United States: New York Federal Court Finds Loan Suspension Rating On Credit Report Insufficient To Demonstrate Concrete Harm Under FCRA
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The United States District Court for the Eastern District of New York recently dismissed a consumer’s claim under Section 1681e (b) of the Fair Credit Reporting Act (the âFCRAâ), finding that the reference of a loan suspension on the consumer’s credit report and the resulting decrease in credit rating was insufficient, on its own, to demonstrate concrete reputational or financial harm. See Grauman v. Equifax Info. Services, LLC, 2021 WL 3239865 (EDNY July 16, 2021). In that case, the plaintiff’s mortgage payments were suspended from April 15 to July 1, 2020 as a form of COVID-19 emergency relief offered by the plaintiff’s lender. Despite the suspension, the Applicant continued to make his monthly mortgage payments on time. However, the Equifax claimant’s credit report reflected a 16 point drop in his credit rating, which the claimant attributed to what he believed was an incorrect statement by the mortgage lender that his mortgage payments were suspended. The following month, the applicant’s credit report showed that a remark from the applicant’s mortgage lender had been deleted from his account, although his credit rating had not been restored to its previous high level. The plaintiff then brought a putative FCRA Â§ 1681e (b) class action suit against Equifax and VantageScore (the “defendants”), a company jointly owned by Equifax which provides an algorithm used to generate credit scores for consumers, alleging that the reporting of the suspension of the applicant’s mortgage loan and the resulting decline in his credit rating was a negligent and willful violation of the FCRA’s requirement that credit bureaus employ reasonable procedures to ensure the accuracy of consumer reports. The defendants requested a dismissal.
The district court allowed the defendants’ motion to dismiss, ruling that the plaintiff lacked standing to bring an action against the FCRA. First, the Court noted that in order to establish standing, the plaintiff had to prove on a preponderance that: (1) he suffered “prejudice in fact”, that is, “an interference with a legally protected interest which is (a) one and particularized, and (b) real or imminent, non-conjectural or hypothetical; “(2)” a causal link between the damage and the behavior complained of “; and (3) it is “probable … that the damage will be remedied by a favorable decision”. Although the Court recognized that Congress conferred legal interests on consumers under the FCRA, the Court found that the plaintiff had not alleged concrete and specific harm to that interest. Based on the Supreme Court’s decision in TransUnion LLC v. Ramirez, 141 S. Ct. 2190 (2021), the court concluded that the reference to the suspension of the plaintiff’s loan on his credit report and the decline in his credit rating were insufficient, on their own, to demonstrate concrete moral or financial harm. Specifically, the inaccurate credit reports were never released to a third party and the applicant did not allege that he had tried or planned to use his credit report to obtain credit. Finally, the Court concluded that the plaintiff had not alleged a risk of future harm. Accordingly, the Court dismissed the complaint.
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