Second Circuit Upholds Dismissal of FCRA Claim Due to Customer’s Failure to Allege Dispute to CRA

A three-judge panel in the Second Circuit recently affirmed a Connecticut district court decision dismissing a Fair Credit Reporting Act suit against Salisbury Bank and Trust Company because the customer had not notified a credit reporting agency of the alleged error in his credit report.

In Sprague v. Salisbury Bank and Trust Company, No. 19-3241, 2020 U.S. App. LEXIS 25157 (2d Cir. Aug. 10, 2020), Appellants borrowed money from Salisbury to purchase a home and, after several years, Salisbury initiated foreclosure proceedings. The parties stipulated to a $40,000 deficiency judgment. When Appellant later noticed his credit report improperly listed the mortgage as still open, he notified Salisbury, who acknowledged the erroneous report and informed Appellant that a correction had been made. Appellants subsequently learned that Salisbury did not correct the erroneous information until several months later.

Appellants filed a complaint alleging Salisbury violated FCRA by “negligently and willfully fail[ing] to perform a reasonable reinvestigation and correction of inaccurate information,” and by “engag[ing] in behavior prohibited by FCRA by failing to correct errors in the information that it provided to credit reporting agencies…after [Appellants] notified [Salisbury Bank] of the error.”

The district court dismissed the complaint reasoning Appellants failed to state a claim under 15 U.S.C. § 1681s-2(b) because they (1) did not plead that they notified a CRA of the disputed accuracy of Salisbury’s reports and (2) did not allege that a CRA notified Salisbury of the dispute. Further, the court reasoned Appellants failed to state a claim under 15 U.S.C. § 1681s-2(a) because there is no private right of action under this subsection. FULL ARTICLE

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