The opinion
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
ERIC KELLER, )
)
Plaintiff, )
)
v. ) 1:23CV409
)
EXPERIAN INFORMATION )
SOLUTIONS, INC., )
)
Defendant. )
)
MEMORANDUM OPINION AND ORDER
LORETTA C. BIGGS, District Judge.
Before the Court is a Motion to Dismiss, (ECF No. 15), filed by Defendant Experian
Information Solutions, Inc. (“Defendant” or “Experian”) pursuant to 12(b)(6) of the Federal
Rules of Civil Procedure. Plaintiff Eric Keller initiated this action alleging willful or, in the
alternative, negligent violations of the Fair Credit Reporting Act (“FCRA” or “the Act”), 15
U.S.C. § 1681 et seq., and seeking compensatory, actual, statutory, and punitive damages. (ECF
No. 11 at 1, 14–17.) Plaintiff brings Count One on behalf of himself and all others similarly
situated.1 (Id. at 15.) With respect to Counts Two and Three, Plaintiff brings those Counts
individually. (Id. 15–17.) For the reasons stated herein, Defendant’s motion will be granted
in part and denied in part.
1 On August 14, 2023, the Magistrate Judge granted Plaintiff’s motion filed with Defendant’s consent
I. BACKGROUND2
Plaintiff’s Amended Complaint, (ECF No. 11), alleges the following: In or around
March 2021, Plaintiff purchased a 2021 Toyota 4 Runner and financed the vehicle through
TD Auto Finance, (id. ¶ 6). In or around December 2021, Plaintiff refinanced the vehicle
through Truist Bank (“Truist”). (Id. ¶ 7.) Truist sent payment to TD Auto for the original
loan. (Id. ¶ 8.) Subsequently, Truist sent a duplicate payment to TD Auto for the original
loan. (Id. ¶ 9.) TD Auto, upon realizing that it had been paid twice for the same loan, refunded
the amount of one of the payments to Truist. (Id. ¶ 10.) Truist then mistakenly credited the
money to Plaintiff’s account with Truist and listed the car as paid off. (Id. ¶ 11.) Truist released
the title to the vehicle to Plaintiff and sent Plaintiff a letter memorializing the title release and
congratulating Plaintiff on the “payoff.” (Id. ¶¶ 12–13.) Plaintiff made numerous attempts
thereafter to make payments on the loan, but Truist refused to take Plaintiff’s payments on
the basis that, according to Truist, Plaintiff’s loan was “paid off.” (Id. ¶ 14.) Plaintiff was
unable to get Truist to accept a payment at any time. (Id. ¶ 15.)
Thereafter, Truist realized it had made a mistake and reopened Plaintiff’s account. (Id.
¶ 17.) Truist informed Plaintiff that the current amount due was $5,202.05, which represented
all the payments up to that point, plus late fees and interest. (Id. ¶ 18.) Plaintiff made attempts
to contact Truist to correct the amount owed, but Truist refused to help Plaintiff and reported
on Plaintiff’s credit report that he was several months in arrears. (Id. ¶¶ 19–20.) Plaintiff
alleges that this reporting was false due to the delinquency being caused entirely by Truist’s
2 Because a motion to dismiss tests the sufficiency of Plaintiff’s allegations in the Complaint, with all
conduct and because the reporting did not acknowledge that Truist did not allow Plaintiff to
make payments, despite Plaintiff’s multiple attempts to do so. (Id. ¶¶ 21–22.)
Plaintiff retained counsel and worked with his counsel to draft a letter disputing
Truist’s reporting of his account. (Id. ¶¶ 24–25.) Plaintiff electronically signed the letter and
authorized his counsel to send the disputes to all three credit bureaus, including Experian. (Id.
