The Fair Credit Reporting Act – When Deleted Information Re-Appears

Under the Fair
Credit Reporting Act (“FCRA”)
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credit reporting agencies (“CRA”) are required to follow
“reasonable procedures to assure maximum possible accuracy of the
information” in reporting consumer information.”  15 U.S.C.
1681e(b).  What this means is
credit bureaus
must report accurate information on its
consumers and if notified that information may be inaccurate, must
conduct an investigation into the claimed inaccuracy and report
back to the consumer with the results of the investigation. 
Should a CRA agree to delete inaccurate information, under the law
it has a duty to notify the consumer if it intends to re-insert the
information at a later date, however at least one Court has decided
that this notice is not always necessary and not always considered
an automatic violation under the statute.

The root of this duty to provide notice of a CRA’s intent to
re-insert previously deleted information comes from the 1983 case
Morris v. Credit Bureau of Cincinnati, 563 F. Supp. 962 (S.D. Ohio
1983).  In Morris, the plaintiff married a woman who had filed
for bankruptcy prior to the marriage.  At a later date, when
the plaintiff filed a credit application, he was denied based on a
bankruptcy reporting on his credit file.  After reviewing his
report, the plaintiff discovered his wife’s premarital accounts
were reporting on his credit file, despite the fact they were not
his and he had never filed for bankruptcy.  The plaintiff
disputed the account information and it was deleted from his report
pursuant to the FCRA.  Sometime later, when plaintiff applied
for credit he was again denied based on the fact the bankruptcy
notation was in fact still attached to his file under a name
associated with the plaintiff, but one he did not use.  The
plaintiff filed suit pursuant to the FCRA against Credit Bureau of
Cincinnati based on the fact it failed to follow all reasonable
procedures to assure maximum possible accuracy of the information
when it failed to delete the bankruptcy notation in its entirety
after already agreeing to its deletion.  The plaintiff argued
the defendant needed to provide him with notice of its intent to
re-report the bankruptcy and success in making this
argument.   

In 1993 the 5th Circuit followed the Morris opinion and even
went so far to argue re-insertion of previous information may be
considered an automatic violation.  In Stevenson v. TRW, Inc.,
the court held “[a]llowing inaccurate information back onto a
credit report after deleting it because it is inaccurate is
negligent” 987 F.2d 288, and this negligence is considered a
violation of 15 U.S.C. 1681e(b). 

Contrary to that opinion, in 2005, a Wisconsin court decided to
buck the trend of the automatic violation standard and held in
Anderson v. Trans Union that re-insertion may not necessarily rise
to a level of negligent conduct in violation of 15 USC
§1681e(b).   In Anderson the plaintiff notified his bank
that his street name had changed and when the bank employee
reported the information on his account the information mistakenly
began reporting the plaintiff as deceased.  367 F. Supp. 2d
1225 (W.D. Wisc. 2005).  The plaintiff notified the defendant
of the inaccuracy and the credit reporting agency used a procedure
it had in place to delete the deceased notation on the account.
However, later when the bank changed the credit card from
Mastercard to Visa the account again reported the deceased notation
causing the plaintiff to be denied credit at a later date. 
When the plaintiff filed suit alleging a violation of 15 U.S.C.
1681e(b), the court held that,  “[th]e Act does not impose
such requirements [as automatic violation for re-insertion]. 
Its goal is to have consumer reports that are fair and accurate; it
does not demand perfection from an industry that deals in billions
of pieces of information.” 367 F. Supp. 2d 1225 (W.D. Wisc.
2005). 

The lesson to be learned from this dichotomy of opinions is
don’t assume an automatic violation has occurred in the event of
re-insertion and protect yourself pursuant to the FCRA by making a
clear dispute to the credit
reporting agencies
in writing with supporting documents. 
If you believe you have a situation in which your rights have been
violation pursuant to the Fair Credit Reporting Act, contact SmithMarco P.C. for a free case review