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Eleventh Circuit Affirms Dismissal of Attempted FCRA Class Action Against Furnisher of Consumer Information

Last month, the Eleventh Circuit affirmed the dismissal of a putative class action suit alleging violations of the Fair Credit Reporting Act thereby delivering an important victory to lenders and other entities that provide consumer information to credit reporting agencies. Under the FCRA, “furnishers” of consumer information are prohibited from providing inaccurate information to credit reporting agencies (“CRAs”) and must investigate when a consumer disputes such information.  In Hunt v. JP Morgan Chase Bank, Nat’l Ass’n, Case No. 18-11306, 2019 WL 1873419 (11th Cir. Apr. 25, 2019) (unpublished), a united panel held (in an unpublished opinion) that JP Morgan Chase had not violated its duties as a furnisher under the FCRA when it reported that a customer’s account was past due.  Not only was such information accurate when it was provided, but the bank was never even required to investigate its accuracy because the plaintiff’s complaint did not allege that JP Morgan received notice that he disputed the information with the CRAs. The Court did not decide, however, whether JP Morgan had an obligation to “refresh” information it had previously provided.

Hunt’s lawsuit stemmed from a mortgage loan he obtained from JP Morgan.  In December 2012, Hunt began missing payments on the loan. By May 2013, JP Morgan began reporting to the CRAs that Hunt’s account was past due and filed an eventually-successful foreclosure suit.  In March 2015, the bank closed Hunt’s account after transferring it to another lender. Two months later, Hunt paid the foreclosure judgment.  In 2017, Hunt found that his credit reports reflected that, between May 2013 and February 2015,  JP Morgan had informed the CRAs that Hunt’s account was 120 days past due.  Hunt disputed this information to the CRAs. After an update, the reports still showed the account as past due.  Hunt subsequently filed his putative class action against JP Morgan, alleging the bank had failed its duty to investigate under the FCRA in two ways.  First, Hunt alleged JP Morgan had inaccurately reported to the CRAs that his account was past due; according to Hunt, the filing of the foreclosure suit in 2013 relieved him of any obligation to make monthly mortgage payments.  Second, Hunt alleged that JP Morgan had failed to accurately report to the CRAs that he had fully satisfied his obligations on the loan by paying the foreclosure judgment.

Under the FCRA, consumers may only sue a furnisher if they can show a factual inaccuracy, not a disputed legal question.

The trial court granted JP Morgan’s motion to dismiss and the Eleventh Circuit affirmed. First, the court found that JP Morgan had provided accurate information to the CRAs when it described Hunt’s account as 120 days past due between May 2013 and March 2015.  The court was “unconvinced” that the filing of the foreclosure suit relieved Hunt from making monthly mortgage payments. However, even if Hunt’s argument were successful, his FCRA claim would still fail.  Under the FCRA, consumers may only sue a furnisher if they can show a factual inaccuracy, not a disputed legal question. Because whether Hunt was obligated to continue payments after the filing of the foreclosure suit was a currently unresolved legal question, not a factual one, it was insufficient to state a claim under the FCRA.

Second, the Eleventh Circuit concluded that JP Morgan’s alleged failure to inform the CRAs that Hunt had paid the foreclosure judgment did not give rise to an FCRA claim.  While the Court declined to decide whether JP Morgan had an obligation to update the CRAs regarding the satisfaction of the judgment, Hunt’s complaint only alleged violations of JP Morgan’s investigative duties.  Hunt never alleged that JP Morgan was notified of a dispute of the account’s 2017 past-due status; indeed, Hunt never even alleged that he contacted the CRAs to dispute the 2017 status.  Because JP Morgan had no notice from the CRAs that Hunt disputed the 2017 past-due status of the account on his credit report, the court held that JP Morgan had “no obligation” to investigate.

The Court declined to decide whether JP Morgan was required to “refresh” information previously provided.

The court’s dismissal of Hunt’s suit should benefit lenders operating in the Eleventh Circuit.  Though unpublished, Hunt is persuasive authority that a furnisher can report a mortgage loan account as past due even though a foreclosure lawsuit has been filed. Furthermore, lenders and other furnishers will not face liability under the FCRA for failure to investigate unless they are contacted regarding the disputed information.  However, the court notably did not answer whether a furnisher is obligated to refresh the information it has previously provided to CRAs.  Accordingly, lenders should continue to approach their FCRA investigative duties seriously and pay particular attention to the status of accounts undergoing litigation.