¶ 26.) Experian is a “consumer reporting agency” [(“CRA”)] as defined in 15 U.S.C. §
1681a(f).3 (Id. ¶ 3.) The dispute letter was mailed to Defendant via certified mail return receipt
requested. (Id. ¶ 27.) The dispute letter indicated that it was from “Eric Keller” and listed his
home address, set forth Plaintiff’s dispute that the Truist account at issue was inaccurate due
to “several mistakes” made by Truist including an accidental payoff and refusal to accept
payment, and was signed at the bottom by Plaintiff. (Id. ¶¶ 29–31.) In response to Plaintiff’s
dispute, Experian sent a letter to Plaintiff stating that it was refusing to conduct a
reinvestigation because it did not believe the dispute letter was sent by or authorized by
Plaintiff. (Id. ¶ 34.) Plaintiff sent a second letter to Experian confirming that he authorized
the dispute and imploring Experian to fulfill its legal obligations. (Id. ¶ 38.)
Experian relayed the second credit report dispute to Truist via an Automated
Consumer Dispute Verification (“ACDV”) communication, which is Defendant’s standard
practice. (Id. ¶ 39.) Truist responded to the ACDV by verifying the reporting as accurate
without providing any proof to Experian that its reporting of the account was an accurate
reflection of Plaintiff’s obligation. (Id. ¶ 40.) Experian did not ask Truist to provide proof
3 “The term ‘consumer reporting agency’ means any person which, for monetary fees, dues, or on a
cooperative nonprofit basis, regularly engages in whole or in part in the practice of assembling or
evaluating consumer credit information or other information on consumers for the purpose of
furnishing consumer reports to third parties, and which uses any means or facility of interstate
contrary to the allegations made by Plaintiff’s dispute. (Id. ¶ 41.) Experian never contacted
Plaintiff regarding his dispute. (Id. ¶ 42.) Plaintiff alleges that had Experian contacted him
regarding the dispute, Plaintiff could have provided documentary proof, including
communications to and from Truist. (Id. ¶ 43.) Experian did not conduct any investigation
into Plaintiff’s dispute other than to forward the ACDV to Truist and relay Truist’s response.
(Id. ¶ 44.) Defendant then mailed a letter to Plaintiff stating that it had verified that the
information reported by Truist was accurate after a reinvestigation. (Id. ¶ 46.)
Plaintiff commenced this action on May 17, 2023. (ECF No. 1.) Defendant initially
filed a motion to dismiss for failure to state a claim on July 6, 2023, (ECF No. 9); however,
Plaintiff filed an Amended Complaint (“the Complaint”), (ECF No. 11), now the operative
Complaint, on July 27, 2023. Defendant filed the instant Motion to Dismiss on August 17,
2023. (ECF No. 15.)
II. STANDARD OF REVIEW
A motion to dismiss under Rule 12(b)(6) “challenges the legal sufficiency of a
complaint,” including whether it meets the pleading standard of Rule 8(a)(2). See Francis v.
Giacomelli, 588 F.3d 186, 192 (4th Cir. 2009). Rule 8(a)(2) requires a complaint to contain “a
short and plain statement of the claim showing that the pleader is entitled to relief,” Fed. R.
Civ. P. 8(a)(2), thereby “giv[ing] the defendant fair notice of what the . . . claim is and the
grounds upon which it rests,” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal
quotation marks and citation omitted). To survive a Rule 12(b)(6) motion to dismiss, “a
complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief
that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550
U.S. at 570). “In ruling on a motion to dismiss, a court may also consider documents attached
to the complaint, as well as those attached to the motion to dismiss, so long as they are integral
to the complaint and authentic.” Lawhon v. Edwards, 477 F. Supp. 3d 428, 436 (E.D. Va. 2020)
(internal quotation marks omitted) (quoting Fusaro v. Cogan, 930 F.3d 241, 248 (4th Cir. 2019)).
In assessing a claim’s plausibility, a court must draw all reasonable inferences in the plaintiff’s
favor. Vitol, S.A. v. Primerose Shipping Co. Ltd., 708 F.3d 527, 539 (4th Cir. 2013).
