The debtor obtained a car loan from the creditor to purchase a car from a third-party used car dealership. After some time, the debtor opted to obtain a refund for the car from the dealership and asked for the amount to be refunded to him directly. The used car dealership refused and stated it would only send the refund to the creditor because the loan had been obtained from the creditor. The debtor then alleged that the creditor, without disclosures or notice of his rights, sent him harassing mail and emails, reported his debt as fraudulent and that the employment history the debtor had represented was also fraudulent. The creditor also stated the debtor had given it a false social security number. In addition, the creditor took other steps to encourage the debtor to pay it. The debtor asserted that the creditor’s “purposeful” conduct was an attempt to make him pay, to discourage him from attempting to get credit in the future and to discourage other creditors from giving him credit. The debtor sued, alleging the creditor (1) violated the Truth in Lending Act (TILA) by failing to disclose his recession rights; (2) violated the Gramm-Leach-Bliley Act (GLBA) and the California Financial Information Privacy Act (CFIPA) by disclosing “nonpublic personal information” to credit reporting agencies (CRAs); (3) engaged in “abusive debt-collection practices,” which violated the Fair Debt Collection Practices Act (FDCPA) and California’s Rosenthal Act; (4) failed to conduct an adequate investigation before reporting his debts to CRAs in violation of the Fair Credit Reporting Act (FCRA); (5) failed to give him notice of “potential claims and defenses” required by 16 C.F.R. § 433.2; (6) violated the Equal Credit Opportunity Act (ECOA); (7) had defamed him by providing false information to the CRAs; and (8) committed fraud.
In Thompson v. Navy Fed. Credit Union, No. 23-cv-01370-LB, 2024 WL 4050392, 2024 U.S. Dist. LEXIS 158146 (N.D. Cal. Sept. 3, 2024) (opinion not yet released for publication), the court held that the debtor did not bring viable claims for defamation, fraud, or a violation of the Equal Credit Opportunity Act. However, the court found that the debtor did bring other viable claims. First, the court found that the TILA claim was viable because TILA requires disclosure of the debtor’s rescission rights, and the debtor alleged the creditor had not provided that disclosure. Second, the debtor had a viable financial privacy claim under the CFIPA but not the GLBA, which “does not contain a private right of action.” BGC, Inc. v. Bryant, No. 22-cv-04801-JSC, 2023 U.S. Dis. LEXIS 107699, 2023 WL 4138287, at *2 (N.D. Cal. June 21, 2023). The debtor’s claim under the CFIPA was viable because financial institutions cannot disclose “nonpublic personal information” to CRAs, which the creditor had allegedly done by disclosing the debtor’s social security number. Third, the court found that the debtor’s claim that the creditor had violated the FDCPA and California’s Rosenthal Act was viable. A key element for a claim under the FDCPA is a violation of a provision of 15 U.S.C. §§ 1692a-1692o, which the Rosenthal Act incorporates §§ 1692b-1692j. Thus, the claim is viable because the creditor allegedly failed to disclose its name to the debtor in violation of 15 U.S.C. § 1692g(a)(2). Fourth, the FCRA claim was also valid because the debtor plausibly alleged that the investigation after he had disputed the debt had been inadequate. Fifth, the claim that 16 C.F.R. § 433.2 had been violated was also viable because the debtor alleged that he had not been notified of all potential claims and defenses as required by the statute. Sixth, the court found that the debtor’s ECOA claim was not viable because he had failed to allege any discrimination. Next, the court held that the debtor’s claim for defamation was not viable because the FRCA preempts defamation claims based on allegations of false reporting to a credit reporting agency. Khankin v. JLR San Jose, LLC, No. 3:23-cv-06145-JSC, 2024 U.S. Dist. LEXIS 45473, 2024 WL 1120118, at *3-5 (N.D. Cal. Mar. 14, 2024). Finally, the debtor did not meet the “more demanding standard” for alleging fraud, which requires a debtor to “state with particularity the circumstances constituting fraud.” Fed. R. Civ. P. (9)(b). The debtor had failed to “allege fraud specifically… [and] instead alleges in a conclusory manner that he was tricked.” Therefore, the court dismissed the debtor’s ECOA, defamation, and fraud claims for not being viable but allowed the debtor to proceed on the remaining claims.
By Jaden Hamilton: [email protected]
Edited By Nura Elhentaty: [email protected]
Edited By Kristin Meurer: [email protected]
Edited By Hayden Mariott: [email protected]