Court Rejects Summary Judgement for Debt Furnisher in Case Alleging Double Reporting of Debt

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Court Rejects Summary Judgement for Debt Furnisher in Case Alleging Double Reporting of Deb
April 1, 2023

 A federal district court based in Illinois has denied a motion for summary judgment by a creditor. This case concerns the Fair Credit Reporting Act (FCRA) and challenges the inclusion of redundant trade lines. 

According to the consumer, the report had redundant lines relating to one debt. The court’s opinion clearly illustrates the importance of accuracy, especially concerning furnishing and including material in consumer reports. In this case, the plaintiff had previously obtained the defendant’s credit card and failed to make minimum payments on the debt. As a result, the defendant referred the debt to a third-party collections agency. Later, the plaintiff obtained a copy of his report and found the debt listed twice.

The defendant furnished the first tradeline. The first tradeline labeled the debt is a revolving account in collections with a balance of approximately $10,000. The collections agency provided the second tradeline. This tradeline reported the debt as an open collections account with a more than $12,000 balance.

The plaintiff followed up with this discovery by filing a dispute with major consumer reporting agencies over the double reporting. The agencies forwarded these disputes to the furnishers. The furnishers followed standard procedures, verifying that the disputed information matched the current data in their systems. As a result, they confirmed the tradelines.

After discovery, the defendant filed a motion for summary judgment. The defendant claimed it found no issue with the accuracy of its report. Furthermore, it added that its investigations proved reasonable under the definition of Section 1681s-2(b) of the FCRA. However, the court rejected this argument. In the court’s opinion, the Seventh Circuit lacked an established precedent to determine whether redundant reporting violated the FCRA.

This stance led to a factual issue concerning double reporting debt. In this case, it could lead to the conclusion that the plaintiff held two distinct debts of more than $22,000 rather than one debt of roughly $10,000. Furthermore, the court found that the defendant’s investigation could prove unreasonable under the FCRA. As a result, the case will proceed within the district court.

As this case illustrates, furnishing or reporting consumer information with the utmost accuracy is crucial. Ensuring accuracy includes preventing potentially harmful information from redundant reporting. Partnering with an accurate employment screening provider familiar with the FCRA and other consumer reporting laws can prove crucial. The right provider can prevent unnecessary litigation and ensure employers make educated hiring decisions.

Stay updated on all the new rules of compliance with Pre-employ’s free news resources on FCRA, EEOC, and more. Contact a Sales Rep today for more information.