Schlanger Law Group recently appealed an order dismissing a class action regarding auto leases that were erroneously reported as including balloon payments.   The CFPB and FTC  as well as numerous prominent consumer advocacy organizations filed briefs in support of our client.

The FCRA requires that credit reporting agencies such as Trans Union, are obligated to “follow reasonable procedures to assure maximum possible accuracy” of consumers’ credit information. Schlanger Law Group’s team of FCRA lawyers filed a lawsuit on behalf of a consumer who had leased a vehicle, alleging that Trans Union violated this obligation by  misreporting  the amount that she could buy the vehicle for at the end of the lease if she chose to do so – roughly $20,000 — as a balloon payment that came due at the end of her regular monthly payments.   Of course (and as our expert testified at deposition) commercially available consumer auto leases in the United States do not have balloon payments.  We argued that even if Trans Union was provided this information by the leasing company, it violated the Act by failing to have any policy or procedure in place to block it or at least flag the information as potentially inaccurate and subject to additional verification.  This was so, we contended, because the information about the lease was implausible and inconsistent with the other data Trans Union had about the account.

The District Court Ruled Against Us And We Appealed.

The District Court sided with Trans Union, ruling that so long as the CRA reports the information provided to it by the leasing company or other data furnisher, it is not liable.  In the District Court’s words, “CRAs can only be held liable for FCRA claims when the information reported does not match the information furnished.” The District Court also ruled that the error in question was a “legal dispute” regarding “the debt’s legal validity” and that “legal disputes” could not form the basis of an FCRA claim against a credit reporting agency. We appealed and, working with one of the nation’s leading appellate firms, Gupta Wessler, filed a brief arguing that that the District Court’s decision was incorrect, inconsistent with the plain text and purpose of the FCRA, and inconsistent with guidance from regulators regarding the credit reporting agencies obligation to create procedures designed to screen out implausible information. We also argued that the FCRA does not distinguish between legal and factual errors, and that CRAs are not relieved of their obligations under the FCRA when they simply parrot the information provided by creditors.

The CFPB And FTC File A Joint Amicus Brief In Support Of Plaintiff, Urging The Second Circuit To Reverse The District Court’s Decision

The Consumer Financial Protection Bureau and the Federal Trade Commission recently filed an “amicus curiae” (latin for “friend of the Court”) brief in support of our client, urging the Second Circuit to reverse the District Court’s decision. The Consumer Financial Protection Bureau (CFPB) is the government agency granted exclusive rule-writing authority and tasked with the responsibility of interpreting and enforcing the FCRA to protect consumers from Fair Credit Reporting Act violations.  The Federal Trade Commission (FTC) is the government agency charged by Congress to protect consumers from unfair and deceptive trade practices and also plays a major role in enforcing, interpreting, and implementing the FCRA.
  • The government’s brief argued that the District Court erred when it ruled that the FCRA only covered “factual” as opposed to “legal” inaccuracies. The government’s brief criticized this distinction as having no basis in the text of the FCRA and “unworkable in practice”.
  • The government’s brief also contended that the District Court erred by ruling that a consumer report is factually accurate so long as the CRA reports the information it received from a furnisher.
  • The brief also pointed out that the error at issue in our case is basic and straightforward, writing “Put simply, TransUnion erroneously reported that Sessa owed an amount she did not owe. A more basic, straightforward inaccuracy is hard to imagine.”
The FTC’s accompanying press release, titled “FTC Joins Amicus Brief Opposing Liability Shield for Sloppy Credit Reports” also pulled no punches, characterizing TU’s position as relying on “invented defenses” and stating that  “[t]he lower court’s unsupported reading could increase the number of inaccurate credit reports and result in inaccurate information about consumers being conveyed to lenders, landlords, employers, and other entities that purchase consumer reports.” Some Of The Nation’s Leading Consumer Advocacy And Legal Services Organizations Also Filed A Brief In Support Of Our Position Several prominent non-profit consumer protection groups also filed an amicus brief in support of our appeal.  These organizations included:
  • CAMBA Legal Services
  • The Connecticut Fair Housing Center
  • Consumer Action
  • The Housing Clinic of Jerome N. Frank Legal Services Organization at Yale Law School
  • Mobilization for Justice
  • The National Association of Consumer Advocates
  • The National Consumer Law Center
  • New Economy Project
  • Public Justice
  • S. PIRG (Public Interest Research Group)The non-profit organizations’ amicus brief contends that the District Court’s interpretation of the FCRA “would disincentivize CRAs from taking even the limited precautions they currently take to avoid reporting inaccurate credit. And it would have disastrous consequences for consumers, leaving them without this vital means of redress of the credit-reporting errors that may otherwise follow them for years.”
SLG is proud to report our appeal is also being championed by these heavy hitters. Our appeal is pending.  We appreciate how important the credit reporting issues before the Court are, not only to our client,  but to the hundreds of millions of Americans whose credit history is reflected on a credit report. We are optimistic that the Appellate Court will uphold the language and intent of the FCRA and reverse the district court’s ruling.

When Faced with Fair Credit Reporting Act Violations, Turn to the Dedicated Consumer Protection Lawyers at Schlanger Law Group

We are passionate about protecting consumers’ rights.  If you are facing Fair Credit Reporting Act violations from errors in your credit report or if you are a victim of identity theft and your bank or credit card company won’t reimburse you, contact us to discuss your legal rights.

Let us help you recover your financial future and regain peace of mind. Call (212) 500-6114 or fill out this simple form for a free case consultation today.