FCRA complaint


In a recent Fair Credit Reporting Act (“FCRA”) case, Mohammad Babar v. Screening Reports, Inc., the U.S. District Court for the District of New Jersey granted defendant, Screening Reports, Inc.’s, motion for judgment on the pleadings, dismissing plaintiff’s complaint with prejudice.   Joseph Messer & Katherine Olson of Messer Strickler, Ltd. represented Screening Reports, Inc., with the assistance of local counsel. 

In the lawsuit, plaintiff sought to recover from Screening Reports, Inc., for a willful violation of Section 1681e(b) of the FCRA, which provides that “[w]henever a consumer reporting agency prepares a consumer report it shall follow reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the report relates.”  To prove a willful violation of Section 1681e(b), a plaintiff must establish, among other things, that the defendant prepared a report which was inaccurate.  Plaintiff alleged that defendant inaccurately reported an “eviction record match” on his credit report.  Plaintiff admitted that he was involved in the eviction action but alleged that he was never evicted because the action was dismissed without prejudice. 

Screening Reports, Inc. moved pursuant to Federal Rule of Civil Procedure 12(c) for judgment on the pleadings arguing that it could not be found liable under Section 1681e(b) because it provided an accurate report.  The Court reviewed the report, which defendant had attached to its Answer to the Complaint, and found that judgment on the pleadings was warranted.  Specifically, the Court relied on the report’s decision detail, which required any and all eviction actions filed against the plaintiff in the past 84 months be reported.  Accordingly, the plaintiff need not have been actually evicted for an eviction action to appear on his report.  Importantly, the Court also found that the eviction action was captioned in the report as “DSM W/O PR 1-5-12.”   The Court held that with this caption, the report clarified that while an eviction proceeding was filed against plaintiff, it was dismissed without prejudice.   As the plaintiff admitted that the eviction action was filed against him and dismissed without prejudice, the report was accurate.  Because the report was accurate, Plaintiff could not establish a violation of § 1681e(b), and the Court dismissed the complaint with prejudice.

For more information on this case or assistance in defending an FCRA claim, contact Joseph Messer at (312) 334-3440 or Katherine Olson at (312) 334-3444.  

Another $3.5 Million Penalty for FCRA Violations

In early 2014, the Federal Trade Commission (“FTC”) brought a complaint against one of the largest check authorization service companies in the nation, TeleCheck Services, Inc. (“TeleCheck”), and its associated debt collection entity for FCRA violations.  TeleCheck and the collection agency agreed to pay $3.5 million to settle the case.

TeleCheck is a Texas consumer reporting agency (“CRA”) that compiles consumers’ personal information and supplies it to U.S. retail merchants to aid them in their determination of whether to accept consumers’ checks.  Under the FCRA, consumers have the right to dispute the information TeleCheck provides to the merchants and have TeleCheck investigate and correct any inaccuracies if their checks were denied based on the information provided by TeleCheck.

The FTC alleged in its complaint that TeleCheck failed to follow reasonable procedures to assure maximum accuracy of the information it provided to its merchant clients and failed to timely correct mistakes in consumers’ reports.  The FTC also alleged that TeleCheck did not follow proper dispute procedures and even refused to investigate disputes. 

The complaint also included allegations against the associated collection agency, which provided information about consumers to TeleCheck.  The FTC alleged that the collection agency violated the requirements of the FTC’s Furnisher Rule, which requires entities supplying information to CRAs to ensure the accuracy of the information provided. 

TeleCheck and the associated collection agency stipulated to change their business practices going forward to comply with the FCRA requirements and the Furnisher Rule.  The stipulated payment of $3.5 million is one of the largest ever resulting from an FTC filed FCRA complaint.  Another check authorization company, Certegy Check Services, Inc., was charged with a $3.5 million fine for similar allegations earlier this year.  These cases are a part of FTC’s initiative to target practices of data brokers which help companies make decisions about consumers, such as their ability to pay for essential goods and services by check.  As Jessica Rich, the Director of FTC’s Bureau of Consumer protection commented: “If CRAs like TeleCheck provide merchants with inaccurate information, those merchants may wrongly deny consumers the ability to buy even the most essential items, like food and medicine.”

For more information about these cases or FCRA policies and regulations, please contact Joseph Messer at jmesser@messerstrickler.com or (312) 334-3440.