reported to Defendant regarding Plaintiff’s account delinquency. In response, Defendant deleted Plaintiff’s entire tradeline.

Plaintiff brought this suit against Defendant alleging it violated 15 U.S.C. § 1681e(b) and 1681(i). Defendant contends that these claims should be dismissed because it was authorized by the FCRA, as a matter of law, to delete.

How does the story end? Let’s discuss the law first.

As a reminder, the purpose of the FCRA is “to ensure fair and accurate credit reporting that protects consumers while meeting the needs of commerce.” For the Defendant to defeat a motion to dismiss under 1681e(b) a plaintiff must allege facts to show the court that:

  1. Inaccurate information was included on a credit report;
  2. Inaccuracy was due to the failure to follow reasonable procedures to assure maximum possible   accuracy;
  3. Injury was suffered; and
  4. Injury was caused by the inclusion of the inaccurate information.

The Court determined that Plaintiff alleged facts sufficient to show that there were inaccuracies on his credit report, meeting the first prong of the above test. However, Plaintiff did not allege facts to support his allegation that the inaccuracy on his disputed November 2019 credit report resulted from Defendant’s failure to follow reasonable procedures. Conversely, Plaintiff relied on statements that Defendant “knew or should have known,” and that “Plaintiff’s account status and payment history were inaccurate.” This is simply not enough to show that Defendant’s inaccuracy was due to itsfailure to follow reasonable procedures.

In addition, Plaintiff did not allege any facts to support his injury claims. Instead, Plaintiff alleged that he “suffered damages, including . . . denial attempts to refinance, loss in ability to finance goods, loss of credit, loss of ability to purchase and benefit from a credit, and suffering the mental and emotional pain, anguish, humiliation and embarrassment of credit denials.” Again, this is simply not enough. In short, Plaintiff has not alleged facts from which the court can reasonably infer Defendant violated Plaintiff’s rights pursuant to 1681e(b).

Plaintiff also claims that Defendant violated 15 U.S.C. § 1681i when it failed to reinvestigate and update Plaintiff’s credit report after he notified Defendant of the dispute. For the Defendant to defeat a motion to dismiss under 1681i, a plaintiff must allege facts to show the court that:

  1. [plaintiff] disputed the completeness or accuracy of an item of information contained in his consumer file and notified [defendant] directly of that dispute;
  2. [defendant] did not reinvestigate free of charge and either record the current status of the disputed information or delete the item from the file in the manner prescribed by Section 1681i(a)(5) within the statutory period;
  3. [defendant’s] noncompliance was negligent or willful;
  4. [plaintiff] suffered injury; and
  5. [plaintiff’s] injury was caused by [defendant’s] failure to reinvestigate and record the current status of the disputed information or delete the item from the file.

It is undisputed that Plaintiff sent Defendant a letter disputing the information about his account—meeting the first prong of the above test. Plaintiff, however, failed to allege facts sufficient to meet the remaining prongs of the above test. Plaintiff only alleged that Defendant “fail[ed] to conduct a lawful reinvestigation,” but he does not allege adequate facts to support this allegation. The Court indicates “[on] its own, this statement is conclusory.”

In addition, Plaintiff has not set forth sufficient allegations that Defendant (1) failed to comply with Section 1681i(a)(5) when it deleted his account or (2) that any noncompliance on Defendant’s behalf was negligent or willful. Further, Plaintiff has not alleged how the deletion of a tradeline reflecting missed payments and delinquency has caused him injury. Thus, the Court held that Plaintiff’s pleadings fail to allege that Defendant violated Section 1681i of the FCRA.