A claim is plausible when the complaint alleges facts that allow the court “to draw the
reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S.
at 678. However, “mere conclusory and speculative allegations” are insufficient, Painter’s Mill
Grille, LLC v. Brown, 716 F.3d 342, 350 (4th Cir. 2013), and a court “need not accept as true
unwarranted inferences, unreasonable conclusions, or arguments,” Vitol, 708 F.3d at 548
(quoting Jordan v. Alt. Res. Corp., 458 F.3d 332, 338 (4th Cir. 2006)). A complaint may fail to
state a claim upon which relief can be granted in two ways: first, by failing to state a valid legal
cause of action, i.e., a cognizable claim, see Holloway v. Pagan River Dockside Seafood, Inc., 669 F.3d
448, 452 (4th Cir. 2012); or second, by failing to allege sufficient facts to support a legal cause
of action, see Painter’s Mill Grille, 716 F.3d at 350.
III. DISCUSSION
A. Fair Credit Reporting Act
Plaintiff seeks relief pursuant to the FCRA. (ECF No. 11 ¶ 1.) The Act “seeks to
ensure ‘fair and accurate credit reporting.’” Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1545
(2016) (quoting 15 U.S.C. § 1681(a)(1)). Further, the FCRA “exclusively regulates reporting
and use of credit information.” Wilson v. Chrysler Cap., No. 19-CV-975, 2019 WL 12107374,
at *2 (M.D.N.C. Nov. 14, 2019).
The Act also regulates how credit reporting agencies collect and transmit credit-related
257 F.3d 409, 414–15 (4th Cir. 2001), and allows consumers to challenge information in a
consumer’s file that they believe is inaccurate or incomplete, see 15 U.S.C. § 1681i. Section
1681i of the Act requires CRAs to reinvestigate disputed items in a consumer’s credit file if
the consumer notifies the agency of the dispute “directly.” 15 U.S.C. § 1681i(a)(1)(A).
In addition to the duties it imposes on CRAs, the FCRA imposes duties on “furnishers
of information” and prohibits any person from furnishing information to a CRA that the
person knows is inaccurate. Saunders v. Branch Banking & Tr. Co. off Va., 526 F.3d 142, 147–48
(4th Cir. 2008) (citing 15 U.S.C. § 1681s–2(a)).
A CRA may rely on information from a reputable source initially to compile a
consumer’s credit file under § 1681e(b); however, 15 U.S.C. § 1681i sets forth more detailed
procedures for “reinvestigating” an entry on a credit report once a reporting agency is put on
notice that the information may be incomplete or inaccurate. Thomas v. Mercedes Benz Credit
Corp., Civil Action No. AW-04-976, 2006 WL 8457059, at *5 (D. Md. June 27, 2006).
15 U.S.C. § 1681i provides in relevant part that:
[I]f the completeness or accuracy of any item of information contained in a
consumer’s file at a consumer reporting agency is disputed by the consumer and
the consumer notifies the agency directly, or indirectly through a reseller, of
such dispute, the agency shall, free of charge, conduct a reasonable
reinvestigation to determine whether the disputed information is inaccurate and
record the current status of the disputed information . . . . If, after any
reinvestigation . . . an item of the information is found to be inaccurate or
incomplete or cannot be verified, the consumer reporting agency shall . . .
promptly delete that item of information from the file of the consumer.
15 U.S.C. §§ 1681i(a)(1)(A), (a)(5)(A).
Whether a CRA’s reinvestigation complies with this provision of the FCRA hinges on
reasonableness, and reasonableness is typically determined by the fact-finder. Thomas, 2006
WL 8457059, at *5. The FCRA, however, does not explicitly define what constitutes a
reasonable reinvestigation. Id. “With respect to an analogous provision of the FCRA, 15
U.S.C. § 1681s-2(b)(1), the Fourth Circuit has opined that to determine reasonableness, ‘the
cost of verifying the accuracy of the information’ should be weighed against ‘the possible harm
of reporting inaccurate information.’” Id. (citing Johnson v. MBNA Am. Bank, N.A., 357 F.3d
426, 432 (4th Cir. 2004).
In evaluating whether a CRA has complied with § 1681i, courts have made clear that
claiming a factual inaccuracy is different than asserting a legal challenge to the debt. Jones v. City
Plaza, LLC, No. 1:19CV924, 2020 WL 2062325, at *4 (M.D.N.C. Apr. 29, 2020). “Claims
brought against CRAs based on a legal dispute of an underlying debt raise concerns about
‘collateral attacks’ because the creditor is not a party to the suit.” Saunders, 526 F.3d at 150.
