District Court (Cal.) Holds that FCRA Not Designed to Adjudicate Disputes Regarding the Underlying Obligation

In Gauci v. Citi Mortg., 2012 WL 1535654 (C.D.Cal. 2012), Judge Otis Wright held that FCRA’s accuracy requirement is not designed to adjudicate a dispute between a furnisher, CRA, and a consumer.

Plaintiff argues that “CMI had no right to have deemed Plaintiff a delinquent payer when CMI made the mistake of charging Plaintiff an incorrect amount of taxes.” (Opp’n 11.) In addition, because there is a pending dispute between CitiMortgage and Plaintiff as to the correct amount of Plaintiff’s debt, and because Plaintiff reported this dispute to the CRAs, the CRAs should have reinvestigated and restored her credit ratings. (Id.) Thus Plaintiff concludes that the CRAs violated the FCRA by failing to reasonably ensure the maximum possible accuracy of Plaintiff’s credit re-ports, and by failing to conduct reasonable reinvestigation after Plaintiff reported the dispute. (Id.) Plaintiff essentially contends that, after she informed the CRAs the ongoing dispute between her and CitiMortgage, the CRAs should have adjudicated that dispute before reporting her credit rating as delinquent. But Carvalho has squarely rejected this argument. Carvalho has clearly settled that, under the FCRA, a credit reporting agency’s job is to correctly report information furnished by the creditor, and credit reporting agencies are not supposed to adjudicate a consumer-creditor dispute in order to issue credit reports. See Carvalho, 629 F.3d at 891–92. When a credit reporting agency correctly reports the information furnished by the creditor, the credit report is considered as “accurate” within the meaning of the FCRA, even when there is an ongoing dispute as to the validity of the debt. Id. Under that circumstance, the consumer is obligated to pay the full amount on time; if she fails to do that and the creditor furnishes the information to the credit reporting agency, all the credit reporting agency needs to do is to correctly report the furnished information. Id. That is exactly what happened in this case: even though Plaintiff disputed the payments she owed to CitiMortgage, the CRAs did correctly report the information furnished by CitiMortgage. Therefore, CRAs’ credit reports are accurate within the meaning of FCRA.