Consumer protection – Fair Credit Reporting Act – ‘Blocked’ account

Where a plaintiff filed a Fair Credit Reporting Act complaint alleging that he was unable to refinance his mortgage because the defendant consumer reporting agency mistakenly told the plaintiff’s mortgage broker that the plaintiff’s account was “blocked,” the defendant’s motion for summary judgment should be denied with respect to the plaintiff’s claim that the defendant negligently violated 15 U.S.C. section1681e(b), as a jury reasonably could find that the defendant prepared a “consumer report” within the meaning of the FCRA, that the defendant’s reported information was inaccurate, and that the defendant failed to follow reasonable procedures to assure maximum possible accuracy of that report.

“Kevin Merchant, Jr. (‘Plaintiff’) commenced this action against Equifax Information Services, LLC (‘Equifax’), alleging willful and negligent violations of the Fair Credit Reporting Act (‘FCRA’), 15 U.S.C. section1681 et seq. …

“In February 2020, Plaintiff sought to refinance his home mortgage. To obtain refinancing, he allowed a mortgage broker to request his credit information from Equifax, a consumer reporting agency (‘CRA’) as defined by the FCRA. Equifax refused to provide Plaintiff’s credit information to the broker, telling the broker that Plaintiff’s account was ‘blocked.’ Plaintiff avers that he never requested a block on his account, and Equifax does not contend otherwise. Instead, Equifax acknowledges that it mistakenly confused Plaintiff’s Equifax online profile with the online profile of another individual with a similar name. …

“In June 2020, Plaintiff sued Equifax, alleging that Equifax violated two provisions of the FCRA: one that requires CRAs to follow reasonable procedures to assure maximum possible accuracy of the information contained in consumer reports, see 15 U.S.C. section1681e(b), and another that requires CRAs to reasonably reinvestigate disputed items of information in consumers’ files, see 15 U.S.C. section1681i. Count I of Plaintiff’s complaint alleges that Equifax willfully committed these violations. See 15 U.S.C. section1681n. Count II of Plaintiff’s complaint alleges that Equifax negligently committed these violations. See 15 U.S.C. section1681o. In August 2021, Equifax moved for summary judgment. …

“Plaintiff alleges that Equifax willfully and negligently violated 15 U.S.C. section1681e(b), which provides that when a CRA prepares a ‘consumer report,’ it must follow ‘reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the report relates.’ …

“Equifax argues that it did not prepare a consumer report. … The evidence viewed in Plaintiff’s favor shows that Equifax told Plaintiff’s mortgage broker that Plaintiff’s Equifax account was ‘blocked,’ indicating that Equifax had credit information on Plaintiff it could not disclose. A jury reasonably could find that such information bears on Plaintiff’s credit worthiness. As this case demonstrates, the very existence of a block on a consumer’s account may cause a lender not to provide credit to that consumer.

“Communication about whether an account is ‘blocked’ is different than communication about whether an account exists. … Here, Equifax did not communicate that it had no report on Plaintiff; Equifax communicated that it could not share its report on Plaintiff. Faced with this information, ‘it is logical to assume that the cautious thing for [the broker] to do would be to deny Plaintiff credit.’ … Accordingly, viewing the facts in Plaintiff’s favor, a jury reasonably could find that when Equifax communicated to the broker that Plaintiff’s account was blocked, Equifax prepared a ‘consumer report’ within the meaning of the FCRA.

“Equifax also argues that its reporting was not inaccurate. To be sure, it is not always ‘inaccurate’ under section1861e(b) for a CRA to exclude information from a consumer’s credit report. … But the inaccuracy alleged here is not merely Equifax’s failure to send Plaintiff’s credit information to the broker; it is also Equifax’s explanation for its inability to do so. Plaintiff avers that he never requested a block on his account, and Equifax does not contend otherwise. Yet Equifax told the broker that Plaintiff’s account was blocked. From this, a jury reasonably could find that Equifax’s reported information was inaccurate.

“Equifax further argues that Plaintiff has no evidence of its procedures. … Here, the broker attempted to access Plaintiff’s credit information from Equifax, but Plaintiff’s account was locked. Plaintiff began repeatedly contacting Equifax to resolve the issue, and Equifax representatives informed Plaintiff that there was no freeze on his account. In all, Plaintiff spent over twenty hours on the phone with Equifax representatives. More than one month later, Equifax told Plaintiff’s broker that Plaintiff’s account was still blocked. From this evidence, a jury reasonably could infer that Equifax failed to follow reasonable procedures to assure maximum possible accuracy of Plaintiff’s ‘consumer report,’ as described above. … Thus, summary judgment on the section1861e(b) aspect of Plaintiff’s claims is denied.”

Other counts

“Plaintiff also alleges Equifax willfully and negligently violated is 15 U.S.C. section1861i. While section1681e(b) (discussed above) concerns the accuracy of ‘information,’ section1681i concerns the accuracy of ‘item[s] of information,’ which are ‘credit entries, such as an account, bankruptcy case, civil suit, or tax lien.’ … Under section1861i, ‘if the completeness or accuracy of any item of information contained in a consumer’s file at a consumer reporting agency is disputed by the consumer,’ the CRA shall ‘conduct a reasonable reinvestigation to determine whether the disputed information is inaccurate.’ … Equifax argues that Plaintiff did not dispute any ‘item of information’ in his file. Indeed, information about whether an account is subject to a block or security freeze is not an ‘item of information’ in the consumer’s file; rather, it is general information concerning the status of the consumer’s file. … Accordingly, a dispute over whether an account accurately is described as blocked is not covered by section1681i. … Therefore, summary judgment on the section1681i aspect of Plaintiff’s claims is granted. …

“Equifax argues that it did not willfully violate the FCRA. A CRA willfully violates the FCRA if its reading of the statute is ‘objectively unreasonable.’ Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47, 69 (2007). In other words, to constitute a willful violation, the CRA’s actions must entail ‘an unjustifiably high risk of harm that is either known or so obvious that it should be known.’ … Equifax’s understating of whether communication concerning the existence of a block is a ‘consumer report’ within the meaning of section1861e(b) was not objectively unreasonable, especially given the somewhat conflicting, yet distinguishable, case law. … Accordingly, summary judgment on the entirety Plaintiff’s willful violation claim (Count I) is granted.”

Merchant v. Equifax Information Services, LLC (Lawyers Weekly No. 02-196-22) (8 pages) (Hillman, J.) (Civil Action No. 4:20-11136-TSH) (July 18, 2022).

Click here to read the full text of the opinion.