[Administrator]

Under FCRA, Credit Reporting Agency’s Procedures not Reasonable as a Matter of Law Where Agency Relied Solely on Creditors to Update Accounts of Consumers Whose Debts Were Discharged in Bankruptcy. On October 13, a federal district court in California refused to dismiss a class action lawsuit brought by consumers alleging, among other things, that TransUnion violated the Fair Credit Reporting Act (FCRA) by employing credit reporting practices that inaccurately indicated their bankruptcy-discharged debts were “due and owing.” According to the plaintiffs, TransUnion relied solely on consumers’ creditors to voluntarily update the status of accounts belonging to consumers who received Chapter 7 discharge orders, and, although TransUnion obtained every discharge order issued in Chapter 7 proceedings through the electronic PACER court reporting service, it did not utilize this resource to determine which debts had been discharged. TransUnion moved to dismiss the complaint, arguing that FCRA does not expressly require credit reporting agencies to describe the legal implications of a bankruptcy discharge order on a credit report. The court, however, refused to find that TransUnion’s procedures were reasonable as a matter of law, holding that nothing in FCRA suggests that there is an exception to a credit reporting agency’s standard obligation to employ reasonable procedures to ensure maximum possible accuracy for bankruptcy-related information. Although this litigation is at an early stage, if the plaintiffs ultimately prevail, the case will likely have a significant impact on credit reporting procedures. See White v. TransUnion, No. CV 05 1073 DOC (MLGX), 2006 WL 3354136 (C.D. Cal. Oct. 13, 2006).
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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