In Carvalho v. Equifax Information Services, LLC, — F.3d — 2010 WL 3239477 (9th Cir. 2010), the Court of Appeals for the Ninth Circuit confirmed FCRA pre-emption of California’s CCRAA — except Civil Code 1785.25(a). The Court of Appeals explained:
Because the private right of action to enforce section 1785.25(a) is found in sections 1785.25(g) and 1785.31, which are not expressly saved from preemption under the FCRA, some courts have held that FCRA preempts private consumer actions against furnishers under California law. See, e.g., Lin v. Universal Card Servs. Corp., 238 F.Supp.2d 1147, 1152-53 (N.D.Cal.2002)). However, we recently rejected this view in Gorman v. Wolpoff & Abramson, LLP, 584 F.3d 1147 (9th Cir.2009). There, we concluded that the provisions creating a private right of action do not constitute a “requirement or prohibition” within the meaning of 15 U.S.C. § 1681t(b)(1)(F) because they merely provide a vehicle for enforcing actual requirements or prohibitions. Id. at 1170-71. Moreover, we concluded that it was highly unlikely that Congress “explicitly retained the portions of the California statutory scheme that create obligations, without leaving in place any enforcement mechanism.” Id. at 1170. Therefore, we held that “the private right of action to enforce California Civil Code section 1785.25(a) is not preempted by the FCRA.” Id. at 1173. . . . ¶ We are left with Carvalho’s claim of inadequate investigation. California Civil Code § 1785.25(f) requires furnishers who receive notice of a dispute to complete an investigation and to review relevant information. Section 1785.25(f), however, is not expressly saved from preemption by the FCRA. Gorman holds only that the FCRA does not preempt section 1785.25(a) claims against furnishers. See 584 F.3d at 1173. Because section 1785.25(a) is the only substantive CCRAA furnisher provision specifically saved by the FCRA, Carvalho’s section 1785.25(f) claim is preempted. Therefore, we discern no reason to disturb the order sustaining the demurrer without leave to amend.
As to Plaintiff’s claim that the CRA failed to properly re-investigate the claim – or to evaluate that the Plaintiff might have had a legal defense to the debt, the Court of Appeals explained:
Although the FCRA’s reinvestigation provision, 15 U.S.C. § 1681i, does not on its face require that an actual inaccuracy exist for a plaintiff to state a claim, many courts, including our own, have imposed such a requirement. See DeAndrade v. Trans Union LLC, 523 F.3d 61, 67 (1st Cir.2008) (collecting cases). In Dennis v. BEH-1, LLC, 520 F.3d 1066 (9th Cir.2008), we held that a plaintiff filing suit under section 1681i must make a “prima facie showing of inaccurate reporting.” Id. at 1069. The inaccuracy requirement comports with the purpose of the FCRA, which is “to protect consumers from the transmission of inaccurate information about them .” Gorman, 584 F.3d at 1157 (internal quotation marks omitted). Because we believe California courts would find Dennis persuasive, we conclude that unless Carvalho has raised a genuine issue as to whether the disputed item was inaccurate, her CCRAA section 1785.16 claims fail as a matter of law. ¶ In Dennis, we did not define what constitutes an inaccurate report. Later, in Gorman, we explained that an item on a credit report can be “incomplete or inaccurate” within the meaning of the FCRA’s furnisher investigation provision, 15 U.S.C. § 1681s-2(b)(1)(D), “because it is patently incorrect, or because it is misleading in such a way and to such an extent that it can be expected to adversely affect credit decisions.” 584 F.3d at 1163 (internal quotation marks omitted). The California Court of Appeal has expounded a very similar concept of inaccuracy in the context of FCRA and CCRAA provisions requiring that credit reporting agencies adopt procedures to assure the “maximum possible accuracy” of credit reports. See 15 U.S.C. § 1681e(b); Cal. Civ.Code § 1785.14(b). For example, in Cisneros v. U.D. Registry, Inc ., 46 Cal.Rptr.2d 233 (Ct.App.1995), the court concluded that “a report violates the[se] statutes when it is misleading or incomplete, even if it is technically accurate.” Id. at 254. . . . ¶ Carvalho’s credit reports reflected a CCS collection account with $118 past due. Carvalho does not contend that the CCS collection account does not pertain to her, that the amount past due is too high or low, or that any of the listed dates are wrong. Indeed, she concedes that “[a]ll the data that shows in my credit report is correct” on its face. Because all of the relevant facts were correctly reported, there was no patent error in Carvalho’s credit report. ¶ Carvalho’s claimed inaccuracy, however, is latent. She contends that even if technically accurate, the CCS item was misleading because she was not legally obligated to pay the Bayside bill until Bayside had properly billed her insurer, as allegedly required by the Agreement, and potential creditors would mistakenly assume from the erogatory item that she is uncreditworthy. . . . ¶ We agree that reinvestigation claims are not the proper vehicle for collaterally attacking the legal validity of consumer debts. “With respect to the accuracy of disputed information, the CRA is a third party, lacking any direct relationship with the consumer, and its responsibility is to ‘re investigate’ a matter once already investigated in the first place.” Gorman, 584 F.3d at 1156-57 (quoting 15 U.S.C. § 1681i(a)(1)). Hence, a consumer disputing the legal validity of a debt that appears on her credit report should first attempt to resolve the matter directly with the creditor or furnisher, which “stands in a far better position to make a thorough investigation of a disputed debt than the CRA does on reinvestigation.” Id. at 1156. Until the consumer has successfully resolved the legal dispute in her favor-for example, by means of a judgment, arbitration award, or settlement-we cannot say that a CRA reporting factually correct information about the disputed debt is misleading potential creditors.