It does not matter whether the lawsuit asserts claims under the Fair Credit Reporting Act (“FCRA”), California’s Consumer Credit Reporting Agencies Act (“CCRAA”), or the myriad of consumer protection laws applicable to consumer finance litigation––consumers regularly request in settlement that the creditor delete the tradeline associated with the account in dispute. Deletion of a tradeline is a remedy that consumers usually cannot obtain in court, because a private litigant cannot obtain injunctive relief under the FCRA. See, e.g., Kaplan v. Experian, Inc., 2010 WL 2163824, at *4 (E.D. Mich. May 26, 2010) (“In response to Plaintiff’s assertion that he is seeking injunctive relief (i.e., an order requiring Experian to delete certain tradelines from his credit report), Experian contends that a private litigant cannot obtain injunctive relief under the FCRA. The Court agrees.”). And, deletion of a tradeline to settle litigation seemingly conflicts with language contained in the manual for credit reporting in METRO-2 format published by the Consumer Data Industry Association (“CDIA”). CDIA Manual at 2-3 (“Only inaccurately reported accounts should be deleted”); id. at 5-15 (“In order to maintain the integrity of credit information, it is important that data furnishers not ask for a subsequent deletion of account history unless an actual error was reported”).

What is a furnisher to do? May a furnisher request the deletion of a tradeline to resolve litigation? Likely so.

First, furnishing of information to a credit reporting bureau is voluntary. The Federal Trade Commission “encourages voluntary furnishing of information to consumer reporting agencies,” but does not require it. 16 C.F.R. § 660, App. A. The FCRA only requires furnishing of “accurate and complete” information, but does not require a furnisher to maintain a tradeline. See 15 U.S.C. § 1681s-2. The same is true of the CCRAA. Hussey-Head v. World Sav. & Loan Ass’n, 111 Cal. App. 4th 773, 782 (2003) (“sections 1785.25 and 1785.26 . . . do no more than recognize the fact that creditors voluntarily report credit information to credit reporting agencies and others, and the purpose of the [CCRAA] is to ensure that the information thus reported is fair and accurate.”). Thus, there appears to be no specific impediment to voluntary deletion of a tradeline that was voluntarily reported in the first place.

Second, the FCRA and CCRAA contemplate the possibility that a tradeline may be deleted. If, for example, “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 credit reporting agency (“CRA”) cannot verify the disputed information upon reinvestigation within 30 days of receiving notice of the dispute, it must “promptly delete that item of information from the file of the consumer.” 15 U.S.C. § 1681i(a)(1), (5); Cal. Civ. Code § 1786.24(e) (“If a reinvestigation is made and, after reinvestigation, the disputed item of information . . . cannot be verified by the evidence submitted, the investigative consumer reporting agency shall promptly delete that information from the consumer’s file”).

Third, it is true that the CFPB, in a Bulletin published on February 27, 2014, cautioned against furnishers’ simply deleting tradelines in response to a consumer dispute without conducting an investigation. CFPB Bulletin 2014-01 at 2 (“furnishers should not assume that simply deleting [the disputed] item will generally constitute a reasonable investigation” or that a furnisher “ceases to be a furnisher with respect to an item that a consumer disputes simply because it directs the CRA to delete that item”); see also Wharram v. Credit Services, Inc., 2004 WL 1052970, at *2 (D. Minn. Mar. 12, 2004) (“Deleting the entire tradeline did not assure the maximum possible accuracy of information relating to Wharram because it failed to convey the positive credit history Wharram established with Wells Fargo prior to the instant dispute.”).

But the FCRA and regulatory compliance differs from settling a case with a consumer. The CFPB’s position does not prohibit a furnisher from deleting a tradeline for the purposes of settlement; it merely explains that doing so does not dispose of furnishers’ obligations under the FCRA. Indeed, the CFPB’s reasoning, espoused in the Bulletin, is that “[i]nvestigations of disputes are important because . . . when a furnisher conducts an investigation, it may learn of a systemic problem, thereby benefitting not only the consumer who raised the dispute, but also other similarly situated consumers who did not submit disputes.” CFPB Bulletin 2014-01 at 1. In other words, requesting the deletion of a tradeline, after a furnisher complies with its investigatory obligations, does not run afoul of the CFPB because the intended benefit of an investigation is not negated by the tradeline deletion.

Deletion of a tradeline pursuant to a settlement that includes appropriate liability waivers and disclaimers is likely permissible under the FCRA, the CCRAA, and even the CDIA manual, particularly if the settlement agreement spells out that the consumer disputes the credit reporting. A settlement agreement should be coupled with language that the consumer acknowledges that: (1) there are no warranties as to the effect of deletion on the consumer’s credit score; (2) the furnisher can request but not guarantee that CRAs will follow the furnisher’s request; (3) the furnisher will provide proof of the request to the consumer; and (4) the consumer’s remedies are limited to breach of the agreement if the furnisher does not actually submit the request.

For more information regarding settlement of credit reporting lawsuits specifically, or the FCRA in general, contact Alisa A. Givental at