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hey guys welcome to this video my name is john watts i'm a consumer protection lawyer and a big part of my practice is suing credit bureaus and companies that provide or furnish information to credit bureaus for credit reports and this is a decision i want us to look at it came out just a few weeks ago well maybe a month or so ago november 19 out of the northern district of illinois and this is the tanya johnson versus u.s bank and then also experian one of the credit bureaus is also a defendant and really four main things i want us to take from this and then we'll go through the actual text of the opinion so what are some commonly used fair credit reporting act words or terminology and then i want us to understand the dative status arguments kind of both sides now we won't get into it in detail if you'd like me to do a video where we really dive into what's called metro 2 which is the industry standard i'm happy to do that just let me know in the comments and then third we'll talk about can you sue both the furniture and the credit bureau when you dispute false information through the credit bureau and it does not get fixed and then how do you plead willfulness and then just in general what damages can you recover so let's take a look at this and so we have this tanya johnson bringing suit against u.s bank home mortgage and experian and only u.s bank moves to dismiss the claims under what's called rule 12 b6 which says you failed to state a claim and in other words it's not plausible what you say and so the court should just throw the case out now and not even get into discovery where we take depositions and exchange written materials so here's the background a judge says in looking at 12b6 motion you assume the truth of the operative complaints well-pleaded factual allegations but not its legal conclusions so when the lawsuit the complaint says well this violates the law the judge doesn't have to give that any weight but the factual allegations have to be believed as true and then any documents attached to the complaint or referred to the complaint will be fine to consider here and the facts will be looked at favorably to johnson the consumer because johnson's not the one moving to dismiss that's u.s bank moving to dismiss so the court says look i'm going to set forth the facts but i'm not vouching that these are objectively true and so i have in red some of the kind of terminology that we see in the fair credit reporting act so we have trade line that just means the account in this situation a mortgage to experian which is a consumer reporting agency also called a credit reporting agency a credit bureau all those are same thing and then u.s bank is a furnisher of information because it is literally furnishing information to the credit bureaus about the consumer in this case johnson and so then her account was reported as partially charged off and charged off status means the debt has been deemed uncollectible now here's kind of the crux of the argument so johnson says hey you have this field in my credit report called the date of status and that should remain static in other words not change because the charge off date stays the same in other words there was a moment in time when the account was charged off and so that should be reflected in the data status and it should not change and then there's another field labeled first reported date and that also should remain static and that's the date in which the debt had its first major delinquency and again that has sort of a understanding or meaning within the fair credit reporting act and typically this is going to be the time when you're about six months late that you never recover from okay so it's not the first delinquency that would be literally the first time your delinquent that you never recovered from never brought current but this will be the first major delinquency which again is about six months so u.s bank says no no no no no we can we can change the data status the first reported date and some circumstance furniture could properly amend both fields to reflect more recent events now the judge is not going to decide who's right and who's wrong about whether or not these fields and when i say field i mean it's just all the different sections under an account or a trade line so you have capital one you have midland funding you have u.s bank and it'll have all these little fields in there that data's put into so that's what they're talking about judge is not going to decide who's right or wrong he's just going to say is the complaint plausible right now that is it plausible that the defendants could be held liable for this so here we go parties disagreement on this point presents a factual dispute as to credit reporting industry practices and so that has to be resolved in the consumer's favor so here we have our first code section and i've tried to and hopefully i've got all of them the fcra code sections in green just to make them stand out so section 1681 s2b that's a duty on furnishers like u.s bank to take actions after receiving a dispute about the account that they're reporting now they have to get that dispute through the credit reporting agency or the consumer reporting agency or the credit bureau again all those mean the same thing now accuracy is not defined specifically but we have some regulations that say correctly reflects the consumer's performance and other content so this being the probably the most important word here it's got to be correct it has to be truthful and so judge says whether change of data status or first reported date undermines the accuracy thus depends on how furnishers and consumer reporting agencies customarily use those two terms and industry practice is a question of fact and so the court says well then i'm going to give the consumer the benefit of the doubt on these allegations that the date of status and the first reported date must be static must never change in order to remain accurate and the judge does point out that the seventh circuit which is the appellate court over the district courts or the trial courts in illinois has a case called gillespie and it says holding consumer reporting agencies practice of amending the date of last activity potentially led to unclear disclosures under 1681g is your right to go get a copy of your file that the credit bureaus have and judge says with that under brush cleared the remaining background is pretty straightforward originally the data status and first reported date was august 2015 sometime in 2018 that changed to june 2016. and so then the consumer and this is key you have to dispute through the credit bureaus so the