NACBA and NCLC Enter Fair Credit Reporting Arena

Posted by NCBRC - September 9, 2016

On September, 2, 2016, NACBA and the NCLC joined forces to file an amicus brief in a case addressing credit reporting standards under the FCRA. Abeyta v. Bank of America, No. 16-15707 (9th Cir.).

Ginny Abeyta filed for chapter 13 bankruptcy in June, 2010, and successfully completed her plan in April, 2014. In October, 2014, she requested her credit report and found that Bank of America had reported her debt as “past due” as of July, 2010, and in “major delinquency” as of August, 2010. There was no mention of her successful chapter 13 bankruptcy. She requested reinvestigation of the debt and the new credit report contained the same inaccuracies.

She then filed suit against Bank of America as the “furnisher” of inaccurate information alleging violation of the Fair Credit Reporting Act (FCRA), 15 U.S.C. 1681–1681x. In dismissing Ms. Abeyta’s complaint, the district court found the reported information to be “technically correct” and therefore not actionable under the FCRA.

In the amicus brief, NACBA and the NCLC argue that the information reported by Bank of America was misleading and, therefore inaccurate, because it made no mention of the bankruptcy and failed to list the current amount owed on the debt as “zero.” Section 1681-s-2(b) of the FCRA mandates that a furnisher of information to a CRA correct inaccuracies upon notification of those errors by the debtor.

In the brief, amici argue that Bank of America failed to adhere to direction by the Federal Trade Commission which established guidelines for interpretation of the FCRA under which “CRAs [must] report a zero balance to reflect that a consumer is no longer liable for debt discharged under a bankruptcy filing.”

The brief also argues that Bank of America failed to comply with industry standards set forth by the Consumer Data Industry Association’s (“CDIA”) Metro 2® Format. Like the FTC guidelines, under the Metro 2® Format, a debt that has been discharged in bankruptcy should be listed with a current balance of zero, current monthly payments of zero and amount past due of zero. While the reporting format provided by Metro 2® is not legally binding, it has been widely accepted within the credit reporting industry by CRAs, major creditors and debt collectors as setting out the appropriate reporting standards. Failure to conform to the guidelines may be considered by courts addressing FCRA compliance. In this case, Bank of America failed to comply with the Metro 2® Format directives and failed to correct the inaccurate reporting after reinvestigation.

The brief takes issue with the district court’s finding that Bank of America is not liable under the FCRA because, in fact, the debt had not been paid and, therefore, the information Bank of America provided was “technically accurate.” Amici argue that a “report can be ‘inaccurate’ if it is either ‘patently inaccurate’ or ‘because it is misleading to such an extent that it can be expected to adversely affect credit decisions.’” Moreover, furnishers of information to the CRA, as the entities with best access to accurate information, are held to a higher standard of accuracy than the CRA. Here, the report indicates that Ms. Abeyta was liable on a debt that had, in fact, been discharged. Therefore, the information provided by Bank of America was inaccurate. By turning a blind eye to the misleading credit report, the district court undermined the fresh start Ms. Abeyta had earned by successfully completing her plan.

The brief argues that it was the province of the finder of fact to determine whether the information Bank of America provided to the CRA was accurate.

Thanks go out to Joshana McVeigh for authoring the brief.

Abeyta NACBA Amicus Sept 2016


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