Furthermore, “[b]ecause CRAs are ill equipped to adjudicate [legal] disputes, courts have been
loath to allow consumers to mount collateral attacks on the legal validity of their debts in the
guise of FCRA reinvestigation claims.” Jones, 2020 WL 2062325, at *4 (second alteration in
original) (internal quotation marks omitted) (quoting Carvalho v. Equifax Info. Servs., LLC, 629
F.3d 876, 891 (9th Cir. 2010) (citing Saunders, 526 F.3d at 150)).
The Court now evaluates each of the counts alleged in the Complaint to determine
whether Plaintiff’s factual allegations state a cognizable claim.
B. Count One (Purported Class Claim) - Failure to Conduct Reinvestigation
Plaintiff in his Complaint makes broad allegations with respect to Defendant’s
Suspicious Mail Policy (“SMP”). (ECF No. 11 at ¶¶ 47–71.) Plaintiff alleges that Experian
employs its SMP in an effort to ensure correspondence it receives concerning a consumer was
sent by the consumer rather than a third-party. (Id. ¶ 48.) Experian’s policy dictates that
suspicious letters are not reinvestigated without further action by the consumer. (Id. ¶ 52.)
Plaintiff further alleges that Experian’s decision to refuse to even review a dispute based on
characteristics of the envelope fails to comply with 15 U.S.C. § 1681i(a)(1)(A). (Id. ¶ 58.)
As discussed above, 15 U.S.C. § 1681i(a) provides that “if the completeness or accuracy
of any item of information contained in a consumer’s file at a [CRA] is disputed by the
consumer and the consumer notifies the agency directly,” the CRA “shall, free of charge,
conduct a reasonable reinvestigation to determine whether the disputed information is
inaccurate and record the current status of the disputed information.” 15 U.S.C. §
1681i(a)(1)(A) (emphasis added). In a later subsection, the FCRA provides that
notwithstanding the requirement to reinvestigate disputes sent directly from consumers, “a
[CRA] may terminate a reinvestigation of information disputed by a consumer . . . if the
agency reasonably determines that the dispute by the consumer is frivolous or irrelevant,
including by reason of a failure by a consumer to provide sufficient information to investigate
the disputed information.” 15 U.S.C. § 1681i(a)(3)(A).
Defendant argues that because it is only required to investigate disputes that originate
directly from the consumer, in discharging its obligations under § 1681i, a CRA “may request
an identity verification to confirm that the consumer himself––and not a third party trying to
gain access to a consumer’s file––made the dispute, as courts repeatedly have found[.]” (ECF
No. 16 at 13–14 (collecting cases).) However, the cases that Defendant relies on to support
its argument that requesting identity verification complies with § 1681i, were not determined
at the motion to dismiss stage. In deciding a motion to dismiss, the Court is only assessing
the sufficiency of a plaintiff’s factual allegations, which must be taken as true, and the Court
must make all reasonable inferences in the plaintiff’s favor.
Turning to the factual allegations here, Plaintiff alleges he retained and worked with his
attorney to draft a letter disputing Truist’s reporting of his account. (ECF No. 11 ¶¶ 24–25.)
Plaintiff electronically signed the letter and authorized his attorney to send the disputes to all
three credit bureaus, including Experian. (Id. ¶ 26.) The dispute letter was mailed to
Defendant via certified mail return receipt requested. (Id. ¶ 27.) The dispute letter indicated
that it was from “Eric Keller” and listed his home address, set forth Plaintiff’s dispute that the
Truist account at issue was inaccurate due to “several mistakes” made by Truist including an
accidental payoff and refusal to accept payment, and was signed at the bottom by Plaintiff.
(Id. ¶¶ 29–31.) In response to Plaintiff’s dispute, Defendant sent a letter to Plaintiff stating
that it was refusing to conduct a reinvestigation because it did not believe the dispute letter
was sent by or authorized by Plaintiff. (Id. ¶ 34.) Plaintiff sent a second letter to Experian
confirming that he authorized the dispute. (Id. ¶ 38.) Defendant subsequently initiated the
reinvestigation. (Id. ¶ 39.)
