The Seventh Circuit recently affirmed judgment in favor of the national consumer reporting agencies (“CRAs”), rejecting a plaintiff’s attempt to impose Fair Credit Reporting Act liability upon the CRAs for reporting information the furnisher had verified as accurate.  This case represents a significant victory for CRAs facing collateral attacks of the accuracy of the accounts they report. 

The case is Humphrey v. Trans Union, LLC, et al.  A copy of the opinion can be found here. 

Plaintiff Ian Humphrey never made payments on his federal student loans, which were serviced by Navient and became due in 2011.  Instead, he submitted multiple disability-discharge applications, but each application was deficient, and the debt was not discharged.  Accordingly, Navient continued to report his account as past due.  Finally, in July 2014, Humphrey’s loans were discharged, but his credit reports continued to reflect the past nonpayment periods.  

Humphrey then submitted disputes (on many grounds) with the CRAs, who then sent Navient Automated Credit Dispute Verifications (“ACDVs”).  Each time, Navient confirmed to the CRAs the information was accurate.  Humphrey’s suit against the CRAs alleged violations of FCRA § 1681e(b) for inaccurate reporting and of § 1681i for an unreasonable reinvestigation.  Navient was also named in the suit.  The district court granted the CRAs’ joint motion for judgment on the pleadings.   

In affirming the district court’s decision, the Seventh Circuit flatly rejected Humphrey’s argument that the CRAs could face liability under the FCRA by continuing to report the debt even though he claimed he had no obligations to make payments while his disability-discharge application was pending.  The court first noted that §1681e(b) and § 1681i claims both require the consumer to “sufficiently allege that his credit report contains inaccurate information.”   

In finding Humphrey had not alleged a factual inaccuracy, the Court confirmed the importance of the distinction between factual and legal inaccuracies.  The inaccuracy alleged by Humphrey relating to his requirement to make payments “required a legal determination about whether his disability-discharge applications required Navient to cease collections” and, therefore, did not constitute a legal inaccuracy. 

Like other courts before it, the Seventh Circuit recognized that an attack on the validity of a debt is not the CRAs fight to fight, ruling “a consumer may not use the Fair Credit Reporting Act to collaterally attack the validity of a debt by challenging a CRAs reinvestigation procedure.” This sound reasoning demonstrates why these collateral attacks should fail.  The Court noted that “Navient was in a better position than the CRAs” to make the legal determination regarding Humphrey’s loan obligations.  Additionally, because the CRAs had properly contacted Navient to verify the loans, the reinvestigations were reasonable, as “CRAs are not a tribunal sitting to resolve legal disputes.”  Indeed, no reasonable reinvestigation by the CRAs could have resolved the question because it “was a legal question beyond the scope of a reasonable reinvestigation.”   

Like here, CRAs often face lawsuits wherein the plaintiff attacks the validity of the underlying debt under the guise of challenging the accuracy of the CRA’s reporting.  The Seventh Circuit’s decision provides helpful support to CRAs facing these types of suits.