17 Apr First Circuit Addresses Collateral Attack Defense in FCRA Cases
The United States Court of Appeals for the First Circuit recently reached a significant decision in a case under the Fair Credit Reporting Act. In the case of Deandrade v. Trans Union LLC, 2008 WL 1722237 (1st Cir. 2008) the Court held that the plaintiff had not sustained his burden of proving inaccuracy of the credit reporting trade line.
In the case, the plaintiff had claimed that Trans Union had violated the FCRA, 15 U.S.C. § 1681i, by failing to conduct a reasonable reinvestigation into the disputed debt and failing to delete the trade line from his credit report. Underlying the dispute was a debt that the plaintiff had contracted for but that he contended had resulted in a fraudulent mortgage being put on his property. The matter was disputed and the subject of state court litigation.
The Court held that the reinvestigation duty under the FCRA did not require Trans Union to evaluate the merits of this dispute. The Court invoked the collateral attack doctrine holding that a consumer cannot use the dispute mechanism of the FCRA to seek adjudication of disputed claims. The Court stated that the plaintiff had “crossed the line between alleging a factual deficiency that Trans Union was obliged to investigate pursuant to the FCRA and launching an impermissible collateral attack against a lender by bringing an FCRA claim against a consumer reporting agency.” The difficulty with the decision is the exact location of the line that was crossed. The Court stated that there was no duty “to go behind public records to check for accuracy or completeness when a consumer is essentially collaterally attacking the underlying credit information.”
This case should not affect those cases where a trade line item is flatly wrong, such as in theft of identity cases. However, it will be used by defense attorneys to undermine cases where a dispute involves issues of disputed fact or credibility.
Nicholas Ortiz, Boston Bankruptcy Attorney
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