United States: Consumer Reporting Agencies’ Procedures Concerning The Reporting And Reinvestigation Of A Public Record Tax Lien On A Consumer’s Credit File Were Reasonable As A Matter Of Law

Wright v. Experian Info. Solutions, Inc., 2014 U.S. Dist. LEXIS 112876 (D. Colo. Aug. 14, 2014).

Facts: Consumer Reporting Agencies ("CRAs"), Experian Information Solutions, Inc. ("Experian") and Trans Union, LLC ("Trans Union"), reported a public record reflecting a notice of federal tax lien related to a 941 employment tax liability for tax period ending March 31, 2004 ("NFTL") on Plaintiff Gary A. Wright's ("Plaintiff") credit files. The "Name of Taxpayer" section of the NFTL contained the following information:



The Pitkin County Clerk and Recorder recorded the NFTL against Plaintiff, and Lexis Nexis electronically reported to the CRAs that the NFTL was attributable to Plaintiff.

In September 2009, Plaintiff disputed the NFTL with the IRS and claimed that the full amount of the tax liability had been paid before it was issued and that the NFTL was prematurely and therefore erroneously filed. As a result, Plaintiff asked that the IRS withdraw the NFTL. The IRS did not withdraw the NFTL but rather filed a Certificate of Release.

The Court noted that Plaintiff did not dispute whether the NFTL applied to him and even "seemed to recognize that the NFTL affected him personally." Plaintiff also did not understand the difference between a withdrawal and a release of an NFTL and never appealed the adverse ruling from the IRS on his request for a withdrawal.

After the NFTL was released, Plaintiff sent written disputes to Experian and Trans Union disputing the validity of the NFTL and claimed that the NFTL was void and that it did not apply to him but rather his title company. Along with his disputes, Plaintiff included the NFTL, the release, and correspondence he had sent to the IRS. Plaintiff demanded that the NFTL be removed from his credit files. While the CRAs updated their records and noted in Plaintiff's credit files that the NFTL had been released, neither Experian nor Trans Union removed the NFTL from Plaintiff's credit files.

As a result, Plaintiff sent another round of disputes to the CRAs making the same allegations. The CRAs consulted with Lexis Nexis, who verified the reporting as accurate based on records from Pitkin County, and the CRAs notified Plaintiff of the results. Plaintiff filed suit alleging violations of the federal Fair Credit Reporting Act ("FCRA") and the Colorado Consumer Credit Reporting Act ("CCCRA"). Specifically, Plaintiff claimed that the CRAs violated § 1681e(b) (failure to follow reasonable procedures to assure the maximum possible accuracy of the information being reported in a consumer's consumer reports) and § 1681i (failure to conduct a reasonable reinvestigation of disputed information being reported in a consumer's credit file) of the FCRA and similar claims in the CCCRA.

The Court found that it was reasonable for anyone reviewing the NFTL to interpret it as applying to Plaintiff. Thus, the CRAs could not be held liable for including it on Plaintiff's consumer reports.

  • Reasonable Procedures. To prevail on these claims, Plaintiff must establish: "(1) [Defendants] failed to follow reasonable procedures to assure the accuracy of [their] reports; (2) the report in question was, in fact, inaccurate; (3) [Plaintiff] suffered injury; and (4) [Defendants'] failure caused his injury."
  • Reasonable Reinvestigation. Prevailing on a § 1681i claim requires establishing essentially the same four elements relevant for an investigation claim, along with establishing a fifth element not in dispute here—namely, that Plaintiff notified Defendants about the alleged inaccuracy.
  • Reasonable Reinvestigation. The Court found that the CRAs' reliance on automatized processes to reinvestigate Plaintiff's disputes "might be unreasonable if the process failed to catch an indisputable inaccuracy." However, the Court concluded that such a scenario was not a concern in this case because even "robots" could "reach the reasonable conclusion that the NFTL applied to Plaintiff personally."
  • Removal. While Plaintiff argued that the CRAs' removal of the public record was evidence of an inaccuracy, the Court noted that a CRA's decision to remove a disputed account is not evidence in and of itself that the CRA's initial reporting of the disputed account was inaccurate. Further, the Court explained that CRAs have discretion not to report released NFTLs on credit reports.
  • Summary Judgment. The Court identified the principal question to be resolved on summary judgment was whether "there is an easily available procedure that would greatly improve accuracy of [the CRAs'] reporting of NFTLs such as Plaintiff's and do so at minimal cost." The Court first noted that there was no irrefutable evidence that the NFTL applied only to the title company and not Plaintiff. Next, the Court found that it was reasonable as a matter of law to "interpret the NFTL as extending to Plaintiff and that no additional procedure implemented by [the CRAs] would have allowed them to more accurately determine the scope of the NFTL's applicability.

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