In George v. Summit Credit Union, No. 21-CV-259-JPS, 2022 U.S. Dist. LEXIS 112739, at *14-21 (E.D. Wis. June 27, 2022), Judge Stadtmueller granted partial summary judgment to an FCRA Plaintiff against a furnisher, leaving for further litigation only the issue of recoverable damages.

The FCRA provides that a furnisher (such as Summit) can be held liable to a consumer for willfully failing to comply with the requirements of the Act. 15 U.S.C. § 1681n. Such willful deviations allow recovery of actual, statutory, and punitive damages against a violator. Id. The Supreme Court has stated that, “where willfulness is a statutory condition of civil liability, we have generally taken it to cover not only knowing violations of a standard, but reckless ones as well.” Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47, 57, 127 S. Ct. 2201, 167 L. Ed. 2d 1045 (2007). Thus, a furnisher violates the FCRA if the facts “show[] that the company ran a risk of violating the law substantially greater than the risk associated with a reading [of the FCRA] that was merely careless.” Id. at 69. The Safeco recklessness standard is an objective one, and the question of whether a furnisher acted recklessly is a matter of law. Murray v. New Cingular Wireless Servs., Inc., 523 F.3d 719, 726 (7th Cir. 2008); Van Straaten v. Shell Oil Prods. Co., 678 F.3d 486, 491 (7th Cir. 2012). Reckless behavior in this context is “action entailing an unjustifiably high risk of harm that is either known or so obvious that it should be known.” Safeco Ins. Co. of Am., 551 U.S. at 68 (internal quotations and citations omitted).  In Murray v. Indymac Bank, F.S.B., No. 04 C 7669, 2007 U.S. Dist. LEXIS 67702, 2007 WL 2741650 (N.D. Ill. Sept. 13, 2007), the plaintiff claimed that the defendant-bank willfully violated the FCRA by mailing the plaintiff a letter regarding mortgage loans. The court found that the plaintiff produced nothing to rebut the bank’s evidence that its employees did not act willfully to violate the law. 2007 U.S. Dist. LEXIS 67702, [WL] at *3. On whether the bank recklessly disregarded its statutory duty, the Court agreed that based on an “objective view” of the circumstances, even though the letter violated the FCRA, the bank’s decision to mail the letter was not unreasonable. 2007 U.S. Dist. LEXIS 67702, [WL] at *10. In so finding, the Murray court cited evidence that (1) the bank took steps to pre-screen customers to whom it mailed its letters; (2) the bank had an FCRA-compliance program with a lengthy approval process for outgoing mail; (3) the bank had a well-funded and robust compliance department; and (4) the compliance employees regularly consulted outside attorneys.6 2007 U.S. Dist. LEXIS 67702, [WL] at *4-7. The Court rejected the plaintiff’s argument that the bank should have been aware of caselaw and other regulatory guidance making clear the letter violated the FCRA. Id. More specifically, the court concluded that no on-point, controlling (as opposed to out-of-circuit persuasive precedent) existed at the time of the bank’s FCRA violation, which would have guided the bank, and that even if there had been controlling law, the plaintiff failed to provide evidence that the compliance department employees “were unaware of cases or regulations or ignored them.” 2007 U.S. Dist. LEXIS 67702, [WL] at *9-10. As a result, the court ruled that the bank “did not ignore an unjustifiably high risk of harm that was known or reasonably should have been known.” 2007 U.S. Dist. LEXIS 67702, [WL] at *10.

The District Court noted the furnisher’s robust FCRA compliance program.

So too here, the undisputed facts make clear that Summit maintains a robust FCRA-compliance program. The parties agree that Summit provides training and resources to its staff members, which includes one-on-one training for employees by the legal department. Summit maintains a copy of the CRRG, which it makes available for staff members who handle credit reporting; in fact, Summit’s staff members regularly use the FCRA and CRRG as a resource. One of Summit’s employees, Brausen, is a Credit Reporting Specialist; approximately fifty percent of his job duties include handling Summit’s credit reporting. Brausen brings years of experience in finance/loan work. If a credit reporting issue arises that is not clear to Brausen or other staff members based on internal Summit resources, they rely on advice from Summit’s outside legal counsel. These same types of compliance procedures in Murray rebutted the plaintiff’s argument that the bank’s compliance efforts were “meaningless.” Here, Summit’s compliance procedures underscore its commitment to abiding by the FCRA.  Further, George has offered little to no controlling law as to the reporting requirements for reaffirmed loans. George primarily relies on FAQ 26 to establish that Summit violated clear FCRA principles. In relevant part, “[f]or accounts that are partially reaffirmed in bankruptcy,” FAQ 26 instructs furnishers to “report a separate tradeline with a new Account Number for the portion of the account that is in repayment.” ECF No. 54 at 10. A plain reading of this instruction indicates that a loan partially reaffirmed in bankruptcy—like George’s—should be reported as a separate line of credit, under a new account than that original debt for the portion that was reaffirmed. Thus, according to FAQ 26, George’s $7,000 Reaffirmed Loan should have been listed as a separate tradeline. However, the CRRG is not controlling authority; the parties, and even the CRRG itself, recognize that the CRRG is not legal advice and is not guaranteed to be reliable or accurate. FAQ 26 describes itself as the “preferred” method, not the legally required method.

The District Court found, however, that the robust program did not protect the furnisher against the claim of inaccuracy.

A major difference, however, exists between the present case and Murray. In Murray, the plaintiff alleged that the bank violated the FCRA by improperly obtaining the plaintiff’s information and not including a firm offer of credit in its letter. The illegality of sending a letter without a firm offer of credit is not immediately obvious—such prohibition is buried in the expansive provisions of the FCRA. As the court in Murray concluded, failure to follow such a provision may not be the result of willful or reckless intent to violate the FCRA. On the other hand, reporting a discharged debt, despite a clear and undisputed understanding that the reported outstanding amount is not actually due, is immediately made suspect by the overarching goal of the FCRA: to protect consumer privacy by requiring consumer reporting agencies to ensure the accuracy of the information contained in credit reports and to maintain accurate and complete credit reporting information.  Here, there is no dispute that the information that Summit transmitted to the credit reporting agencies was objectively wrong. Summit knew that the balance appearing on George’s credit reports did not reflect the terms of the Reaffirmation Agreement. The balance reported to the credit reporting agencies included the original Loan balance and not the balance that was modified by the approved and valid Reaffirmation Agreement. The credit information that Summit provided regarding George indicated to any third party without inside knowledge that George owed thousands of dollars more on his Loan than he actually did. No reasonable person, when reviewing George’s ACDV (which included a copy of the Reaffirmation Agreement), could have determined that reporting the pre-discharged balance was a correct course of action. The type of mistake that occurred here did not require a team of legal experts to catch and correct. It was obvious on its face. Summit reported a debt that it knew that George did not owe; at the very least, this conduct was a reckless violation of the FCRA. The Court will grant summary judgment to George on this claim.