Earlier this month, the United States District Court for the District of Minnesota granted a national credit reporting agency’s motion for judgment on the pleadings, holding that it was not obligated under the Fair Credit Reporting Act to report all tradelines contained in a consumer’s credit file.
In this case, plaintiff Troy Krosch alleged that a national CRA violated Sections 1681e(b) and 1681i of the FCRA by allegedly reporting inaccurate information and failing to reasonably investigate the accuracy of the information it reported. Specifically, Krosch claimed that the CRA failed to include his mortgage loan account on his credit report, which purportedly would have included his positive payment history. Krosch alleged he disputed the reporting to the CRA but, in response, the CRA did not conduct a reasonable investigation and was unable to honor his request to include his mortgage loan account on his credit report.
The CRA filed a motion for judgment on the pleadings, arguing that Krosch had failed to plausibly allege a cause of action under the FCRA, which the Court granted and dismissed the complaint without prejudice.
Pursuant to Section 1681e(b) of the FCRA, a CRA must follow reasonable procedures to assure maximum possible accuracy of credit information. In order to prove that a CRA fell short of the FCRA’s accuracy standard, the Court stated that a plaintiff must plausibly allege that the CRA reported inaccurate credit information and failed to follow reasonable procedures to assure the accuracy of his credit report. The CRA argued that the complaint failed to plausibly allege either element because the FCRA does not require CRAs to report every account or tradeline of a consumer, only that the information contained in a credit report must be accurate.
While the Court agreed with the CRA and, surprisingly, Krosch did not challenge its assertion. Instead, Krosch argued that the CRA had reported credit inquiries made by his mortgage lender and that by failing to include his mortgage loan account, the CRA rendered his credit report “misleading” and, thus, inaccurate pursuant to the FCRA standard. In rejecting Krosch’s argument, the Court held, “A credit report is not inaccurate or materially misleading simply because it does not mention a particular tradeline.” Further, Krosch had failed to allege any facts in his complaint related to the credit inquiries made by his mortgage lender. Accordingly, the Court held that Krosch’s complaint failed to allege any facts that would support a plausible inference that the information reported by the CRA was materially misleading under the FCRA.
Next, the Court stated that in order for Krosch to prevail on his Section 1681i claim, he was required to “(1) point to an item of information contained in the [Defendant’s] file and (2) prove that the item of information is inaccurate.” Like his Section 1681e(b) claim, Plaintiff’s Section 1681i claim was based on Defendant’s alleged failure to include his mortgage loan account on his credit report. As it did with Krosch’s Section 1681e(b) claim, the Court held that “failure to allege the existence of an inaccuracy triggering [Defendant’s] obligations disposes of his § 1681i claim.” Accordingly, the Court held that the CRA could not be held liable for failing to conduct a reasonable investigation into the accuracy of information it never had.
This decision provides an important reminder for national CRAs. While information included on a consumer credit report must be complete and accurate, not all accounts on which information is furnished must be included on a consumer report. Considering how the FCRA does not impose a duty on CRAs to include all accounts furnished to it, CRAs should be cognizant of the accuracy of the information being furnished and whether the furnisher’s system for determining the accuracy of that information complies with the CRA’s own system.