Consumer Protection – FCRA – Auto Loan – Bank Accounting Errors

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A bank that admitted it made “accounting errors” in repeatedly telling a borrower he had a zero balance on an auto loan, and then hitting him with an accelerated loan amount, late fees and penalties and reporting the delinquent loan to credit reporting agencies without mentioning the dispute, must pay the borrower $1,000 in statutory damages and $80,000 in punitive damages for violating its duties as a “furnisher of information” under the Fair Credit Reporting Act, 15 U.S.C. Sect. 1681 et seq., the 4th Circuit ruled in Saunders v. Branch Banking & Trust Co. of Va. (Lawyers Weekly No. 001-095-08) (17 pages).
The bank would have us create a per se rule that furnishers are never obliged to report affirmative defenses or consumer disputes, regardless of how meritorious the dispute may be. Such a rule would be ill-advised. Certainly, if a consumer has a meritorious dispute as the jury concluded the borrower here did the consumer’s failure to pay the debt does not reflect financial irresponsibility. Moreover, some courts have concluded that a disputed debt differs materially from an undisputed debt even if the consumer would not succeed at a trial of the dispute. The per se rule suggested by the bank would result in numerous reports with omissions that are misleading in such a way and to such an extent they can be expected to have an adverse effect.
Nor do we find persuasive the bank’s contention that a furnisher’s reporting of an ongoing dispute of a debt is superfluous once a consumer has filed a dispute with any credit reporting agency. Among other things, when a furnisher reports a dispute, its report confirms that the consumer has actually contacted the furnisher and explained the consumer believes he does not owe the debt. Moreover, plaintiff borrower presented evidence that, in the course of business, CRAs do not consider the furnisher’s reporting of a dispute superfluous.
In sum, given the evidence before it, the jury could reasonably conclude the bank’s decision to report the debt without any mention of a dispute was misleading in such a way and to such an extent it can be expected to have an adverse effect. There was evidence to support a finding of a willful violation of the FCRA: (1) the bank’s records reflected the ongoing dispute over the debt; (2) the bank’s reports to the CRAs did not reflect that ongoing dispute and (3) the bank intended not to report that ongoing dispute. The District Court did not err in denying the bank’s motion for judgment as a matter of law.
Nor did the court err in awarding $80,000 in punitive damages. The bank’s intentional misconduct and longstanding refusal to correct its errors are more reprehensible than negligence or a mistake quickly corrected. And the award is not so grossly excessive or arbitrary as to be constitutionally excessive.
Judgment for the plaintiff affirmed.
Saunders v. Branch Banking & Trust Co. of Va. (Lawyers Weekly No. 001-095-08) (17 pages) (Motz, J.) (4th Circuit) Appealed from the U.S. District Court for the District of Virginia at Richmond, Dohnal, J.; Alan D. Wingfield for appellant; Richard J. Rubin for appellee (No. 07-1108) (May 14, 2008).