1681c[a][4]: Batdorf v. Trans Union

This Folder Examines the Differing Time Periods That the Various Types of Credit Data May be Retained in Your Credit File. The Related Re-Aging Folder Also Contained in This Forum Examines the Known, Deceptive Trade Practice of Tampering With the Reporting to Avoid Automated Purge Mechanisms at the Bureaus.
David A. Szwak

1681c[a][4]: Batdorf v. Trans Union

Postby David A. Szwak » Sat Jan 14, 2006 9:59 pm

Batdorf v. Trans Union
Not Reported in F.Supp.2d, 2002 WL 1034048
May 15, 2002

The obsolete ITT account
*4 Plaintiff also contends that since the ITT account was charged off in 1988, defendant should not have reported it in 1999, more than seven years later. Section 1681c prohibits consumer reporting agencies from reporting adverse information which "antedate the report by more than seven years." 15 U.S.C. § 1681c(a)(4) & (5). The FCRA defines when the seven years begins to run:
(c) Running of reporting period
(1) In general.--The 7-year period referred to in paragraphs (4) and (6) of subsection (a) of this section shall begin, with respect to any delinquent account that is placed for collection (internally or by referral to a third party, whichever is earlier), charged to profit and loss, or subjected to any similar action, upon the expiration of the 180-day period beginning on the date of the commencement of the delinquency which immediately preceded the collection activity, charge to profit and loss, or similar action.
It is undisputed that ITT charged plaintiff's account to profit and loss on July 20, 1988. The seven years thus began to run around January 20, 1989. Accordingly, defendant was prohibited from including the ITT account information in credit reports generated after January 1996; it is undisputed, however, that defendant included the information in reports generated in November 1999.
Defendant responds that it has implemented reasonable procedures for deleting obsolete adverse items. Every month defendant's system scans its files to identify items of information which are six months and eleven months old. The system then deletes such items from the files so they will not be included in subsequent reports. An item's age is calculated by examining the delinquency, charge-off or collection date reported to defendant by the subscriber. If more than one date is available, the earliest date is applied to determine the item's age. If a delinquency, charge-off, or collection date has not been reported, then the item's age is calculated by examining the date on which defendant received the last account update from the credit grantor.
Defendant asserts that in or about April 1993. ITT reported to defendant that plaintiff had a past due balance. ITT did not provide defendant with a delinquency date, collection date, or charge-off date. Accordingly, defendant's system calculated the running of the seven-year period based on the date ITT first reported the account, April 1993. Under that calculation defendant was required to purge the tradeline in March 2000. Defendant contends that summary judgment must be granted because no reasonable jury could find that the above procedures are unreasonable.
The Court disagrees. Defendant's system depends entirely on the credit grantor reporting the date of delinquency, collection, or charge-off. If no such date is reported, defendant nonetheless reports the adverse information and assumes the seven-year period should start running at the time the credit grantor reports the account; defendant makes no further inquiry of the credit grantor. Defendant offers no evidence or argument as to why such a system is reasonable as a matter of law, especially given that the FCRA specifically requires the seven-year period to run from certain dates. Given that requirement, common sense dictates that a reasonable procedure would ensure that a credit grantor provide such dates before the defendant includes such information on a credit report. Indeed, the FTC Commentary on the FCRA (cited by defendant) provides:
*5 A consumer reporting agency should establish procedures with its sources of adverse information that will avoid the risk of reporting obsolete information. For example, the agency should either require a creditor to supply the date an account was placed for collection or charged off, or the agency should use a conservative date for such placement or charge off (such as the date of the last regularly scheduled payment), to be sure of complying with the statute.
55 Fed.Reg. 18819 (1990) (cited at p. 12 of defendant's motion). Defendant's procedures neither require a creditor to supply the date, nor use a conservative date for placement for collection or charge off.
Defendant's reliance on the Sixth Circuit's decision in Spence v. TRW, Inc., 92 F.3d 380, 381 (6th Cir.1996) is unpersuasive. The Spence defendant reported a delinquent account that had been placed for collection more than seven years earlier. The court held that the defendant had not violated the FCRA because at the time the debt was reported to defendant and defendant included the information in a credit report, defendant was not aware of the date the debt had been placed for collection. The court's decision is premised on the fact that before the credit report at issue was published, the plaintiff had advised the defendant that it disputed the obsolete account, but the plaintiff did not advise the defendant that it was obsolete. Thus, reasoned the court, if the plaintiff had "directly conveyed" to the defendant the pertinent information on when the debt had been placed for collection, the defendant presumably would have deleted the item and it would not have appeared in the credit report at issue in the lawsuit. Id. at 383.
Here, in contrast, plaintiff did not have any communications with defendant until after he was denied credit; he thus had no opportunity to advise defendant of the pertinent date before the erroneous credit report was issued. Moreover, the Spence decision does not refer to the statutory definition of when the seven years begins to run. Nor does the court refer to the regulation which specifically identifies certain reasonable procedures. The Spence court simply ignored that it is the consumer reporting agency's obligation to implement reasonable procedures to ensure maximum accuracy in the first place.
In light of defendant's failure to explain why it is reasonable to report adverse information even when defendant does not know when the seven-year period should start to run, the Court cannot conclude that no reasonable jury could find that defendant's reporting of the obsolete ITT account was negligent. See Guimond, 45 F.3d at 1333 ("[t]he reasonableness of the procedures and whether the agency followed them will be jury questions in the overwhelming majority of cases"). Plaintiff has nonetheless not come forward with evidence sufficient to permit a reasonable trier of fact to find that defendant's reporting of the obsolete account was willful; accordingly, the Court will grant summary judgment in defendant's favor on the willfulness claim.

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