One could say that “Bank Error in Your Favor” did not entitle the FCRA Plaintiff to $200.  In Ross v. F.D.I.., — F.3d —-, 2010 WL 4261819 (4th Cir. 2010), the Court of Appeals found no malice when a Bank acted merely negligently under FCRA.  The facts were a bit complicated: 


James Williams executed a mortgage on a home on May 8, 1996. This loan was eventually assigned to WaMu, and WaMu held it for all periods relevant to this case. The FDIC is involved in this case as the receiver of Washington Mutual Bank. On or about August 16, 1996, Williams quitclaimed his interest in the property to Charlene Ross, and the two married the following month. The relationship soured, and in April 2001 Ross secured a domestic violence protective order evicting Williams. Ross obtained another order the following month naming her as the property’s owner. Williams, however, retained sole responsibility for the loan.    Ross contacted WaMu about this arrangement in July 2001. At that time, Ross confirmed that any pay-ments she made would be properly credited to the mortgage, requested an IRS 1098 form to claim a tax deduction for mortgage interest, and asked that she receive monthly mortgage statements at the address of the encumbered home. Ross then sent WaMu the necessary documentation, including her social secu-rity card, the May 2001 order, and the August 1996 quitclaim deed. In the process of fulfilling Ross’s requests, WaMu mistakenly listed Ross’s name on the mortgage.    The loan went into default when no payments were made from June 2001 through September 2001. On September 11, 2001, Ross discovered that WaMu had reported negative information about her to consumer reporting agencies (“CRAs”). WaMu took this action based on its mistaken belief that Ross was responsi-ble for the loan. Ross contacted WaMu, but WaMu informed her that it did not know why the name on the loan was changed. She also contacted the CRAs directly, but they could only confirm that WaMu had indeed placed the negative trade line on her report.


Ross sued for FCRA and FCPA violations.  As to the former, the Court of Appeals found that Plaintiff had no private right of action under FCRA 15 U.S.C. §§ 1681s-2(a)(1)-(2).  As to any kind of malice exception, the Court of Appeals found none:  


All that would be shown is that WaMu behaved negligently with respect to its reporting activities. Banks make mistakes, which include errors in their records. And while we would hope that these errors could be held to a minimum and corrected the first time they are brought to the bank’s attention, the failure to do so does not necessarily constitute malice.     At worst, WaMu needed a couple of tries to remedy fully its initial mistake. This “may evidence the weakness and unreasonableness of [WaMu’s] procedure[s], but no malice can be derived from it.” Cousin v. Trans Union Corp., 246 F.3d 359, 375-76 (5th Cir.2001). To be sure, Ross would have a triable case for negligence. But § 1681h(e) requires malice, and there is no evidence that WaMu engaged in the kind of knowing or reckless behavior needed to meet this standard. WaMu may be guilty of sloppy recordkeeping, but that is at most negligence, not malice. See Cousin, 246 F.3d at 375-76. Malice is a high bar. The Ninth Circuit declined to find malice even when the defendant used questionable debt collection tactics, threatening, “We’re a big bank. You either pay us or we’ll destroy your credit.” Gorman, 584 F.3d at 1169. WaMu’s behavior pales in comparison to the conduct of the Gorman defendant. Indeed, WaMu was accommodating and took measures to correct its mistake. In short, even granting Ross’s unfounded inference, WaMu’s behavior, while assuredly not perfect, falls short of the sort of malice intended to be reached by § 1681h(e).