Experian's Arguments re Reas Procs:Toler v. PHH,etal, WD Ark

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Experian's Arguments re Reas Procs:Toler v. PHH,etal, WD Ark

Postby Administrator » Fri Nov 21, 2014 3:16 am

Experian's Arguments re Reas Procs:Toler v. PHH,etal, WD Ark

F. Plaintiffs Failed to Show That Experian Maintained Unreasonable Procedures Prior to Plaintiffs' Dispute
Under § 1681 e(b), when the alleged inaccuracy is received directly from the creditor,
"independent verification of infonnation provided by creditors is not needed absent knowledge
that the infonnation may be inaccurate." Zahran v. Transunion Corp., No. 01-C-1700, 2003 U.S.
Dist. LEXIS 5089, at *14-15 (N.D. IlL March 28, 2003) (citations omitted). The risk that some
inaccuracies may result from Experian's procedures does not render those procedures
unreasonable. See Jianqing Wu, 2006 U.S. Dist. LEXIS 96712 at *21. Additionally, "[i]t would
be unreasonable to require a consumer reporting agency to develop systems that would catch
infrequent and irregular mistakes that furnishers might make. The Act does not impose such
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Case 6:12-cv-06032-RTD Document 262 Filed 11/20/14 Page 11 of 17 PageID #: 7174
requirements." Schmitt v. Chase Manhattan Bank, NA., No. 03-3295, 2005 U.S. Dist. LEXIS
18029, at *12-13 (D. Minn. Aug. 23,2005) (citation omitted).
On this element, Plaintiffs admit that the alleged inaccuracy came from PHH directly, but
offered two bases for why Experian's procedures are allegedly unreasonable: (1) Experian's
procedures led to an alleged inaccuracy; and (2) Experian's procedures should have caught
PHH's irregular reporting. Both of these bases, taken together and viewed in light most
favorable to Plaintiffs, do not meet their burden on this element. See Schmitt, 2005 U.S. Dist.
LEXIS 18029, at *12-13. Instead, Plaintiffs were required-and failed-to show that, outside of
the § 1681i reinvestigation context, either: (a) Experian had specific knowledge that the
information PHH was reporting may be inaccurate; or (b) that any inaccuracy provided by PHH
occurred with such a regularity or frequency that Experian's procedures should be designed to
catch such inaccuracy. See Jianqing Wu, 2006 U.S. Dist. LEXIS 96712 at *21; Schmitt, 2005
U.S. Dist. LEXIS 18029, at * 12-13. Plaintiffs simply offered no evidence suggesting either of
the above or otherwise showing how a "reasonable" procedure would have uncovered the alleged
"inaccuracy"-namely the unique details of a purportedly modified loan between Plaintiffs and
PHH-in this case. In essence, Plaintiffs appear to make the same argument rejected against
Equifax as a matter oflaw in Jianqing Wu:
Seemingly, Plaintiff holds the opinion that nothing short of an in-person review of each derogatory item reported would satisfy the requirements of § 1681 e(b) of the FCRA. Not surprisingly, Plaintiff has not provided any caselaw to support this proposition. To make Equifax liable under the FCRA for relying on the records of businesses, which Equifax has identified as trustworthy, would vitiate one of the purposes of the FCRA, to facilitate commerce. Under the system Plaintiff proposes, the economic costs of investigation would render it economically infeasible for CRAs to function. Nothing in the FCRA or its implementing regulations evinces the intent to place such heavy burdens on CRAs.
Jianqing Wu, 2006 U.S. Dist. LEXIS 96712 at *22. Because Plaintiffs failed to show that
Experian knew the delinquency may be inaccurate in the e(b) context or otherwise show how a
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Case 6:12-cv-06032-RTD Document 262 Filed 11/20/14 Page 12 of 17 PageID #: 7175
different procedure would have removed the delinquency, Experian is entitled to judgment as a
matter of law on Plaintiffs' § 1681 e(b) claims for this independent reason.
David A. Szwak
Bodenheimer, Jones & Szwak, LLC
416 Travis Street, Suite 1404, Mid South Tower
Shreveport, Louisiana 71101
318-424-1400 / Fax 221-6555
President, Bossier Little League
Chairman, Consumer Protection Section, Louisiana State Bar Association

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