An Interesting REPO Reporting Case

jam237 · May 10, 2012

http://www.paed.uscourts.gov/documents/opinions/08D0495P.pdf

I found this case when I was looking up Cushman v. TransUnion related articles.

Heather L · May 21, 2012

jam237 said: ↑

http://www.paed.uscourts.gov/documents/opinions/08D0495P.pdf

I found this case when I was looking up Cushman v. TransUnion related articles.
Click to expand...

Hi Jan237,

If you would like to start a discussion about this case, maybe summarize it for us a little. This case is a lot to read in our free time. Thanks! Heather with BoostMyScore.NET

jam237 · May 21, 2012

It's only 41 pages... Basically... Short version...

The plaintiff's son borrowed her ex-husbands car which was being leased. The car was pulled over by an officer, and the car was seized for illegal substances in someone's possession.

The leaser repossessed the car under a clause which is extremely vaguely written.

They reported on the plaintiff's credit report that it was REPOSSESSED; which actually prevented the plaintiff from obtaining a loan to cure the demand to pay-off the lease. She disputed the trade line twice.

First dispute "I never paid late", along with the additional comments "Never late paying. . . . This is not a real repossession. Please investigate. Honda put the
adverse on my credit report. [Household Finance] would have given me a loan to pay Honda off, but it was already put on the credit report as repossession."

TransUnion processes the dispute by sending an ACDV that said. "[c]laims company will change. Verify all account information.", they omitted the never paid late, or any mention of the repossession.

Honda only verified that the information was correct, and only updated the investigation date.

A few months later, she sends a second dispute, and said "I request you reinvestigate the American Honda Finance listing . . . again. There was no default in payments, all the payments were made on time. The vehicle was improperly repossessed when it was being driven by my son’s girlfriend. There was no default and the credit report should not read repossession."

Again TransUnion sent an ACDV to Honda asking that they verify her present and previous account status, payment historical profile, payment rating, special comment, and compliance condition codes.

Honda again verified the tradeline as accurate, and only updated the reinvestigation date.

The plaintiff then filed a suit against Honda, the repossession company, and TransUnion.

The relevant causes of action is whether reporting a REPOSSESSION for a REPOSSESSION which is not caused by default of payments is false reporting, because a REPOSSESSION is seen as synonymous as REPOSSESSION for NON-PAYMENT.

"Whether a reinvestigation conducted by a furnisher in response to a consumer’s notice of dispute is reasonable thus depends in large part on the allegations made by the consumer and the notice of the allegations provided to the furnisher by the consumer reporting agency." pg 20.

Because the first dispute ACDV didn't contain notations to verify payment history, and the repossession, Honda met its requirements under the FCRA, however in the second dispute, the ACDV did contain notations to verify the payment history, and the repossession, but there is no indication that Honda performed an investigation more thorough than the cursory investigation that is routine. "The evidence suggests that AHFC discounted this dispute because it believed that plaintiff’s credit report did not reflect late payments and that “there was no question” that there had not been late payments on plaintiff’s account." pg 22-23.

"Given the plain meaning of the term repossession—which, as explained below, see infra Part IV.A, implies non-payment—this dismissal of plaintiff’s claim by AHFC may not have been reasonable. Thus, with respect to this notice of dispute, it is for the jury to determine whether AHFC’s investigation and response to Trans Union was consistent with the requirements of 15 U.S.C. Â§ 1681s-2(b)(1)." pg 23.