At this stage of the case, the Court must accept Plaintiff’s factual allegations as true and
draw all reasonable inferences in Plaintiff’s favor. Plaintiff’s factual allegations support a
reasonable inference that under its SMP, Defendant fails to initiate reinvestigations, essentially
terminating the reinvestigation based on suspected fraud, without determining whether the
grounds for termination pursuant to 15 U.S.C. § 1681i(a)(3)(A) are satisfied. Plaintiff has
included sufficient factual allegations to call into question Defendant’s compliance with §
1681i(a)(1)(A) in light of Defendant’s requirement that Plaintiff provide additional information
before reinvestigating Plaintiff’s dispute sent by his attorney. Whether Defendant’s actions were
ultimately reasonable is not a question the Court can settle at this stage of the case. Accordingly,
Count One of Plaintiff’s Complaint survives Defendant’s Motion to Dismiss.
C. Count Two (Unreasonable Reinvestigation) and Count Three (Reporting
Information Which Defendant Cannot Verify)-Individual Claims
Plaintiff brings Counts Two and Three on his own behalf and not on behalf of any
purported class. (ECF No. 11 at 15–16.) With respect to Count Two, Plaintiff alleges that
Defendant violated 15 U.S.C. § 1681i because Defendant (1) failed to conduct a reasonable
reinvestigation of the information in Plaintiff’s credit file after receiving actual notice of
inaccuracies; (2) failed to delete inaccurate information upon actual notice of inaccuracies; (3)
failed to maintain reasonable procedures with which to filter and verify disputed information
in Plaintiff’s credit file; and (4) relied upon verification from a source it has reason to know is
unreliable. (Id. ¶ 104.) With respect to Count Three, Plaintiff alleges that Defendant failed to
maintain “reasonable procedures” designed to prevent the reporting of incorrect information,
in violation of 15 U.S.C. § 1681i(a)(5)(C). (Id. ¶ 108.)
To state a claim under § 1681i, a consumer must first show that his or her credit file
contains inaccurate or incomplete information. Jones, 2020 WL 2062325, at *4. “To determine
whether a consumer has identified a factual inaccuracy on his or her credit report that would
activate § 1681i’s reinvestigation requirement, [t]he decisive inquiry is whether the defendant
[CRA] could have uncovered the inaccuracy if it had reasonably reinvestigated the matter.” Id.
(quoting DeAndrade v. Trans Union LLC, 523 F.3d 61, 68 (1st Cir. 2008)) (first alteration in
original) (internal quotation marks omitted ). Defendant argues that Plaintiff has failed to
plead a factual inaccuracy given that Plaintiff alleges that “he was unable to get Truist to accept
a payment at any time.” (ECF No. 16 at 9 (citing ECF No. 11 ¶ 22).) Plaintiff argues that the
Court should “avoid creating a novel, bright-line rule” by distinguishing “legal versus factual”
inaccuracies, as the Fourth Circuit has not adopted this approach and other courts have
to amend the text of the FCRA to impose additional requirements on the Plaintiff’s prima
facie case, the inaccuracies disputed were not a dispute about the ‘legality’ of the underlying
debt.” (Id.) Plaintiff also asserts that “Defendant could have quickly resolved the disputes
had it simply attempted to do so.” (Id.)
Turning to the factual allegations of Plaintiff’s Complaint, Plaintiff alleges that he made
numerous attempts to make payments on the loan, but Truist refused to take Plaintiff’s
payments on the basis that, according to Truist, Plaintiff’s loan was “paid off,” and Plaintiff
was unable to get Truist to accept a payment at any time. (ECF No. 11 ¶¶ 14–15.) Plaintiff
made attempts to contact Truist to correct the amount owed, but Truist refused to help
Plaintiff and reported on Plaintiff’s credit report that he was several months in arrears. (Id. ¶¶
19–20.) After receiving verification from Plaintiff, Defendant relayed Plaintiff’s credit report
dispute to Truist, and Truist responded to the ACDV by verifying the reporting it had
previously made to Experian was accurate. (Id. ¶¶ 38–40.) Defendant then mailed a letter to
the Plaintiff stating that it had verified that the information reported by Truist was accurate
after a reinvestigation. (Id. ¶ 46.)
