The Fair Credit Reporting Act (“FCRA”) prohibits furnishers of credit from providing inaccurate or misleading information to Consumer Reporting Agencies (“CRAs”). The meaning of “inaccuracy,” however, remains hotly-litigated.
The manual published by the Consumer Data Industry Association (“CDIA”) states that the “purpose of [the CDIA] guide is to document [the credit reporting] process” and the “Industry Standards” for consumer reporting. District courts, however, are split on whether the CDIA manual sets the standard of care and accuracy. Plaintiffs have argued that furnishers’ non-compliance with the CDIA manual and METRO-2 codes renders reporting inaccurate. Courts have rejected this argument, but also found compliance with the manual and METRO-2 to be a defense.
For example, California courts have rejected the argument that noncompliance with CDIA guidelines by itself renders the information furnished inaccurate. Giovanni v. Bank of America, N.A., 2013 WL 1663335 (N.D. Cal. Apr. 17, 2013); Mortimer v. Bank of America, N.A., 2013 WL 1501452, at *12 (N.D. Cal. Apr. 10, 2013) (“failure to comply with the CDIA guidelines does not render [a] report incorrect.”); Sheridan v. FIA Card Servs., N.A., 2014 WL 587739 (N.D. Cal. Feb. 14, 2014); see also Jones v. Experian Info. Solutions, Inc., 2012 WL 2905089 (E.D. Va. July 16, 2012).
But, courts have also found compliance with the CDIA manual to be dispositive as a defense. Grossman v. Barclays Bank Delaware, 2014 WL 647970 (D. N.J. Feb. 19, 2014); Toliver v. Experian Info. Solutions, Inc., 973 F. Supp. 2d 707, 719 (S.D. Tex. 2013).
Courts caution, however, that following the CDIA manual and METRO-2 can still result in inaccurate reporting. In Jones, for example, the court stated that “the position taken in the CDIA Resource Guide . . . that a debt must be reported at a zero current balance upon entry of the Confirmation Order, prior to [a petitioner’s] Chapter 13 discharge — [is] inconsistent with the Chapter 13 discharge provision in 11 U.S.C. § 1328, and the weight of authority.” 2012 WL 2905089, at *3. Likewise, the CDIA directive to report “no data” instead of overdue payments while a Chapter 7 petition is pending has been rejected where “it was factually accurate … that [the] accounts were past due.” Sheridan, 2014 WL 587739, at *5; see also Mortimer, 2013 WL 1501452.
The 2009 Inter-agency FACTA Rule requires that reporting have both accuracy and integrity. 74 Fed. Reg. 31484-01 (2009). For furnishers of credit information, the safest route is to avoid deviating from the guidelines established in the CDIA manual and report in METRO-2 format all the information about accounts that is in the furnisher’s possession where absence of the information from a report would be materially misleading in evaluating a consumer’s creditworthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living.
For more information about the FCRA and credit reporting standards, please contact Scott J. Hyman at sjh@severson.com or Alisa A. Givental at aag@severson.com.