A New Jersey district court allowed a Fair Credit Reporting Act claim past the pleading stage, denying the defendant credit reporting agency’s motion for judgment on the pleadings despite its claims that the plaintiff failed to plead facts sufficient to establish a claim under the FCRA because the alleged information reported was, in fact, accurate.

The action centered on the credit reporting agency’s (or CRA’s) reporting of a mortgage for a home that was jointly owned by plaintiff Marina Radley and her ex-husband.  Following dissolution of the marriage in 2013, Radley and her ex-husband entered into an agreement whereby the ex-husband took ownership of the home and would indemnify her against liability for mortgage payments.  Radley thereafter had no ownership interest in the property.  Defendant Equifax Information Services LLC continued to report the mortgage on her credit reports, which Radley thereafter disputed.  At issue was whether Radley had alleged sufficient grounds to plead a FCRA violation where the alleged inaccurate information reported by Equifax was technically correct but may nevertheless be “inaccurate” pursuant to the FCRA.

The Court agreed with Radley’s contention that, at the pleading stage, she does not have to prove that the reported information is, in fact, inaccurate.  Under 15 U.S.C § 1681e(b), a CRA “shall follow reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom” a report relates.  “Maximum possible accuracy” signifies that a report may be inaccurate not only when it is patently incorrect, but when it is misleading in such a way and to such an extent that it can be expected to have an adverse effect.  Accordingly, a consumer report that contains technically accurate information may be deemed “inaccurate” if the statement is presented in such a way that it creates a misleading impression.

On these grounds, the Court found that Radley was not required to prove that the reported information was in fact inaccurate at the pleading stage.  Rather, because she alleged that the reported information was the responsibility of her ex-husband, she had set forth facts sufficient to support her contention that the reported information was misleading, or otherwise not as complete as it could have been.  Therefore, whether the information was “inaccurate” under the FCRA was a question of fact, and Equifax was not entitled to judgment on the pleadings.

The New Jersey District Court decision confirms CRAs’ duties to not only report accurate information, but also to avoid reporting information that creates a misleading impression.  We will continue to monitor and report on developments involving the responsibilities of CRAs, furnishers, and users under the FCRA.