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Roybal v. Equifax, 405 F.Supp 2d 1177, 1180 (E.D.Cal. 2005) | Baker v Midland Funding, MCM and Bursey & Associates | Litigation Forum

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Roybal v. Equifax, 405 F.Supp 2d 1177, 1180 (E.D.Cal. 2005)
Cited by Midland and MCM in their motion to dismiss the 1st amended complaint for failure to state a claim.
March 25, 2014
11:17 pm
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christine
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The relevant excerpt from Roybal v. Equifax, 405 F.Supp 2d 1177, 1180 (E.D.Cal. 2005)

ANALYSIS

1. Fair Credit Reporting Act Claim

Plaintiffs have instituted this private right of action against Defendants including Rickenbacker, a furnisher of consumer credit information, for violations of the Fair Credit Reporting Act ("FCRA"). Plaintiffs allege that Rickenbacker proffered inaccurate credit information about Plaintiffs without properly investigating their complaints or removing erroneous credit entries. Rickenbacker rebuts that the FCRA provides only a limited right of private enforcement against furnishers of credit information and that Plaintiffs do not have standing to bring this action.

The Ninth Circuit spoke to this precise question in Nelson v. Chase Manhattan Mortgage Corp. wherein the court discussed whether a private right of action exists against a furnisher of credit information under the FCRA. There, the Ninth Circuit explained the issue as follows:

"It can be inferred from the structure of the [FCRA] that Congress did not want furnishers of credit information exposed to suit by any and every consumer dissatisfied with the credit information furnished. Hence, Congress limited the enforcement of the duties [owed by furnishers of credit information] to governmental bodies. But Congress did provide a filtering mechanism . . . by making the disputatious consumer notify a CRA and setting up the CRA to receive notice of the investigation by the furnisher. With this filter in place and opportunity for the furnisher to save itself from liability by taking the steps required by § 1681s-2(b), Congress put no limit on private enforcement under §§ 1681n & o."
282 F.3d 1057, 1060 (9th Cir.2002).

The foregoing makes clear that a private right of action against a furnisher of credit 1180*1180 information exists only if the disputatious consumer notifies the CRAs in the first instance. The CRAs then have an obligation to investigate whether the claim is frivolous or irrelevant. See 15 U.S.C. § 1681i(a)(3). Once a claim is deemed viable, the CRAs must contact the furnisher of the credit information which affords an opportunity to investigate and rectify erroneous reports. See 15 U.S.C. § 1681s-2(b). The furnisher's duty to investigate, however, does not arise unless it receives notice of the dispute from the CRAs directly. Bypassing the filter and contacting the furnisher of credit information directly does not actuate the furnisher's obligation to investigate nor does it give rise to a private right of action. See Nelson, 282 F.3d at 1060.

In order for Plaintiffs to state a claim under the FCRA against a furnisher of credit information such as Rickenbacker, Plaintiffs must allege that they contacted the CRAs who, in turn, determined the claim was viable and contacted Rickenbacker triggering Rickenbacker's duty to investigate. Since Plaintiffs have failed to allege the foregoing as required, they lack standing to bring this private right of action against Rickenbacker. Accordingly, Rickenbacker's motion to dismiss Plaintiffs' FCRA claim is granted with leave to amend. [emphasis added.]

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