[Administrator]

Court Allows FCRA Claim for Lender’s Failure to Correct Own Error.

On May 14, a federal district court held that failing to correct information provided to a consumer credit reporting agency was a “willful” violation for the purposes of the Fair Credit Reporting Act (FCRA). Johnson v. Wells Fargo Home Mortgage Inc., No. 3:05-CV-0321-RAM, 2008 WL 2074001 (D. Nev. May 14, 2008).

The defendant lender misapplied the borrower’s payment to another loan of the borrower’s, causing the first loan to become delinquent.

The borrower alleged that this inaccurate information caused a decrease in his credit score making it more difficult for him to secure credit.

The court dismissed most of the borrower’s claims because they were based on credit for commercial purposes, which is not covered by FCRA.

The court also granted summary judgment for any claims arising before the consumer reporting agency’s request the lender reinvestigate the borrower’s delinquency.

However, for the claims that did survive, the court refused to dismiss claims for punitive damages, holding “acknowledging its own error and refusing to correct it, while still reporting negative information to the CRAs, certainly qualifies as willfulness under the FCRA.”
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David Szwak
Chairman, Consumer Protection Section, Louisiana State Bar Association
Bodenheimer, Jones & Szwak, LLC
416 Travis Street, Suite 1404
Mid South Tower
Shreveport, Louisiana 71101
318-424-1400
Fax 318-221-6555