Plaintiff argues that he has alleged sufficient facts demonstrating Experian’s inaccurate
reporting because he tendered payments to Truist; however, these payments were rejected.
(ECF No. 17 at 5–6.) Plaintiff cites Saunders to support his arguments, stating that the Fourth
Circuit “affirm[ed] a verdict for statutory and punitive damages against a furnisher under nearly
identical facts.” (Id. at 6 (emphasis added).) Plaintiff highlights the key distinguishing fact
between Saunders and this case. In Saunders, the furnisher of the information did not escape
liability under the FCRA. 526 F.3d at 148–51. However, Plaintiff does not bring this action
against the furnisher, Truist, but rather against Experian, the CRA.
As discussed above, the Fourth Circuit has articulated its “concern” about collateral
attacks in Saunders. See Saunders, 526 F.3d at 150. It is for this reason that courts in this district
and others within the Fourth Circuit consistently hold that “[a] legal dispute on the underlying
debt is a collateral attack on the credit report and is insufficient to sustain a FCRA claim.”
Wilson, 2019 WL 12107374, at *3. Plaintiff cites non-binding authority to support his position,
(see ECF No. 17 at 6–11), in an attempt to avoid the case law that clearly applies in light of the
facts alleged in the Complaint. The Court does not find Plaintiff’s arguments persuasive.
Here, no reasonable investigation on the part of Defendant could have uncovered an
inaccuracy in Plaintiff’s report because there was never any factual deficiency in the report.
Instead, Plaintiff has a legal dispute to the debt––whether Plaintiff’s tendered payments, that
Truist refused, in some way excused the debt. Contrary to Plaintiff’s argument, Defendant
could not have “quickly resolved” this dispute. (ECF No. 17 at 6.) This dispute is the subject
of an action that Plaintiff has brought against Truist, which is pending before this Court. See
Keller v. Truist Bank, et al., No. 1:23-cv-407 (M.D.N.C filed May 17, 2023). Therefore, it is clear
that the issue here is “not a factual inaccuracy that could have been uncovered by a reasonable
investigation, but rather a legal issue that a [CRA] such as [Experian] is neither qualified nor
obligated to resolve under the FCRA.” Jones, 2020 WL 2062325, at *4 (quoting DeAndrade,
523 F.3d at 68).
In Perry v. Toyota Motor Credit Corp., where the plaintiff brought a § 1681i claim against
a CRA arguing that his past due credit reporting was incorrect because his bankruptcy
discharge eliminated his obligation to make car loan payments, the district court found that
“the Fourth Circuit has expressed concern about collateral attacks on underlying debts via
FCRA suits against CRAs. Accordingly, Perry’s contention that Experian inaccurately
reported his account as due and owing, with a past-due balance fails to state a claim under
FCRA §§ 1681e(b) and 1681i.” No. 1:18CV00034, 2019 WL 332813, at *5 (W.D. Va. Jan. 25,
2019). Plaintiff’s claim likewise fails because it is “nothing more than an impermissible
collateral attack on the debt.” Jones, 2020 WL 2062325, at *6 (dismissing the § 1681i claim).
This Court finds that Plaintiff’s allegations characterize a legal dispute on the underlying
debt, which is a collateral attack on the credit report. Accordingly, Plaintiff fails to plausibly
allege that his consumer report contains inaccurate information. Therefore, Plaintiff’s Counts
Two and Three fail to state a claim against Defendant for violations of 15 U.S.C. § 1681i.
For the reasons stated herein, the Court enters the following:
ORDER
IT IS THEREFORE ORDERED that Defendant’s Motion to Dismiss, (ECF No.
15), is GRANTED with respect to Counts II and III, Plaintiff’s individual claims, and
DENIED with respect to Count I, Plaintiff’s purported class claim.
This, the 30th day of March, 2024.
/s/Loretta C. Biggs
United States District Judge