In a consumer class action, the United States Court of Appeals for the Seventh Circuit was called on to decide whether “consumer reporting agencies to determine the legal validity of disputed debts.” Denan v. Trans Union LLC, No. 19-1519, 2020 U.S. App. LEXIS 14930, at *1-2 (7th Cir. May 11, 2020). Joining the First, Ninth, and Tenth Circuits, the Seventh Circuit found that “a consumer’s defense to a debt is a question for a court to resolve in a suit against the [creditor,] not a job imposed upon consumer reporting agencies by the FCRA.” Id. at *12 (internal quotations omitted).
In Denan, the plaintiffs obtained loans from tribal payday lenders. Those loans charged interest rates in excess of 300% and, according to the loan agreements, were governed by tribal law, not state law. The plaintiffs claimed that because the loans violated state usury laws, they were “legally invalid.” Id. at *4. But instead of bringing suit against the tribal lenders, who may have been protected by sovereign immunity, the plaintiffs brought a putative class action against consumer reporting agency (or CRA) Trans Union, alleging it violated 15 U.S.C. § 1681e(b) for failing to assure the “maximum possible accuracy” of reported information. Continue Reading Credit Reporting Agencies Are Not Required to Determine What Is a “Legally” Valid Debt