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Sueing Experian in Rayes, the claimant alleged that imprecise or deceptive information relating to Western Sky Financial LLC ("Western Sky") bank balances appears on its credit report. In particular, the applicant argued that the Western Sky loan on which it was based was extortionate and null and void from the outset under national legislation and that Experian, for its part, should not have notified them.
Expertian argued that Reyes' demands had legally collapsed because the controversial imprecision at the core of her own FFRA demand was nothing more than a multilateral assault on the legality of the guilt in question. The Central District of California relied mainly on Carvalho and issued a fast-track injunction in favour of Experian.
The Carvalho Ninth Circuit represents the first obstacle to the otherwise "lamentable approach" of the circuit by formulating a controversial imprecision under the California Food Credit Reporting Agencies Act (the California analog to FCRA). The Ninth Circuit has recognised that information to consumers is imprecise when it is "obviously imprecise" or so deceptive as to adversely influence a consumer's capacity to obtain credit.
Carvalho, 629 F.3d at 890. At Carvalho, the Tribunal was faced with the allegation that the three Consumers Registration Authorities ('CRAs') had each neglected to adequately investigate and then cancel a contested discharge of debts due from the claimant. The claimant claimed that the medically prescribed indebtedness should not appear on her credit report because her health insurer was liable for paying the indebtedness.
Ninth Circle confirmed that the applicant had not found any imprecision by alleging that it was not juridically liable for the fault and the obligation to reopen the investigation does not oblige credit rating agencies to settle litigation between the notifying party. In other words, credit rating agencies are not obliged to establish whether the information provided to consumers is correct for regulatory reasons.
Carvalho, 629 F.3d at 891-92. These standards were established in the First Circuit in DeAndrade by Trans Union LLC, 523 F.3d 61 (1st Cir. 2008). California Carvalho case law has extended the use of this precision rule - that litigation is not an imprecision - to non-recovery actions.
In particular, the judiciary has followed this line of cases to reject cases of FCRAs relying on an obligation on a credit rating agency to comply with appropriate mechanisms, primarily to ensure the highest possible degree of precision before a consumer-initiated litigation occurs. <font color="#ffff00">-==- proudly presents 84 F. Supp. </ i>. 3104, 1060-61 (C.D. Approx. 2014); Prianto v. Experian Information Solutions, Inc.
No. 13-CV-03461-TEH, 2014 WL 3381578, at *4 (N. D. Approx. July 10, 2014); Smith v. Experian Information Solutions, Inc. The stricter precision requirements - at least for controversial inaccuracies - are not used in the third, fifth and seventh circuits. Perez v. Experian Information Solutions, Inc.
2015 WL 12683795, at *3 (C. D. Cal. Jan. 13, 2015) (Measurement of precision demands of circuits FCRA). It should come as no great surprise, then, that Judge Guilford in Reyes quickly waived the plaintiff's claim that her credit report included errors in the patents and concentrated on her claims that Experian had provided "misleading" information.
According to the tribunal, the claimant asked Experian to determine whether it was juridically liable for the indebtedness in question - a job that Carvalho makes clear is not the job of a rating agency. Probably the Supreme Tribunal will finally listen and determine which precision standards apply, the stricter First and Ninth Circle standards or the more litigious Third, Fifth and Seventh Circle standards.
In the meantime, the case of Rayes will serve as a precious memory that precision is the best defence of a credit rating agency in California credit and consumption reports.