In Hassel v. Centric Bank, et al., the United States District Court for the Middle District of Pennsylvania granted a furnisher’s motion to dismiss claims brought under Sections 1681i and 1681s-2(b) of the Fair Credit Reporting Act. In doing so, the Court reinforced the pleading standard for FCRA claims against data furnishers by requiring a plaintiff to plausibly allege a factual inaccuracy in the furnisher’s report. In addition, the Court provided a playbook for furnishers that, if followed, could result in effective and efficient dismissal of FCRA reasonable investigation claims.
In October 2019, Nathan S. Hassel discovered that Centric Bank (“Centric”) allegedly reported his mortgage payment as 30 days delinquent, allegedly causing a decrease to his credit worthiness. Believing it was his September 2019 payment that was late, Hassel disputed the alleged inaccurate reporting to Centric and directly to a consumer reporting agency (“CRA”). Hassel included evidence showing that his September 2019 payment had been made on time. In a written response, Centric informed Hassel that it was his August 2019 payment that was past due, not the September payment. Further, Centric advised Hassel that a payment made on August 26, 2019, had been returned due to insufficient funds and was not satisfied until September 10, 2019.
In his complaint, Hassel alleged that Centric violated Sections 1681i and 1681s-2(b) of the FCRA by erroneously reporting his mortgage payment as 30 days delinquent, failing to conduct a reasonable investigation into his dispute, and failing to provide an explanation of the dispute process or investigation results.
In response, Centric filed a motion to dismiss arguing that Section 1681i did not apply to furnishers and that Hassel failed to plead facts that would entitle him to relief under Section 1681s-2(b). Centric argued it did not fit the definition of a CRA and, as further evidence, directed the Court to Hassel’s complaint where he alleged Centric was a “furnisher” as set forth in the FCRA. The Court agreed and held that Section 1681i applied exclusively to CRAs and that Centric was not a CRA as it was not “in the business of assembling and evaluating consumer credit information.” Accordingly, the Court dismissed Hassel’s Section 1681i claim against Centric with prejudice.
Nevertheless, the Court stated that Centric had an obligation to Hassel under Section 1681s-2(b) to conduct a reasonable investigation and to rectify any inaccurate information. Centric argued that Hassel failed to state a claim under Section 1681s-2(b) because the October 2019 communications that were attached as exhibits to his complaint demonstrated that the late payment issue was adequately investigated and communicated to Hassel, eliminating any argument that the reporting was factually inaccurate.
Relying on the exhibits, the Court found ample evidence that the information furnished by Centric was accurate and that accuracy was communicated to Hassel in writing on October 16, 2019. The Court held that the exhibits proved accurate reporting and that Hassel was merely mistaken about which month’s payment was at issue. The Court declined to require more from Centric under Section 1681s-2(b), stating that it would be “absurd to require a furnisher to continue its investigation after the information at issue is proven accurate and the accuracy is communicated to the consumer.” Accordingly, the Court held that Hassel had failed to plausibly plead a factual inaccuracy and dismissed his Section 1681s-2(b) claim with prejudice. The Court also denied Hassel’s request for leave to amend his complaint, stating that based on the October 2019 letter, further amendment would be futile.
In granting Centric’s motion to dismiss, the Court reinforced the standard requiring plaintiffs to plausibly plead a factual inaccuracy in order to sustain a claim under Section 1681s-2(b) of the FCRA. In addition, the Court’s decision demonstrates the effectiveness of a proactive approach to defending FCRA lawsuits against furnishers and the appropriate use of early dispositive motions in resolving claims based on factually accurate reporting.