Alert

FCRA Action Dismissed for Lack of Standing and Failure to State a Claim

August 22, 2024

In July 2024, the United States Court for the District of Massachusetts dismissed a pro se litigant’s claims against Experian Information Services LLC (Experian), TransUnion LLC (TransUnion), and Equifax Information Solutions, Inc. (Equifax) (collectively, Credit Reporting Agencies) for alleged violations of the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681 et seq.

Factual Background

In Verlus v. Experian, et. al., plaintiff alleged that the Credit Reporting Agencies had 1) failed to investigate plaintiff’s credit reports properly in violation of 15 U.S.C. § 1681i and 2) failed to follow reasonable procedures to assure that plaintiff’s credit reports contained accurate information in violation of 15 U.S.C. § 1681e(b). Specifically, plaintiff noted that another person’s account information was on his credit reports and that the Credit Reporting Agencies were reporting charged-off accounts. Plaintiff contended that the Credit Reporting Agencies’ “failure to properly investigate” his disputes caused him to be denied credit and forced him to pay higher interest rates.

The Credit Reporting Agencies collectively filed a motion to dismiss plaintiff’s amended complaint under Rule 12(b)(6).

Court’s Analysis

The court found that plaintiff’s amended complaint had failed to allege separate claims of misconduct against each of the Credit Reporting Agencies and found that plaintiff could not rely on his general, conclusory allegations that the Credit Reporting Agencies, together, had “many erroneous tradelines.” The court further found that plaintiff had failed to identify the specific tradelines in his reports that had purportedly caused him damages. Accordingly, the court concluded that because of generalizations in plaintiff’s amended complaint, the Credit Reporting Agencies had no “meaningful opportunity to mount a defense” against plaintiff’s complaints because they had “no adequate notice of their purported wrongdoing.” The court subsequently granted the motion to dismiss without prejudice. On August 5, 2024, plaintiff filed a second amended complaint. To date, none of the Credit Reporting Agencies have filed responses to the second amended complaint.

Implications for Financial Services Institutions

Financial services institutions – mortgage servicers included – may want to dissect any consumer complaint they receive to determine if the complaint meets the requisite pleading standards. More often than not, a simple motion to dismiss could save needless hours on litigation if a complaint is too barebones to give rise to adequate claims.

Our office will continue to monitor this litigation and will update this article as necessary.