Fair Credit Reporting Act
Frazier v. Equifax Information Systems LLC
Date: Aug. 7, 2024
Issue: Whether Equifax is liable for allegedly inaccurate information produced in a tri-merge report it did not prepare.
Case Summary: In a 2-1 decision, a Seventh Circuit panel affirmed a district court decision holding that Equifax is not liable for allegedly inaccurate information produced in a tri-merge report it did not prepare.
In 2020, Tamara Frazier applied for a mortgage with Mutual Federal Bank. The bank reviewed a “tri-merge” report from CreditLink which aggregated data received from Equifax, Experian, and TransUnion (CRAs). While Frazier claimed she resolved a 90-day delinquency on a previous home mortgage in January 2016, the report noted she paid for less than the full balance of her loan, with the date of last activity in October 2015. As a result, Mutual Federal Bank denied her application declaring her debt-to-income ratio was unacceptably high. Frazier argued her “status” and “account history with status codes” which were provided by Equifax and used to complete CreditLink’s report should have been interpreted to show her mortgage loan account was inaccurately reported.
Frazier sued Dovenmuehle Mortgage Inc (DMI), a mortgage sub-servicer, CreditLink and Equifax. Frazier claimed Equifax’s consumer report and file of her credit history contained inaccuracies. However, the district court granted summary judgment to Equifax, ruling the information the CRA furnished was all true, and as a result, no inaccuracy existed in its report. Frazier appealed the district court’s decision.
The panel rejected Frazier’s claims alleging Equifax’s consumer report of her credit history was inaccurate and Equifax kept inaccurate information in her consumer file. According to Frazier, the “status” within her report noting her payment was “90-119 days past due” and the “account history with status codes” were incorrect. The panel reasoned reporting information must be “reviewed in context” and in “full context” any information indicating the account was 90 days delinquent was not misleading. The court also explained it is unclear whether the status reflected as “90-119 days past due” is an incorrect indicator of current delinquency or a correct indicator that Frazier previously had a delinquency that was resolved. The panel determined the status was not patently incorrect. Similarly, the panel found that the “account history with status codes” did not indicate she was currently delinquent when the bank reviewed her report. The panel thus concluded the status was not materially misleading as a matter of law.
In addition, the panel ruled Equifax cannot be held liable for CreditLink’s report. According to the panel, the report CreditLink prepared and sent cannot establish Equifax’s liability because no evidence showed Equifax disseminated the alleged inaccuracies in the report. Further, the CreditLink tri-merge report combines data from all three major CRAs. Because CRAs do not prepare tri-merge reports and do not report all information by a particular agency, the court concluded that tri-merge reports standing alone cannot establish a CRA’s liability. The panel also determined Equifax did not cause the bank to deny Frazier’s loan application, and that no evidence proved the bank reviewed an Equifax report, rather than only CreditLink’s report. For these reasons, the panel concluded Equifax cannot be held liable.
In dissent, Judge David Hamilton reasoned the panel should reverse summary judgment for Equifax. According to Judge Hamilton, substantial evidence showed Equifax received false information in Frazier’s credit report, and the company failed to correct it. Judge Hamilton also noted Equifax did not keep a record of the information it sent to CreditLink. Given the “gap in evidence,” Judge Hamilton reasoned it was difficult to understand how the district court granted summary judgment “on the theory that the information furnished and reported by Equifax … was all true and that there was no inaccuracy in Equifax’s report.”
Bottom Line: As of Sept. 1, Frazier has not filed an en banc (full panel) petition for rehearing.
Documents: Opinion
