11th Cir. Says that Bank’s Reporting Forebearance Payments as Past Due Did Not Violate the FCRA

In Felts v. Wells Fargo Bank, N.A., 2018 WL 3130674 (11th Cir. 2018), the Court of Appeals for the Eleventh Circuit found that a Bank’s reporting of a mortgage account in forbearance as ‘past due’ did not violate the FCRA.  The Court of Appeals imposed a causation requirement on an FCRA re-investigation claim, namely that the (un)reasonableness of a re-investigation cannot give rise to a claim without the information furnished being inaccurate in the first instance.

Regardless of the nature of the investigation a furnisher conducted, a plaintiff asserting a claim against a furnisher for failure to conduct a reasonable investigation cannot prevail on the claim without demonstrating that had the furnisher conducted a reasonable investigation, the result would have been different; i.e., that the furnisher would have discovered that the information it reported was inaccurate or incomplete, triggering the furnisher’s obligation to correct the information. Absent that showing, a plaintiff’s claim against a furnisher necessarily fails, as the plaintiff would be unable to demonstrate any injury from the allegedly deficient investigation. And, in turn, a plaintiff cannot demonstrate that a reasonable investigation would have resulted in the furnisher concluding that the information was inaccurate or incomplete without identifying some facts the furnisher could have uncovered that establish that the reported information was, in fact, inaccurate or incomplete.  As a result, Felts cannot prevail on her claim against Wells Fargo pursuant to § 1681s–2(b) of the FCRA without identifying some fact in the record establishing that the information Wells Fargo reported regarding her account was inaccurate or incomplete. If the undisputed facts indicate that Felts has not met this threshold requirement, Wells Fargo is entitled to judgment as a matter of law.

The Court of Appeals found that the Bank was only required to report the status of the Account, not a secondary agreement that did not legally modify the loan.

Felts’ argument misconstrues Wells Fargo’s reporting obligation. Wells Fargo was not required to furnish information to the CRAs regarding every agreement it formed with Felts. Instead, Wells Fargo was required to furnish information to the CRAs regarding Felts’ payment status and history for one agreement in particular: the Note Felts signed for the Loan. The CRAs requested, and Wells Fargo submitted, information regarding Felts’ compliance with her obligation to make installment payments in accordance with the Note she signed. Felts’ apparent compliance with the terms of a second, separate agreement she entered into with Wells Fargo—the Plan—has no bearing on the accuracy of the information Wells Fargo reported to the CRAs regarding Felts’ compliance with the terms of her first, original agreement—the Note—unless the Plan legally modified the terms of the Note. As Felts has not identified any fact in the record establishing that the Plan legally modified the Note, the information Wells Fargo reported regarding Felts’ compliance with the terms of the Note was not inaccurate: Wells Fargo reported that (1) the Scheduled Monthly Payment Amount for the Note was $2,197.38, which Felts agrees that it was; and (2) Felts did not pay the amount the Note required her to pay beginning in July 2012, which Felts concedes she did not do.