Fair Credit Reporting Act (“FCRA”) plaintiffs learned a hard lesson in procedure recently when the Second Circuit Court of Appeals affirmed the dismissal of their claim because they (presumably) failed to follow the notification process required by 15 U.S.C. § 1681s-2(b), which foreclosed their private right of action.

The case is Sprague v. Salisbury Bank & Trust Co., No. 19-3241, 2020 WL 4577169, (2d Cir. Aug. 10, 2020). The facts are straightforward and were not in dispute. In 2014, Salisbury Bank and Trust foreclosed on a mortgage taken out some years before by Plaintiffs Robert Sprague and Robin Zeigler. In 2016 the Plaintiffs checked their credit report and found the mortgage was still reported as open and delinquent for over two years. At this point, rather than notifying any of the credit reporting agencies, they notified Salisbury directly. Salisbury acknowledged the error in March of 2016 and promised to correct it, but did not do so until more than eight months later.

Plaintiffs filed a complaint alleging that Salisbury violated FCRA by failing to correct errors in the information it reported to the CRAs. Plaintiffs failed, however, to specify which provision of FCRA supported their claim. After one amendment and multiple extensions of time to further amend, the district court dismissed the case for failure to state a claim.

The FCRA establishes two separate categories of duties for furnishers (entities who provide information about consumers to CRAs): § 1681s-2(a) spells out a furnisher’s duty to refrain from knowingly providing inaccurate information, while § 1681s-2(b) requires furnishers to investigate disputes and correct inaccuracies in the data they report. Importantly, the furnisher’s duty to investigate under § 1681s-2(b) is only triggered when the furnisher is notified by a CRA that a consumer has disputed certain information. Section 1681s-2(b) is also the only provision in § 1681s-2 that includes a private right of action. The statute leaves it to federal and state authorities to enforce the broader expectations under § 1681s-2(a).

The problem with Plaintiffs’ case was simple: Because they did not dispute their credit reporting through a CRA, they could not state a claim, even though Salisbury acknowledged that it had reported inaccurate information. In its decision, the Court correctly pointed out that even if Salisbury’s reporting had violated § 1681s-2(a), the Plaintiffs could not bring a private claim under that section of the law.