Eleventh Circuit Holds Publication of Consumer’s Credit Report Not Necessary for Actual Damages Under Fair Credit Reporting Act

In Collins v. Experian Information Solutions, No. 14-11111 (Jan. 5, 2015), the Eleventh Circuit reversed the district court’s grant of summary judgment and held that a consumer’s credit report need not be published to a third party in order to entitle the consumer to actual damages under § 1681i(a) of the Fair Credit Reporting Act. The Eleventh Circuit remanded the case to the district court to determine whether Collins presented sufficient evidence of actual damages to create a jury question. However, the Eleventh Circuit also affirmed the district court’s grant of summary judgment for Experian on Collins’ claim that Experian willfully violated its duty of conducting a reasonable investigation.

In April of 2010, Equable Ascent Financial, LLC (Equable) sued Collins in small claims court claiming that Collins owed them money. Collins denied Equable’s allegations, and after a trial the court entered judgment in favor of Collins on July 26, 2010. The purported debt to Equable was listed on an Experian credit report pulled in June 2010. So, on July 30, 2010, Collins wrote to Experian explaining that the debt was a mistake, that he had won in court, and asking that the debt be removed from his credit report. Because of Experian’s uncertainty over the origins of the letter, Collins wrote another letter on August 19, 2010, confirming his identity and explaining the situation and asking that the debt be removed from his credit report.

In response to Collins’ second letter, Experian sent an Automated Consumer Dispute Verification form (ACDV) to Equable. In response, Equable wrongly responded that Collins’ debt was still valid, and Experian did nothing else to investigate Collins’ claim. When Collins visited the Experian website on November 23, 2010, he learned his debt to Equable was still being reported. Collins then filed a lawsuit against Experian in state court on February 5, 2011. Experian finally removed the Equable account from Collins’ credit report on March 10, 2011, and subsequently removed the case to federal court on March 11, 2011. The district court granted summary judgment to Experian, and Collins appealed to the Eleventh Circuit.

The FCRA creates a private right of action against consumer reporting agencies for the negligent or willful violation of any duty imposed under the statute. Collins argued that Experian’s reinvestigation of his disputed debt with Equable was unreasonable, and that Experian was therefore liable for both negligent and willful violations of the FCRA. The district court found that there was an issue of material fact as to whether Experian’s reinvestigation was reasonable when it disregarded the small claims court information that Collins provided and instead relied solely on Equable to verify the debt. However, the district court granted summary judgment to Experian on Collins’ negligence claim because it found that Collins could not show actual damages since he failed to present evidence that the erroneous information regarding his debt to Equable was ever published to a third party.

In an issue of first impression, the Eleventh Circuit agreed with Collins that the cases cited by the district court requiring publication to third parties in order to recover emotional distress damages in an FCRA action are distinguishable from this case. The Court found the distinction in the difference in the FCRA’s definitions of the terms “consumer report” and “file.” A “consumer report” is defined as “any . . . communication of any information by a consumer reporting agency bearing on a consumer’s credit worthiness . . . .” 15 U.S.C. § 1681a(d)(1) (emphasis added). In contrast, “[t]he term ‘file’ . . . means all of the information on that consumer recorded and retained by a consumer reporting agency regardless of how the information is stored.” 15 U.S.C. § 1681a(g) (emphasis added). So, a “consumer report” is communicated by the consumer reporting agency, while a “file” is retained by the consumer reporting agency.

The Court found that Experian violated 15 U.S.C. § 1681i(a), which imposes a duty on consumer reporting agencies to conduct a reasonable reinvestigation of disputed information in a consumer’s credit file. This was in contrast to a similar provision imposing a duty concerning consumer reports. The Court reasoned that “when Congress uses different language in similar sections, it intends different meanings.” Iraola & CIA, SA v. Kimberly-Clark Corp., 232 F.3d 854, 859 (11th Cir. 2000). The Court therefore concluded that the plain language of the FCRA does not require that the disputed information be published to a third party in order for a consumer to recover actual damages under 15 U.S.C. § 1681i(a).

The district court viewed Collins’ actual damages evidence under the belief that Collins’ credit report had to have been published to a third party, so it did not have the opportunity to analyze whether Collins’ evidence of emotional distress was sufficient to present a question for the jury on actual damages. Therefore, the Eleventh Circuit remanded the case to the district court to conduct this inquiry in the first place.

The Eleventh Circuit did agree, however, with the district court’s grant of summary judgment to Experian on Collins’ claim that Experian’s violation was willful. Under 15 U.S.C. § 1681n(a), “[a]ny person who willfully fails to comply with any requirement imposed under this subchapter with respect to any consumer is liable to that consumer” for actual, statutory, or punitive damages. The Supreme Court has held that “reckless disregard of a requirement of FCRA would qualify as a willful violation within the meaning of § 1681n(a).” Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47, 71 (2007). Furthermore, “a company . . . does not act in reckless disregard of [the FCRA] unless the action . . . shows that the company ran a risk of violating the law substantially greater than the risk associated with a reading that was merely careless.” Safeco, 551 U.S. at 69.

The Eleventh Circuit found that while Experian taking no steps other than contacting Equable with an ACDV form may have been negligent, the higher standard of willfulness or recklessness was not met in the case. So, Experian’s conduct did not rise to the level of running “a risk of violating the law substantially greater than the risk associated with a reading that was merely careless.” See id. Therefore, the Eleventh Circuit affirmed the district court’s grant of summary judgment on Collins’ claim that Experian willfully violated § 1681i(a) when reinvestigating his disputed debt.

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