7th Cir. Joins Other Circuits Finding that CRA Obligations Do Not Extend to Being Debt Tribunals For Purposes of Determining Accuracy of a Tradeline

In Denan v. Trans Union LLC, No. 19-1519, 2020 U.S. App. LEXIS 14930 (7th Cir. May 11, 2020), the Court of Appeals for the Seventh Circuit held that a CRA, under the guise of determining accuracy, was not obligated to adjudicate the consumer claims that the debt was not valid.

Here, plaintiffs contend not only that Trans Union had a duty to verify plaintiffs’ debt liability, but that Trans Union “knew or recklessly ignored” that their loans “are void and uncollectible as a matter of clearly established law.” Their claims, though, attempt to graft responsibilities of data furnishers and tribunals onto a consumer reporting agency. HN6 Only furnishers are tasked with accurately reporting liability. See 12 C.F.R. § 1022.41(a). And it makes sense that furnishers shoulder this burden: they assumed the risk and bear the loss of unpaid debt, so they are in a better position to determine the legal validity of a debt. See Brill v. TransUnion LLC, 838 F.3d 919, 921 (7th Cir. 2016) (affirming dismissal of suit challenging the accuracy of credit report because the creditor car lessor, not a consumer reporting agency, “was in a better position to determine the validity of its own lease”); see also Gorman v. Wolpoff & Abramson, LLP, 584 F.3d 1147, 1156 (9th Cir. 2009) (explaining “the furnisher of credit information stands in a far better position to make a thorough investigation of a disputed debt than the [consumer reporting agency]”). Nor are consumer reporting agencies tribunals; they collect consumer information supplied by furnishers, compile it into consumer reports, and provide those reports to authorized users. See Carvalho v. Equifax Info. Servs., LLC, 629 F.3d 876, 891-92 (9th Cir. 2010) (explaining same and that a consumer reporting agency is merely “a third party, lacking any direct relationship with the consumer”). The collectability of plaintiffs’ loans here requires resolution of three legal issues: whether the choice-of-law provisions in plaintiffs’ loan agreements are enforceable; whether New Jersey and Florida lending laws render plaintiffs’ loans void; and whether tribal sovereign immunity shields Plain Green and Great Plains from the application of New Jersey and Florida laws. The power to resolve these legal issues exceeds the competencies of consumer reporting agencies.