On January 4, 2023, a unanimous Second Circuit Court of Appeals panel ruled that a credit bureau’s reporting of a private student-loan debt as being owed despite the plaintiff-borrower’s bankruptcy discharge was not “inaccurate” under the Fair Credit Reporting Act.
Section 1681e(b) of the FCRA requires credit reporting agencies, like Experian, to “follow reasonable procedures to assure maximum possible accuracy of the information” in consumer credit reports. The plaintiff alleged that Experian violated Section 1681e(b) by continuing to report his student loan debt after he went through Chapter 7 bankruptcy. Although the plaintiff had listed his student loan as a debt, he failed to ask the bankruptcy court to determine whether it was dischargeable under federal bankruptcy law, which allows the discharge of student loans, but only under certain conditions. The bankruptcy court’s discharge order stated that the plaintiff was “released from all dischargeable debts,” but not whether that included his student loan. Thus, the Court found, the plaintiff’s “allegation that his Experian report contains an inaccuracy hinges on the resolution of an unsettled legal question.”
The court observed that while a “clear line has not been drawn between legal and factual inaccuracies in the FCRA context,” courts have generally required that the disputed information be “readily and objectively verifiable.” The court concluded that the “bespoke attention and legal reasoning” required to resolve the post-bankruptcy validity of the plaintiff’s student loan debt rendered the debt’s status insufficiently objectively verifiable. The plaintiff, therefore, was precluded from pursuing a claim for violation of Section 1681e(b) of the FCRA.
The case is Mader v. Experian, U.S.C.A. (2nd Cir.) No. 20-3073. Counsel for Plaintiff-Appellant, Adam R. Shaw, George F. Carpinello, and Jenna C. Smith, of Boies Schiller Flexner; Counsel for Defendant-Appellee, Meir Feder, Kerianne N. Tobitsch, Jack Millman, and John A. Vogt of Jones Day.
Eric J. Ellman is Senior Vice President for Public Policy and Legal Affairs at the Consumer Data Industry Association (CDIA) in Washington, DC. He also served for eight months as Interim President and CEO of the Association. More