Sessa v Transunion

FAIR CREDIT REPORTING ACT
Shelley Milgram v. Chase Bank USA, N.A.
Gia Sessa v. TransUnion LLC
Date: Aug. 9, 2022

Issue: Whether furnishers and Consumer Reporting Agencies (CRAs) must investigate legal disputes and defenses for claims under the Fair Credit Reporting Act (FCRA). 

Case Summary: The American Bankers Association and a group of trade groups filed two amicus briefs urging the Second and Eleventh Circuits to reject the Consumer Financial Protection Bureau’s (CFPB) position that furnishers and Consumer Reporting Agencies must investigate legal disputes and defenses to a debt the consumer raises under FCRA. 

In the Milgram case, Shelly Milgram sued Chase alleging FCRA violations because Chase failed to conduct a reasonable investigation after her employee opened several credit cards in her name without her consent. Chase concluded Milgram was responsible for the charges under the legal doctrine of apparent authority because Milgram’s employee used and paid for the Chase card from a deposit account controlled by Milgram for over two years without objection. The district court ruled in Chase’s favor, characterizing the investigation duties the FCRA imposes on furnishers as “procedural” and “far afield” from legal questions. The court also ruled there was no genuine dispute that Chase conducted a reasonable investigation as required under the FCRA. 

In the Sessa case, Gia Sessa sued TransUnion alleging FCRA violations because TransUnion failed to maintain reasonable procedures to ensure the accuracy of her credit report. Sessa leased a vehicle which was financed by Hudson Valley Federal Credit Union. At the end of the 36-month lease, Sessa could purchase the vehicle for its residual value of $19,444.07, however, Hudson Valley furnished data to TransUnion indicating she owed a “balloon payment” of $19,440. The dealership confirmed Sessa did not owe the balloon payment. TransUnion asserted it was not obligated to resolve a legal challenge because it relied on Hudson Valley’s reporting. The district court ruled in favor of TransUnion because it accurately reported the information it received. 

On appeal, the Consumer Financial Protection Bureau (CFPB) filed an amicus brief in both cases on behalf of plaintiffs. CFPB argued furnishers and CRAs must investigate legal disputes and defenses to a debt the consumer raises under the FCRA. CFPB further contended it would be difficult for courts to decide FCRA cases to determine whether a plaintiff has asserted a factual inaccuracy or a legal dispute.

To counter CFPB, Amici filed briefs in both cases arguing three points. First, Amici argued the FCRA’s text focuses on factual accuracy. Amici asserted that a careful examination of the FCRA’s text demonstrates that Congress required furnishers and CRAs to investigate factual inaccuracies not legal disputes. In Amici’s view, evaluating whether credit information conforms exactly to fact or truth, has no errors, or contains all necessary parts, applies most naturally to matters of fact. 

Second, Amici argued the FCRA’s structure, purpose and history confirm the textual focus on factual accuracy. Amici outlined the five types of inaccuracy Senator William Proxmire introduced when sponsoring the act in 1970: confusion over individuals with similar names; biased information; malicious gossip; computer errors; and incomplete information. According to Amici, each of these categories were intended to be factual in nature. 

Third, Amici argued several courts have correctly interpreted the FCRA to focus on factual inaccuracies. According to Amici, courts have recognized a plaintiff must show a factual inaccuracy, rather than the existence of disputed legal questions, to bring suit against a furnisher under FCRA § 1681s-2(b).

Bottom Line: As of Sept. 1, 2022, neither the Second nor Eleventh Circuit have scheduled oral argument. 

Download the amicus brief to read the full text.