Smith v. Trans Union LLC, No. 20-4233, 2021 U.S. Dist. LEXIS 198812 (E.D. Pa. Oct. 14, 2021), Judge Savage dismissed an FCRA case premised on an alleged inconsistency in reporting an account as closed with a zero balance but also a past due balance.

The issue in these Fair Credit Reporting Act (FCRA) actions is whether a consumer reporting agency’s simultaneously reporting a zero balance and a past-due pay status of an account is inaccurate and misleading in violation of § 1681e(b) of the FCRA. No circuit court has addressed the issue. District courts are divided. We agree with the majority view that holds that reporting an account closed and a past-due pay status would not mislead a reasonable creditor to believe that there was still an outstanding balance.

The District Court explained:

The plaintiffs argue that the Pay Status tradelines are inaccurate because it is impossible and incorrect for an account to be closed with a zero balance and still be past due. This perceived inconsistency, according to the plaintiffs, renders the reports not only false on their face but also misleading because it appears they are still late on accounts that had been closed with zero balances. They claim that the pay status represents the current condition of the account. They argue that an account reported as over 30 or 120 days past due will be misinterpreted by the algorithms used by the lending industry to determine a consumer’s credit worthiness, negatively impacting their credit scores. Trans Union counters that the accounts were accurately reported as closed and paid with a historical past due pay status of either 30 or 120 days at the time they were closed. It asserts that the report “clearly indicates Plaintif[s were], in the past, past due in the historical pay status section” and that this “could not indicate Plaintiff[s are] ‘currently’ past due ‘each month'” because the reporting states that the accounts were closed and had zero balances. Stated differently, the parties dispute how a reasonable creditor interprets the Pay Status tradeline. The plaintiffs claim that Pay Status reflects the current status of the account and Trans Union maintains that it reflects the historical pay status at the time the account was closed. Thus, we must determine how a reasonable creditor would interpret the Pay Status tradeline. No circuit court has addressed whether a credit report simultaneously reporting a pay status of “120 days past due” and a balance of zero dollars is inaccurate or misleading under the FCRA. However, many district courts have. The majority of district courts have concluded that a closed account’s Pay Status does not represent current delinquency and that publishing this information does not render a report inaccurate under the FCRA. Within our district, some judges have denied motions for judgment on the pleadings in cases involving the same issue. On the other hand, the majority of judges in our district agree that this reporting is not inaccurate or misleading. For example, in Bibbs, Judge Kearney rejected the theory that a closed account with a Pay Status of 120 days past due indicated the plaintiff “currently owe[d] past due payments” because to do so would require him to “ignore” the Date Updated, Date Closed, Balance, Remarks, and monthly Ratings tradelines that established the account had been closed years earlier. 521 F. Supp. 3d at 579-80. Judge Wolson recently rejected the same theory by concluding that “a reasonable creditor reviewing the report as a whole would adopt a logical reading of the credit report. . . rather than an illogical reading. . .” and that plaintiffs’ interpretation of Pay Status as reporting the current status of a closed account was illogical when read in conjunction with the other tradelines. Gibbs v. Trans Union, LLC, No. 21-cv-667, 2021 U.S. Dist. LEXIS 185094, 2021 WL 4439546, at *2 (E.D. Pa. Sept. 28, 2021). Here, Trans Union reports that the plaintiffs’ accounts are closed and have zero balances. In the Remarks sections, each account is reported as “CLOSED.” The reports show that each account’s Date Closed matches the Date Updated and Last Payment Made. Bennett’s Equifax report is even clearer: it states his accounts are “Paid and Closed,” have scheduled payments of zero dollars, and have zero dollars past due.44 A creditor, reading the reports in their entirety, would not conclude that when the accounts were closed with zero balances, there were payments outstanding. No reasonable creditor would be misled. Viewing the reports in their entirety from the perspective of a reasonable creditor, we conclude that the CRAs reported the plaintiffs’ information accurately and were not misleading. A potential creditor would want to know an applicant’s payment history before extending credit and on what terms. In short, the reports are neither inaccurate nor misleading. The information is not inconsistent. On the contrary, it is accurate and consistent. On the date these accounts were closed, plaintiffs had been either 30 or 120 days behind on payments.