Holden v. Holiday Inn

FAIR CREDIT REPORTING ACT
Holden v. Holiday Inn Club Vacations Inc.
Date: Feb. 15, 2023

Issue: Whether the Fair Credit Reporting Act (FCRA) requires furnishers to investigate and adjudicate legal disputes.

Case Summary: The American Bankers Association along with other trade groups (Amici) filed an amicus brief urging the Eleventh Circuit to reject the Consumer Financial Protection Bureau’s (CFPB) attempt to expand FCRA’s obligations to require credit reporting agencies and furnishers to adjudicate legal disputes.

Tanethia Holden sued Holiday Inn for allegedly reporting inaccurate information to Experian; failing to conduct an appropriate investigation; and failing to correct inaccuracies. Holden purchased a timeshare from Holiday Inn. Holden’s promissory note required her to make monthly installment payments until the full amount was repaid. She made the first three installment payments and then stopped making payments. Holden sent a letter via her attorney informing Holiday Inn she no longer intended to make further payments. She attempted to cancel the contract, alleging her sales transaction was fraudulently represented at the time of sale. Holiday Inn did not agree the contract was cancelled and reported the delinquent debt to Experian. Holden disputed the information in her consumer report several times. Holiday Inn investigated the disputes, but determined no inaccuracy existed. The district court granted summary judgment for Holiday Inn, reasoning a disagreement over whether the debt is owed constitutes a legal dispute, rather than an “inaccuracy” under FCRA.

Mark Mayer also sued Holiday Inn, claiming it violated FCRA when it verified the accuracy of this information in his credit report. Mayer purchased a timeshare from Holiday Inn and made monthly payments from November 2014 to July 2017, but then stopped making payments. He sent Holiday Inn two letters disputing the validity of his agreement in 2019. Mayer claimed he was rescinding the agreement and permitting Holiday Inn to retain all prior payments as liquidated damages. Afterward, Mayer obtained a credit report from Experian, which showed an open account with a past due balance. Mayer disputed the report’s accuracy with Experian, however, Holiday Inn certified the information as accurate. The district court granted summary judgment for Holiday Inn, reasoning Mayer’s dispute over whether the liquidation clause excused his payment obligations is a legal contractual dispute, not a factual issue supporting a FCRA claim.

Holden and Mayer appealed the decisions, and the Eleventh Circuit consolidated the cases. The plaintiffs argued FCRA imposes a duty on furnishers to ensure all information reported to credit reporting agencies is accurate and complete—whether characterized as “legal” or “factual.”

CFPB filed an amicus brief urging the Eleventh Circuit to reverse the district court’s decision. CFPB argued furnishers are required to investigate reasonable disputes, regardless of whether the disputed inaccuracy can be characterized as legal. Furthermore, CFPB asserted the FCRA does not categorically exempt legal issues from the investigations furnishers must conduct. CFPB also emphasized the distinction between legal and factual issues is ambiguous and potentially unworkable.

Amici disagreed with CFPB, filing its amicus brief in support of Holiday Inn. Amici argued the FCRA addresses factual inaccuracies rather than legal disputes, as FCRA’s text requires furnishers and CRAs to investigate only factual accuracy. CFPB argued the statutory text contemplates a distinction between “legal” inaccuracies and “factual” inaccuracies. But Amici emphasized a careful examination of the FCRA’s text demonstrates how Congress required furnishers and CRAs to investigate factual inaccuracies, not legal disputes. Amici further emphasized the FCRA’s structure and purpose reinforce the natural reading of the statutory text.

Amici also argued CFPB’s contrary approach is unworkable and inefficient. Amici claimed distinguishing between fact and law is a familiar task for courts. Amici emphasized CFPB’s warning are especially unwarranted because courts around the country have already distinguished between fact and law for years in the FCRA context. Additionally, Amici claimed CFPB’s approach is unsound. As a threshold matter, Amici emphasizes the regime CFPB envisions would be unadministrable and expensive.

Bottom Line: The Eleventh Circuit has not yet scheduled oral argument. Plaintiffs’ reply brief in due 
March 1, 2023.

Download the amicus brief to read the full text.