jam237 · May 21, 2012

In Re: TransUnion

pg. 27-31

A. Failure to Follow Reasonable Procedures in Violation of 15 U.S.C. Â§ 1681e(b) To prevail on a claim of negligent failure to comply with Â§ 1681e(b), a plaintiff must show the following four elements: (1) that “inaccurate information was included in a consumer’s credit report,” (2) that “the inaccuracy was due to defendant’s failure to follow reasonable procedures to assure maximum possible accuracy,” (3) that “the consumer suffered injury,” and (4) that “the consumer’s injury was caused by the inclusion of the inaccurate entry.” Philbin v. Trans Union Corp., 101 F.3d 957, 963 (3d Cir. 1996). Trans Union argues that it is entitled to
summary judgment because the information was accurate, meaning that plaintiff cannot show the first element. (TU’s Mem. 5.)
A plaintiff cannot sustain a claim to enforce Â§ 1681e(b) without showing an inaccuracy in her credit report. Whether the accuracy requirement of Â§ 1681e(b) merely requires technical accuracy or requires something more has not been clarified by either the United States Supreme Court or the Third Circuit. Plaintiff urges this court to follow the D.C. Circuit’s reasoning in Koropoulos v. The Credit Bureau, Inc., 734 F.2d 37 (D.C. Cir. 1984), which rejected the technical accuracy defense in the context of a consumer reporting agency defendant. The court denied summary judgment for the consumer reporting agency where “there is a genuine issue of
fact as to whether the report was sufficiently misleading so as to raise the issue of whether [the defendant’s] procedures for assuring ‘maximum possible accuracy’ were reasonable.” Id. at 42.
In rejecting the technical accuracy defense as applied to consumer reporting agencies, the D.C. Circuit based its conclusion on the FCRA’s requirement that consumer reporting agencies employ reasonable procedures to assure more than mere accuracy. Id. at 40. The FCRA provides: “Whenever a consumer reporting agency prepares a consumer report it shall follow reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the report relates.” 15 U.S.C. Â§ 1681e(b) (emphasis added). District courts in the Eastern District of Pennsylvania have applied Koropoulos. See Agosta v. InoVision, No. 02-806, 2003 WL 22999213, at * (E.D. Pa. Dec. 16, 2003) (“Though ‘technically accurate,’a derogatory entry on a credit report is actionable because it is misleading or materially incomplete.”); Evantash v. G.E. Capital Mortgage Servs., Inc., No. 02-1188, 2003 WL
22844198, at *4 (E.D. Pa. Nov. 25, 2003) (“Because the Third Circuit has not endorsed the ‘technical accuracy defense,’ we shall apply the less stringent approach articulated in Koropoulos.” (internal footnote omitted)). But see Todd v. Associated Credit Bureau Servs., Inc., 451 F. Supp. 447, 449 (E.D. Pa. 1977) (holding, prior to Koropoulos, that a technically accurate consumer report precluded a finding of liability of the consumer reporting agency). I, too, will follow Koropoulos and deny summary judgment if “there is a genuine issue of material fact as to whether the report was . . . misleading.” 734 F.2d at 42.
Whether the credit report in the instant case is accurate and not misleading depends on the meaning of “repossession” as used in the report. “Repossession” is not defined by federal or Pennsylvania statute. It is defined by the dictionary as “the act of resuming possession of property when the purchaser fails to keep up payments on it.” Webster’s Third New International Dictionary 1926 (1981) (emphasis added). Similarly, one dictionary definition of the verb “repossess” is “to resume possession of (an item purchased on installment) in default of the payment of installments due.” Id. (emphasis added). Given these definitions, and applying the Koropoulos approach, a reasonable jury could conclude that Trans Union’s reporting was so misleading as to be inaccurate. Therefore, I will not grant Trans Union’s motion for summary judgment on the basis of the alleged accuracy of the report.16
Trans Union asserts in the alternative that “Trans Union is entitled to summary judgment on [p]laintiff’s claims of damages relating to credit denials in August 2006 because these allegedly occurred prior to her disputes.” (TU’s Mem. 5.) Trans Union also asserts that “there is no evidence that an actual recipient of [p]laintiff’s consumer report was misled or would have acted on [p]laintiff’s application for credit differently if the reason why the repossession occurred had been included in [p]laintiff’s report.” (TU’s Reply 2.)
Plaintiff argues that, in the context of damages, Trans Union erroneously conflates Â§ 1681i(a)’s reinvestigation requirement with Â§ 1681e(b)’s reasonable procedures requirement. I agree. Section 1681 relates to “reasonable procedures to assure maximum possible accuracy” in reporting generally, 15 U.S.C. Â§ 1681e(b), and so the time at which a consumer disputes the information is irrelevant to the Â§ 1681e(b) analysis.
With respect to causation, a plaintiff need not “satisfy his burden only by introducing direct evidence that consideration of the inaccurate entry was crucial to the decision to deny credit.” Philbin, 101 F.3d at 968. Instead, a plaintiff need only “produce evidence from which a reasonable trier of fact could infer that the inaccurate entry was a ‘substantial factor’ that brought about the denial of credit.” Id. Plaintiff asserts, based on her conversation with a Household Finance representative, that Household Finance would have given her a loan to redeem the car
had the repossession not been reported in the way that it was. In her deposition, plaintiff testified
as follows:17
He would have given me a loan. It doesn’t matter if you pay 25 percent. They give you a loan for anything.
He said to me—he made it clear to me that I would have given you the loan had it not been reported that way on your credit report. But the way it is reported on your credit report, I cannot give you a loan
Q. And did he say how it was reported on your credit report?
A. Those are the words he used to me, the way it was reported on your credit report, I cannot give you the loan.
(Krajewski Dep. 105:14-106:3.) Assuming the truth of these statements—as I must when evaluating Trans Union’s motion for summary judgment—I find sufficient evidence of a denial of credit resulting from the repossession entry on plaintiff’s credit report for plaintiff to survive Trans Union’s motion for summary judgment. Therefore, I will deny Trans Union’s motion for summary judgment as to plaintiff’s claim alleging violation of Â§ 1681e(b).
Click to expand...

The next part of the decision involving TransUnion is about the reasonableness of the investigation.

The court ruled that it would be unrealistic for TU to obtain a copy of the actual contract to determine whether or not it was a 'real repossession' especially because that was one of the tasks that the court was currently being asked to do in the case, however in both plaintiff's disputes, she disputed the payment history, so the court says even though it wouldn't be reasonable to have TU go through the contract to determine whether or not there was in fact a 'real repossession', they did have a responsibility to ensure that the reporting of the 'repossession' wasn't misleading enough to be inaccurate. There isn't enough evidence to prove that TU's investigation was sufficient to balance the "NEVER LATE" = "REPOSSESSION" question.

jam237 · May 21, 2012

There is a good start of the summary of the case...

Heather L · May 24, 2012

Thank you for summarizing this for everyone. I never even thought about a situation like this. I am sure that if happens more often then we might think. If this is why we need to review our credit reports more often, and don't your son's girlfriend drive your car.
Good thing there are site like creditnet.com to help people play the credit score game.
Thanks! Heather with BoostMyScore.NET

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