Ostreicher v. Experian Information Solutions, Inc.

Background

Zev Ostreicher opened four Chase credit-card accounts. By 2017, all four were delinquent, and Chase charged off the account balances, which totaled more than $33,000. In March 2019, Ostreicher disputed the accuracy of the Chase balances with Experian Information Solutions, Inc., a credit-reporting agency. Experian sent Chase a dispute form, and Chase investigated and confirmed that the balance and past-due amounts were correct.

The credit report described each account as charged off, stated that the balance had been written off and was past due as of March 2019, and listed monthly payments of $0. Ostreicher sued Chase and Experian under the Fair Credit Reporting Act (FCRA). He claimed that reporting the full balances as both written off and past due was inaccurate or misleading, and that Chase violated the FCRA by failing to mark the accounts as disputed. His claims against Experian were later dismissed with prejudice by joint stipulation. Chase moved for summary judgment on Ostreicher’s remaining claims.

Legal standards

Summary judgment is appropriate when the evidence shows no genuine dispute about a material fact and the moving party is entitled to judgment under the law. The FCRA imposes different duties on credit-reporting agencies, users of credit reports, and entities that provide information to credit-reporting agencies. Chase was an information provider.

The court explained that the FCRA’s duty to provide accurate information under 15 U.S.C. § 1681s-2(a) cannot be enforced through a private lawsuit. But a private plaintiff may sue under § 1681s-2(b) for willful or negligent noncompliance after a credit-reporting agency notifies the information provider of a dispute. That duty includes investigating the disputed information, reporting the investigation’s results, and correcting information that is inaccurate, incomplete, or unverifiable.

Whether the reported information was inaccurate

The court held that Ostreicher failed to show that Chase reported incomplete or inaccurate information. The parties did not dispute that a charge-off is an internal accounting action that changes a debt from a receivable to a loss; it does not eliminate the debtor’s obligation to pay. Ostreicher also did not dispute the accuracy of the account balances.

The court rejected Ostreicher’s argument that labeling the balances “past due” misleadingly suggested an ongoing monthly payment obligation. It reasoned that “past due” means delinquent or late, and that a charged-off debt can still be past due because the creditor may seek to collect it. The court also found that the $0 monthly-payment entries made clear that Ostreicher did not have an ongoing monthly payment obligation. In the court’s view, the report accurately showed both that Ostreicher had failed to pay the accounts and that he had no current monthly payment obligation.

Because Ostreicher did not establish the required inaccuracy or incompleteness, the court granted Chase summary judgment on his claims concerning the reported balances.

Whether Chase had to mark the accounts as disputed

The court also granted Chase summary judgment on Ostreicher’s claims that Chase violated the FCRA by failing to identify the accounts as disputed. The court stated that the FCRA provision requiring an account to be marked as disputed does not create a private cause of action. It further noted that courts recognizing a claim under the investigation provision generally require a genuine or legitimate dispute.

Here, Ostreicher told Experian that the balance was incorrect, but Chase investigated and confirmed that it was correct. Ostreicher conceded that the balance itself was correct, and the court had already determined that describing the balance as past due was not inaccurate. The court therefore concluded that Ostreicher had not shown a genuine dispute about inaccurate information, even assuming the Court of Appeals for the Second Circuit would recognize a claim based on failure to mark an account as disputed.

Disposition

Judge Seibel granted Chase’s motion for summary judgment. The court directed the Clerk of Court to enter judgment for Chase Bank USA, N.A., terminate the pending motion, and close the case.