Summary
The United States District Court for the Eastern District of Virginia denied Chex Systems, Inc.'s motion to dismiss a class action alleging violations of § 1681e(b) of the Fair Credit Reporting Act. The court held that the plaintiff plausibly alleged that Chex failed to use reasonable procedures to prevent inaccurate reporting of a debt discharged in bankruptcy and plausibly alleged a willful violation.
Topics
Practice areas
Questions Presented
- Whether the plaintiff plausibly alleged that Chex Systems violated 15 U.S.C. §1681e(b) by failing to follow reasonable procedures to ensure accurate reporting.
- Whether the plaintiff plausibly alleged a willful violation of 15 U.S.C. §1681n.
Holdings
- The complaint plausibly alleges that Chex failed to follow reasonable procedures under §1681e(b); therefore the motion to dismiss is denied.
- The complaint plausibly alleges willfulness because it alleges Chex knew of systematic errors and failed to act, so the motion to dismiss is denied.
Key quotations
“To survive a motion to dismiss under Fed. R. Civ. P. 12(b)(6), a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’”
Factual background
The plaintiff obtained a bankruptcy discharge of a SunTrust credit card debt in September 2019. Chex Systems reported the discharged debt as an unpaid charge‑off, causing the plaintiff's application for a new bank account to be denied. The plaintiff alleges Chex failed to implement reasonable procedures to verify bankruptcy discharges and relied on an unreliable source.
Procedural history
The plaintiff filed a class action under the Fair Credit Reporting Act alleging inaccurate reporting of a discharged bankruptcy debt. The defendant moved to dismiss; the district court denied the motion.