No private right of action under Fair Credit Act claim

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Where the plaintiffs alleged a bank violated § 1681s-2(a) of the Fair Credit Reporting Act by supplying information known to be incorrect to a credit reporting agency, the claim was dismissed because there is no private right of action under that section of the law.

Background

Melvin and Linda McCauley filed this action against Ally Bank in the Circuit Court of Albemarle County, asserting claims for breach of contract and violations of the Fair Credit Reporting Act, or FCRA. Following removal, Ally has moved to dismiss the complaint pursuant to Federal Rule of Civil Procedure 12(b)(6).

FCRA

Plaintiffs argue that they “clearly allege that Ally . . . violated 15 U.S.C. § 1681s-2(a)(1)(A)” by “continuing to report to a consumer reporting agency, information that [Ally] had been put on notice of by Plaintiffs and in its own correspondence had determined to be erroneous.” However, there is “no private right of action under § 1681s-2(a).” Consequently, plaintiffs’ claims for relief based on alleged violations of subsection (a) must be dismissed with prejudice.

Although a private right of action does exist under § 1681s-2(b), the complaint does not allege a plausible violation of this subsection. In order to state a claim for failure to investigate pursuant to § 1681s-2(b), a plaintiff must allege that a credit reporting agency notified the defendant of a dispute by the plaintiff.

In this case, plaintiffs do not contend—either in their complaint or response brief—that they reported a dispute to a credit reporting agency or that a credit reporting agency notified Ally of such dispute. Consequently, plaintiffs have no plausible claim for relief under § 1681s-2(b).

Breach of contract

Ally also moved to dismiss the breach of contract claims asserted in Count One. Since Count One does not satisfy the minimum threshold on its own, the court must decide whether to exercise supplemental jurisdiction over this count. In a case such as this, where the federal claims are dismissed in the early stages of litigation and only state claims remain, the court “should decline the exercise of jurisdiction.”

Accordingly, the court declines to exercise supplemental jurisdiction over the remaining claims asserted under state law. The court will remand the claims for breach of contract to the Circuit Court of Albemarle County for consideration.

Defendant’s motion to dismiss Count Two granted.

McCauley v. Ally Bank, Case No. 3:20-cv-00069, March 15, 2021. WDVA at Charlottesville (Conrad). VLW 021-3-108. 7 pp.