consumer initiated dispute with experian and experian then must forward the dispute to u.s bank unless it's going to fix it without doing that and then u.s bank continued to furnish the wrong june 2016 dates to experian so now let's get into the law a little bit so you can take a dispute directly to the consumer reporting agency and that's under section i and the agency experian equifax transunion they have an obligation to investigate part of their obligation unless they're going to fix it without doing anything else is they must give notice of the dispute to the furnisher that would be u.s bank and once that furnisher gets the notice of dispute now they have five obligations and i have these in blue so number one is conduct an investigation number two review all relevant information provided by consumer reporting agency that's why it's a good idea whatever you want the furniture to investigate give that to the credit bureaus okay so that then they will pass it on to the furniture and we've talked about this in a number of videos the more detail you give then the greater the obligation to investigate is see if we're just very vague like hey i think something might possibly be wrong somewhere anywhere i don't know within my account well they don't have much obligation but if you say hey you're reporting the these two status accounts or two status fields incorrectly here's what you did report now here's what you're reporting that's wrong that's very very specific okay so again number one conduct investigation number two review all the information provided by the consumer reporting agency number three report the results to the consumer reporting agency so you gotta investigate and then tell experian or equifax or transunion whoever it is here's what happened and if that information was inaccurate so in other words you're having to fix it you've got to tell that to the other credit bureaus to do your best as a furniture to make sure all the information is consistent and then finally number five is if the information proves inaccurate or unverified you've got a couple options modify delete or permanently block the report up and there's a private right of action to enforce those duties this is key 1681 s2b if that's violated you can sue an s2b is when the furniture gets notice of your dispute through the credit bureau now if you go directly to the furniture that is under section 1681 s2a and you cannot sue for that it's fine to go directly to them but you've got to go through the credit bureaus and then have the credit bureaus notified the furnisher to get to this s2b all right so what does johnson focus on here saying whether u.s bank conducted any investigation in the reasonableness present questions of fact and so you cannot dismiss the case and the judge says she's right so whether the furniture's investigation is reusable under s2b is a factual inquiry so whether it's reasonable as a factual question normally reserved for trial and so the judge says i'm going to accept factually what you're saying here that altering the date of status and the first reported date is against industry practice and a reasonable investigation by u.s bank would have uncovered those errors identified thus it is plausible given those facts it's plausible u.s bank did not undertake a reasonable investigation so what does the bank argue bank says well you failed to allege what information you included with your dispute to experience such as the specific date she was just be do you see this ties in with what i know i keep harping on this but you've got to be specific i can't tell you how many times people come to me and they say here's this just horrible error and they explained it to me go oh my goodness that's a terrible layer and they say yeah and i disputed it and it didn't get fixed i said well let me see your dispute letter and and they're kind of hesitant to do that finally whether it's a credit repair organization whether it's a consumer whether it's a lawyer they finally give me their dispute letter and it's just garbage i mean there's nothing to it and i'm like you had a fabulous lawsuit if you had done a proper specific dispute you can see here the bank is saying hey you didn't tell us exactly what dates you're disputing and judge says you're wrong because here are these three paragraphs 17 18 19 it says here are the errors and then paragraph 20 says open to dispute with experian so it's a inference that what was disputed in paragraph 20 of the complaint are the items in 17 18 19. now a better way to plead this thing is to be very specific about it here's exactly what we said or attach your dispute letter you can redact or block out personal information but put that in there in the complaint so there's no argument about this and then the bank says and this is such a common argument i mean we've been dealing with this for probably 20 years where the bank says aha you pleaded yourself out of court because you said it was experian that may have erroneously changed the dates this is such a bogus argument and i i'm always amazed at these lawyers because they're usually at these really big firms and very fancy firms and these people went to the best schools and top of their class and i find it hard to believe that they really don't understand the basic rules of federal civil procedure because the truth of the matter is they do and they're just lying to the court because the judge says look federal rules allow alternative even inconsistent pleadings recognizing parties may tailor their theories as they conduct discovery so you can say hey there's false information on my experian report i disputed it to experian experience says they went to u.s bank and it was verified so i'm going to sue experian and i'm going to sue u.s bank so experian would be under section 1681 i for a lousy investigation probably under eb for failure to have reasonable procedures to assure maximum possible accuracy but then you also see us bank for section 1681 s2b and so the judge is acknowledging this now i think i'm not trying to be hyper technical here but i do want to maybe add something to what the judge says judge says the consumer has either a claim under 1681 s-2b against u.s bank or a claim under 1681i against experian the more accurate way of saying that is or you can have both in other words it's possible experian did a lousy investigation it's possible u.s bank did a lousy investigation it's possible they both did a lousy investigation so you could go to the jury on both of those claims so i don't want you to take what the judge said here as that you have to only choose one of these at the end of the day no that's not what the judge is saying or if it is the