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The Fair Credit Reporting Act – When Deleted Information Re-Appears

On Behalf of | Jan 8, 2013 | Consumer Protection

Under the Fair Credit Reporting Act (“FCRA”)the credit reporting agencies (“CRA”) are required to follow “reasonable procedures to assure maximum possible accuracy of the information” in reporting consumer information.”  15 U.S.C. 1681e(b).  What this means is credit bureaus must report accurate information on its consumers and if notified that information may be inaccurate, must conduct an investigation into the claimed inaccuracy and report back to the consumer with the results of the investigation.  Should a CRA agree to delete inaccurate information, under the law it has a duty to notify the consumer if it intends to re-insert the information at a later date, however at least one Court has decided that this notice is not always necessary and not always considered an automatic violation under the statute.

The root of this duty to provide notice of a CRA’s intent to re-insert previously deleted information comes from the 1983 case Morris v. Credit Bureau of Cincinnati, 563 F. Supp. 962 (S.D. Ohio 1983).  In Morris, the plaintiff married a woman who had filed for bankruptcy prior to the marriage.  At a later date, when the plaintiff filed a credit application, he was denied based on a bankruptcy reporting on his credit file.  After reviewing his report, the plaintiff discovered his wife’s premarital accounts were reporting on his credit file, despite the fact they were not his and he had never filed for bankruptcy.  The plaintiff disputed the account information and it was deleted from his report pursuant to the FCRA.  Sometime later, when plaintiff applied for credit he was again denied based on the fact the bankruptcy notation was in fact still attached to his file under a name associated with the plaintiff, but one he did not use.  The plaintiff filed suit pursuant to the FCRA against Credit Bureau of Cincinnati based on the fact it failed to follow all reasonable procedures to assure maximum possible accuracy of the information when it failed to delete the bankruptcy notation in its entirety after already agreeing to its deletion.  The plaintiff argued the defendant needed to provide him with notice of its intent to re-report the bankruptcy and success in making this argument.

In 1993 the 5th Circuit followed the Morris opinion and even went so far to argue re-insertion of previous information may be considered an automatic violation.  In Stevenson v. TRW, Inc., the court held “[a]llowing inaccurate information back onto a credit report after deleting it because it is inaccurate is negligent” 987 F.2d 288, and this negligence is considered a violation of 15 U.S.C. 1681e(b).

Contrary to that opinion, in 2005, a Wisconsin court decided to buck the trend of the automatic violation standard and held in Anderson v. Trans Union that re-insertion may not necessarily rise to a level of negligent conduct in violation of 15 USC §1681e(b).   In Anderson the plaintiff notified his bank that his street name had changed and when the bank employee reported the information on his account the information mistakenly began reporting the plaintiff as deceased.  367 F. Supp. 2d 1225 (W.D. Wisc. 2005).  The plaintiff notified the defendant of the inaccuracy and the credit reporting agency used a procedure it had in place to delete the deceased notation on the account. However, later when the bank changed the credit card from Mastercard to Visa the account again reported the deceased notation causing the plaintiff to be denied credit at a later date.  When the plaintiff filed suit alleging a violation of 15 U.S.C. 1681e(b), the court held that,  “[th]e Act does not impose such requirements [as automatic violation for re-insertion].  Its goal is to have consumer reports that are fair and accurate; it does not demand perfection from an industry that deals in billions of pieces of information.” 367 F. Supp. 2d 1225 (W.D. Wisc. 2005).

The lesson to be learned from this dichotomy of opinions is don’t assume an automatic violation has occurred in the event of re-insertion and protect yourself pursuant to the FCRA by making a clear dispute to the credit reporting agencies in writing with supporting documents.  If you believe you have a situation in which your rights have been violation pursuant to the Fair Credit Reporting Act, contact SmithMarco P.C. for a free case review.