Consumers Must File Credit Reporting Disputes with Credit Reporting Agencies, Appeals Court Reiterates

by Joseph Mullaney on November 28, 2011 · 5 comments

 

The Takeaway: 

Essentially, a consumer has no rights under the Fair Credit Reporting Act (FCRA) unless he or she actually disputes an inaccurate credit report directly with the credit reporting agency.

The Facts: 

A consumer sued a couple of creditors alleging they misreported her mortgage payments to Experian, Equifax, TransUnion, and Innovis, the four largest credit reporting agencies in the United States.  Apparently, her monthly payments were due on the first of each month though she was paying her payments later in a month.  Eventually, when her payments arrived at the mortgage company on the 31st of a month, the payments were already considered 30 days late.  Her mortgage company reported her to the 4 credit reporting agencies as is standard practice.

After learning that her payments were deemed late, the consumer had an attorney write a dispute letter to her mortgage company claiming she was not late.  She did not file the dispute directly with the credit reporting agencies.  Neither the mortgage company nor its parent company addressed the negative reporting to her satisfaction.

The consumer filed a federal lawsuit in New Jersey alleging violations of the FCRA.  She also wanted a temporary restraining order that sought to prevent the mortgage company from continuing to report her mortgage payments late while the court decided the overall merits of her lawsuit.

After several motions were filed, the lower court concluded that a consumer looking to sue a creditor under the FCRA must first lodge her dispute directly with the credit reporting agencies.  The court ruled against her.  Although the district court joined a chorus of other courts also requiring consumers to dispute directly with the credit reporting agencies, she nevertheless appealed.

The Ruling:

The appeals court agreed with the lower court and held that the FRCA requires a reasonable investigations into disputes only when the consumer directly advises a credit reporting agency of a dispute.  A creditor can only be sued if it receives a dispute directly from a credit reporting agency and not the consumer.  A dispute filed only with the creditor will not allow a consumer to sue the creditor.

The Cite:

Simmsparris v Countrywide Financial Corp., 652 F.3d 355 (3d Cir. 2011).

If you are PA or NJ consumer having a problem with a credit reporting agency, you should contact us right away for legal help now.

Tagged as: credit dispute, fair credit, fcra

  • Anonymous

    I must admit that if that happened to me, my first thought would be to contact the mortgage company. I know that you should file disputes with the credit reporting agency. But in an instance where I was already in a relationship with the creditor, I might not think of it. This is a good reminder, as a consumer.

  • Mimsey

    This article stresses the importance of consumers knowing what their credit card agreements actually say and file any disputes with credit card reporting agencies. If the consumer wants to be protected against potential problems, he must follow established procedures.

  • Sean

    This is why most people who end up disputing things will dispute everything until the information is fully provided to them. I have had to do this before and NCO is a pain to deal with. They actually tried to charge me for a debt that I had paid off (late, I was young and barely in my 20′s when it happened), double charge me then dock me for it, 15 years *after* I paid it off.

  • Jamie

    Everyone should be keeping track of their credit bureau reports annually instead of getting a shock when they actually need credit.  Mistakes happen all the time.  Each of the 3 major bureaus must provide one free copy per year but you have to ask for it.

  • Creaturecomfort

    This goes to show that consumers should read all fine print on their credit card terms agreement and report any disputes they have with the credit reporting agencies. At least getting an annual credit report is easier and costs far less now than it used to.

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