District Court (Cal.) Says Negligent, but not Willful, FCRA Claim Could Be Stated in SSN Swap Situation

In Callahan v. Equifax Information Services LLC, 2013 WL 5503949 (N.D.Cal. 2013), Judge Alsup found that Plaintiff could state a FCRA claim in an SSN-swap situation.  The proposed pleading alleged that Plaintiff’s credit reports indicated that a SunTrust mortgage account was associated with her. Plaintiff disputed the mortgage account and the CRAs notified SunTrust. Although plaintiff’s SSN did not match the SSN associated with the mortgage account, SunTrust purportedly verified plaintiff’s SSN with the CRAs (only correcting this error a year later when a CRA again contacted SunTrust about the account). Plaintiff’s proposed amended complaint establishes the basis of her beliefs as documented communications between SunTrust and CRA defendants. The District Court found that the Defendant was a “furnisher” under FCRA, not because it initially furnished consumer reporting information to a CRA, but because of its response to the CRA on re-investigation:

Defendant argues that it is not a “furnisher” under the FCRA because plaintiff never had an account with SunTrust (id. at 5–6). The FCRA does not define “furnisher,” but defendant cites a decision that ade-quately defines the term: “[t]he term furnishers of information is generally understood to include various types of creditors, such as banks and other lenders, that provide credit information about their customers to other entities that issue consumer reports about the customers’ credit worthiness.” Ross v. Washington Mut. Bank, 566 F.Supp.2d 468, 475 n.1 (E.D.N.C.2008) (internal quotation omitted). Defendant emphasizes the phrase “their customers” and argues that defendant would only qualify as a furnisher in actions involving information they had furnished about their own customers (Dkt. No. 61 at 6). Consequently, defendant is not a furnisher in this action, it says, because plaintiff was never a customer (ibid.). Not so. ¶ . . . In this case, SunTrust debt was listed on plaintiff’s credit report. When plaintiff disputed the SunTrust mortgage account on her credit report, the CRAs contacted SunTrust about the account. Narrowing the definition of furnisher as defendant suggests would leave the CRAs and plaintiff with no way to verify the SunTrust entry because SunTrust would have no duty to investigate. In effect, SunTrust acknowledges this by arguing that its investigation was a “courtesy” to the CRAs (Dkt. No. 61 at 6). This order holds that the term “furnisher” includes someone who furnishes information to a CRA in response to the CRA’s inquiry on the credit status of someone, even if the furnisher has no account at all for the subject.

The District Court also held that the Plaintiff could adequately plead a case for negligent re-investigation under FCRA.

In Chiang, the Seventh Circuit held that in order to survive summary judgment a plaintiff alleging a violation of Section 1681s–2(b)(1) must show some “causal relationship between the [furnisher’s] allegedly unreasonable [investigation] and the failure to discover inaccuracies in his account. Chiang, 595 F.3d at 37. Even if Chiang was controlling authority, plaintiff has met this burden by the plausible showing that SunTrust should have known that the SSN did not match. How hard is it to compare two numbers? They either match or they don’t. SunTrust goofed on this or so it is alleged. This failure supports an inference of sloppy work, at least in plaintiff’s individual case at the Rule 12 stage.. . . In Westra, the Seventh Circuit held that the extent of the information provided to the furnisher by the CRA was relevant to whether the furnisher’s investigation was reasonable. Westra, 409 F.3d at 827. The court held that the furnisher had not been provided enough information by the CRA. There is a notable difference. There the furnisher was not given an SSN; SunTrust was provided plaintiff’s SSN. . . .¶ . . . This order therefore holds that when a CRA gives an SSN to a furnisher and the furnisher erroneously confirms that it matches a debt, that alone constitutes an inference of negligence under the Act. The amended pleading is adequate.

The District Court found, however, that Plaintiff could not state a claim for willfulness.

Defendant finally asserts that plaintiff has failed to support with facts or allegations that defendant acted in willful noncompliance of the FCRA (Dkt. No. 61 at 18–20). SunTrust argues that defendant had to have a “reckless disregard” for its duty in order to qualify as willful noncompliance, citing Burr, 551 U.S. at 69 (Dkt. No. 61 at 19). Under Burr :  a company subject to FCRA does not act in reckless disregard of it unless the action is not only a violation under a reasonable reading of the statute’s terms, but shows that the company ran a risk of violating the law substantially greater than the risk associated with a reading that was merely careless. Ibid. Plaintiff’s reply argues that “[t]he Court should not dismiss the willfulness claim at the pleading stage” because it is a “factually intensive issue” (Dkt. No. 62 at 9). This order finds that plaintiff’s proposed amended complaint does not adequately allege willfulness. SunTrust’s conduct was negligently sloppy, but did not demonstrate “reckless disregard.” Plaintiff’s willful noncompliance claim will not be allowed to proceed against SunTrust.