judge is mistaken here you can have both of these claims and judges points out need not establish which theory will ultimately pan out before she filed or complain again just understand you can get a jury verdict on both of these it's just like i often do this i go back to car wrecks because it's easy to understand you could say hey this truck driver was negligent and this person in a van was negligent and they crashed into my car and they both were negligent well it can ultimately be that the truck driver was negligent and the person driving the van was negligent and you get a verdict against both of them or maybe it's just one or the other so it could be at the end of the day the plaintiff may only get a verdict against u.s bank or only get a verdict against experian but they might get it against both okay let's go back to the this uh arguments here by u.s bank said the consumer did not plausibly allege that it willfully violated the law and that's what you have to have under 1681 in and if you have that which is willfulness or recklessness then you get statutory damages up to one thousand dollars per violation that's different than the fdcpa the fair debt collection practices uh that's up to one thousand total this is one thousand per violation i mean we have cases where we might have disputed things a half a dozen a dozen times it keeps getting verified well there those would be multiple multiple statutory violence and you can get punitive damages to punish u.s bank and to deter or discourage u.s bank and other furnitures from doing the same bad conduct so plaintiff may prove willful violation through evidence of reckless disregard well what does that mean company ran a risk of violating law substantially greater than the risk associated with a reading that was merely careless and if you know the risk and you fail to take any precaution against it that gives us an indication this is a willful violation so the consumer says hey you ran a greater than careless risk and in this killingsworth case the issue was the defendant charged a higher interest rate based on information it should have known was false and that was enough to say this is willful johnson the consumer in this case we're covering similarly alleges u.s bank was surprised of a clear error in the information it furnished to experian but failed to investigate the error or fix the information that's enough under this killingsworth to plead willful and u.s bank can't say well we had a reasonable belief that its conduct was legal because they knew amending the charge off dates was legally perilous given the precedent remember that gillespie case that the recording of multiple dates and the date of last activity can cause significant confusion and uncertainty for the consumer so all these arguments by u.s bank gets losing now it says you don't allege actual damages and the judge see under section 1681-0 that's for neglig nce and that lets you get actual damages and the court says well that's kind of meaningless because a willful violation survives and the consumer said she had mental language humiliation and embarrassment emotional stress damages if supported with evidence are recoverable under the fcra now say some judges would want more detail and it may be that there was a lot more detail just the judge didn't quote it but even in the complaint some judges want a lot of detail about emotional stress damages but you certainly can do that you certainly can get emotional distress damages for a violation of the fcra and the consumers pled a plausible pecuniary or financial harm so here's an example going back to that gillespie case so the fcra prohibits a consumer reporting agency providing consumer report containing accounts place for collection or charge to profit and loss which are more than seven years old okay and that's from section 1681 c a4 so the passage of time benefits consumers because after seven years a charge off can't be included there's an exception for what are called the large transactions okay but for 99 of people once that charge offs more than seven years old can't be on the report so the 10-month extension of the charge-off date that the consumer alleges possibly caused harm to her financial situation because it would have kept this delinquent mortgage on her credit report longer than it should have been and the the judge points out even if that was merely negligent you can get actual damages so the motion of dismiss is denied so again i want you to see this to see some of these words that we use a lot in this and i've used them in sort of powerpoint type things you know we talked about the furniture and the the credit bureau and all that but i want you to see them in the opinion and then at least understand that there are arguments about this sort of date of status so again we come back to the the date of status and the first reported date which is tied in with the first major delinquency so just to understand those now again if you want more detail let me know and we'll go through the metro 2 guide which is sort of the rule book that the industry puts out for credit bureaus and furnishers and see what it says and then can you sue both the furniture and the credit bureau absolutely when you notify the credit bureau and then they say hey we reached out to the furniture and this is verified then you can and often should sue both of them because you don't really know who messed it up maybe one or maybe both and then what about willfulness remember that has to do with they're running a greater risk than just merely carelessness would provide and what type of damages if it's just a negligence case then you can get emotional distress and financial damage if it gets up to that willful or reckless now you can get statutory which the idea of statutory is this is up to a thousand dollars per violation even if you can't prove any damages this is your incentive to bring the case to get these guys to start doing what they're supposed to government doesn't have time to sue them every time they break the law so they want to encourage consumers to sue that's also why your lawyer gets paid by the furnisher or the credit bureau at the end of the day because again the government wants to incentivize you to bring these lawsuits and hire a lawyer that knows what he or she is doing to make these guys change and so you can get statutory damages and punitive damages so i hope you found this helpful and let me know if you continue to like these type of case decisions and let me know any suggestions you have for future videos and we keep a list of all those and we'll keep doing our best to crank out a new video every day okay you guys have a fabulous day bye-bye