Call Us
Free Case Review

FCRA UPDATE: NO RIGHT TO OFFSET UNDER FCRA

“From a policy standpoint, therefore, it is difficult to conjure up support for a rule which would allow a furnisher to bring an indemnification action.”  

In Mayo v. Synchrony Bank, which settled earlier this month, a magistrate judge in the District of Kansas denied credit card company’s motion for leave to file third-party complaint against another consumer.

FACTS

Plaintiff Syretta Mayo filed a lawsuit against Equifax, Experian, Trans Union and Synchrony Bank under the Fair Credit Reporting Act “FCRA”.  The plaintiff alleges, inter alia, the consumer reporting agencies reported inaccurate information on her credit report.  When she brought the false information to the credit bureaus attention, Ms. Mayo claims the credit bureaus and Synchrony failed to resolve her credit dispute in compliance with the FCRA.

Synchrony moved for leave to file a third-party complaint against the consumer who opened the account and purportedly listed the plaintiff as a co-signer.  “In its proposed third-party complaint, Synchrony contends it received a credit card application that listed Hall as the primary applicant and Plaintiff as the co-applicant.”  Synchrony alleged “that by listing Plaintiff as a co-applicant and providing confidential information about Plaintiff, Hall negligently or intentionally misrepresented to Synchrony that Plaintiff knew of and consented to Hall’s listing of her as a co-applicant.”

ANALYSIS

The decision whether to grant a motion for leave to file a third-party complaint is in the discretion of the court.  “[T]he defendant’s claim against the third party must in some way be dependent on the outcome of the main claim, or the third party must be secondarily liable to defendant.”

The claims asserted in Synchrony’s proposed third party complaint against the consumer who opened the disputed account included: (1) negligent misrepresentation; intentional misrepresentation; and (3) indemnification.

The plaintiff opposed Synchrony’s motion and argued the third party complaint was improper because: Synchrony did not have an indemnification agreement with the consumer; the FCRA does not provide a federal common law right of indemnification; and the negligence and misrepresentation claims made by Synchrony are completely independent of the plaintiff’s FCRA claims.

CONCLUSION

The trial court acknowledged Synchrony’s claims shared facts in common; however, because the plaintiff’s claims were made under federal law, the FCRA, and the FCRA does not “expressly or impliedly provide[] a right to indemnity,” the court denied Synchrony’s motion for leave to file the third party complaint.  Accordingly, “[f]rom a policy standpoint, therefore, it is difficult to conjure up support for a rule which would allow a furnisher to bring an indemnification action.”

GOT CREDIT REPORT ERRORS?

The Adkins Firm represents consumers with credit report errors and background report errors in federal court under the Fair Credit reporting Act (FCRA).  We accept FCRA referrals from lawyers across the country.  Mr. Adkins is admitted to all federal district courts in Alabama, Colorado and Texas.  He has also been admitted on motion into federal  courts in the following districts: California; Florida; Georgia; Illinois; Indiana; Kentucky; Mississippi; New Jersey; Oregon; Pennsylvania and the District of Columbia.

If you or your clients have discovered credit report errors or background report errors and need help, contact us for a free case review or information about how to refer a client to Micah Adkins.