5th Cir. Says Inaccuracy Is a Pre-Condition to Claim Against Furnishers Under FCRA

There is no issue that Pittman notified the CRAs of his dispute, or that Experian and Equifax notified the Servicers of the dispute.  There is a question about whether the Servicers failed to reasonably investigate or rectify the disputed charge.  The district court never reached this question, however, because it reached only the “threshold question of whether there were reporting errors by iServe and BSI.” (R. 96, Opinion, PageID # 2380.) The district court found that “an error is an essential part of a[ ] FCRA claim.” (Id. (citing Spence v. TRW, Inc., 92 F.3d 380, 382 (6th Cir. 1996).) ) In Spence, this Court found that “[a] showing of inaccuracy is an essential element of a claim under the Fair Credit Reporting Act.” 92 F.3d at 382 (citations omitted). We note that Spence dealt with a claim under § 1681e(b), id. at 381, but that several courts have required a showing of inaccuracy to succeed on a claim under § 1681s-2(b) as well. See Shaw v. Equifax Info. Sols., Inc., 204 F.Supp.3d 956, 959 (E.D. Mich. 2016) (“Inaccuracy is an essential element of a claim for negligent or willful violation of the FCRAunder section 1681s-2(b).” (citing Spence, 92 F.3d at 382) ); Bailey v. Equifax Info. Servs., LLC, No. 13-10377, 2013 WL 3305710, at *9 (E.D. Mich. July 1, 2013) (“[T]he Court grants FIA’s motion [to dismiss] [because] Plaintiff has failed to make factual allegations that support her claims that FIA reported inaccurate or misleading information or had unreasonable procedures.”); Nykoriak v. GMAC LLC, No. 09-12490, 2010 WL 1923796, at *3 (E.D. Mich. May 12, 2010)(denying the plaintiff’s motion for summary judgment because there was a genuine issue of material fact about whether the furnisher reported accurate information); see also Chiang v. Verizon New Eng. Inc., 595 F.3d 26, 37–38 (1st Cir. 2010) (“The FCRA is intended to protect consumers against the compilation and dissemination of inaccurate credit information.” (citation omitted) ); Wadley v. Ford Motor Credit Co., 397 F.Supp.2d 781, 784 (E.D. Va. 2005) (“[T]he FCRA requires a showing that the entity reporting the debt furnished inaccurate information.”); Haynes v. Navy Fed. Credit Union, 52 F.Supp.3d 13, 19–20 (D.D.C. 2014) (the furnisher’s report to credit agencies that the plaintiff was past due on his mortgage loan was accurate and, in the absence of other support, foreclosed plaintiff’s FCRA claim).  We agree that a threshold showing of inaccuracy or incompleteness is necessary in order to succeed on a claim under § 1681s-2(b). After all, as this Court has described, “Section 1681s-2 works in two phases. Initially, furnishers have a duty to provide the CRAs with accurate information about their consumers. Later, a furnisher may be asked by a CRA to respond to disputes about the consumer information provided.” Boggio, 696 F.3d at 614 (internal citation omitted). And the requirement meets the goals of FCRA by preventing “ ‘furnishers of information’ from spreading inaccurate consumer-credit information.” Id. (emphasis added). To meet this threshold showing, a plaintiff can show that the information provided is false or that it contains a material omission or creates a materially misleading impression. Id. at 617–18.   Turning to the threshold question in this case, the district court concluded that Pittman could not show that iServe and BSI “made an error in reporting his loan payments as overdue.” (R. 96, Opinion, PageID # 2380; R. 107, Opinion, PageID # 2603–05.) This was because there was no enforceable permanent loan modification and because Pittman missed two payments, made smaller payments after the TPP, and never brought his account current.  We disagree with the district court that Pittman cannot make his initial showing of inaccurate or incomplete reporting. We think his FCRA claim can proceed for at least two reasons: (1) while there was no written permanent modification document, there may have been an enforceable agreement to modify his loan⁶; and, (2) the Servicers did not report the existence of the TPP.⁷We address these two reasons in turn.