CRA Not Automatically Liable in ID Theft Case: Bagby

Maximum Possible Accuracy
David A. Szwak

CRA Not Automatically Liable in ID Theft Case: Bagby

Postby David A. Szwak » Fri Nov 04, 2005 1:29 pm

Bagby v. Experian Information Solutions,
Not Reported in F.Supp.2d, 2004 WL 1244113, N.D.Ill., Jun 07, 2004

Bagby claims that Experian violated the FCRA's requirement that consumer reporting agencies "follow reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom [a consumer credit] report relates." 15 U.S.C. § 1681e (b). "Judging the reasonableness of a [credit reporting] agency's procedures involves weighing the potential harm from inaccuracy against the burden of safeguarding against such inaccuracy." Philbin v. Trans Union Corp., 101 F.3d 957, 962 (3d Cir.1996). To prevail on this claim, Bagby must show (1) that there was inaccurate information in her consumer credit report, (2) that the inaccuracy was due to Experian's failure to follow reasonable procedures to assure accuracy, (3) that she suffered actual damages and (4) that those damages were caused by the inaccuracy. Id. at 962. If Bagby fails to show the existence of a genuine factual issue on any one of these elements, Experian is entitled to summary judgment on this claim.
Bagby claims the information Experian disclosed in her credit report regarding the Sears and Discover accounts was inaccurate because the accounts were fraudulently opened in her name. The Court assumes for the purposes of discussion that both the Discover and the Sears accounts were erroneously reported.

A credit reporting agency is not automatically liable when it prepares an inaccurate credit report. Henson v. CSC Credit Serv., 29 F.3d 280, 284 (7th Cir.1994). The issue is whether Experian maintained "reasonable standards for assuring maximum accuracy." Id. at 286. Reasonable procedures are "those that a reasonably prudent person would undertake under the circumstances." Lee v. Experian Information Solutions, No. 02 C 8424, 2003 WL 22287351, at * 3 (N.D.Ill. Oct.2, 2003). Bagby contends that the reasonableness of the credit reporting agency's procedures is always a question for a jury. The issue is, generally speaking, a question of fact. Crabill v. Trans Union, L.L.C., 259 F.3d 662, 664 (7th Cir.2001). But if the reasonableness of the procedures used by the consumer reporting agency is beyond question, a court can determine that the procedures were reasonable as a matter of law. Id. For example, Henson held as a matter of law that consumer reporting agencies are not liable for reporting information from a judgment docket unless the agency has prior notice from the consumer that the information might be inaccurate. Henson, 29 F.3d at 285.

It is undisputed that the Sears and Discover accounts were in Bagby's name and that the creditors reported them to Experian as her accounts. Bagby has presented no evidence that Sears or Discover are unreliable sources of information or that Experian had any reason to doubt the accuracy of the information they reported. Before Bagby sent Experian her dispute letter in November 2002, Experian was not aware, nor should it have reasonably been aware, that these accounts belonged to any one other than Bagby. Under the circumstances, the Court agrees with Experian that Bagby cannot sustain a § 1681e (b) claim for the period before November 2002. See Quinn v. Experian Solutions, No. 02 C 5908, 2004 WL 609357, at *3 (N.D.Ill. Mar.24, 2004). Moreover, as will be discussed in greater detail below, Experian's procedures following its receipt of Bagby's dispute letter were also reasonable as a matter of law. The duty of reinvestigation imposed by § 1681i(a) following a dispute by a consumer is more stringent than the credit reporting agency's initial obligation under § 1681e (b). Cushman v. Trans Union Corp., 115 F.3d 220, 225 (3d Cir.1997). Thus, if Experian has satisfied its § 1681i(a) obligation as the Court has found, it has a fortiori met the requirements of § 1681e (b). See Lee, 2003 WL 22287351 at *3.

Once Bagby placed Experian on notice that there was a claimed inaccuracy in her credit report, "the window of potential liability opened," id., and Experian was responsible for using reasonable procedures to assure accuracy. After receiving the dispute letter from Bagby, Experian sent a Consumer Dispute Verification form to Sears and Discover as well as several other creditors whose accounts Bagby disputed. The CDV stated that Bag by disputed that the accounts belonged to her and claimed that they were fraudulently opened in her name. Based on this investigation, several of the items were deleted from Bagby's credit report, but both Sears and Discover reported to Experian that Bagby's accounts were correctly reported. Bagby offers no evidence supporting the proposition that Experian had any reason to doubt whether Sears or Discover performed a full reinvestigation concerning Bagby's accounts. No reasonable jury could find that Experian's procedures for policing the accuracy of its credit reports were unreasonable.

Even if Experian's procedures following receipt of Bagby's letter could be found unreasonable, Bagby's claim would still fail because she has not shown that there is a genuine issue of material fact as to whether she suffered any actual damages. In her complaint, Bagby claims that she was damaged by having to incur expenses associated with disputing the information, she suffered emotional distress associated with having incorrect derogatory personal information about her reported to others, and she was given a decreased credit score which may prevent her from getting credit. However, Bagby has failed to offer any evidence as to how the information regarding the Sears and Discover accounts (which were not reported as past due or late) had any negative effect on her credit rating. And Bagby has offered no evidence of emotional distress resulting from Experian's reporting of the accounts, as distinguished from her mother's allegedly unauthorized opening of accounts in Bagby's name. See Def's Rule 56.1 Statement ¶¶ 41-43; Pl's Resp. to Def's Rule 56.1 Statement ¶¶ 41-43.

Finally, the only out of pocket expenses Bagby claims are the fees she paid to obtain copies of her credit report to check for inaccuracies and the cost of having to pay the balance on the Discover account in order to keep it current. However, Bagby's requests for copies of her credit report were made even before she initially alerted Experian that she disputed the Sears and Discover accounts. As previously discussed, as a matter of law, Experian cannot be held liable prior to having been informed of Bagby's dispute. And Bagby's voluntary decision to pay the balance on the account cannot reasonably be said to have been caused by Experian's reporting of the account. See Ruffin-Thompkins v. Experian Info. Sys., No. 03 C 0683, 2003 U.S. Dist. Lexis 23647, at *16 (N.D.Ill.Dec. 31, 2003).

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