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In May of 2022, a New Jersey District Court ruled in favor of Diamond Resorts, declining to find them liable under the Fair Credit Reporting Act. The case, Esperance v. Diamond Resorts, provides insight on how courts are interpreting the Fair Credit Reporting Act. Specifically, the court held that companies providing consumer information to credit bureaus, like Diamond Resorts, do not have to investigate the legal validity of debts. This reduces a company’s investigatory duty under the Act to only disputed factual inaccuracies. Moreover, the court found that the Fair Credit Reporting Act does not per se impose ramifications on companies who report inconsistent credit information. HIGHLIGHTS OF ESPERANCE V. DIAMOND RESORTS
District Court grants Diamond Resorts’ motion for summary judgment on all claims
Companies providing consumer information to credit bureaus do not have to investigate the legal validity of debts
No ramifications for inconsistent credit reporting under the Fair Credit Reporting Act
BACKGROUND
Sandy Esperance and Betsy Fumelus (the Plaintiffs) were sisters who purchased a Florida timeshare from Defendant Diamond Resorts’ predecessor, Tempus Palms International. After several years of paying their loans, Plaintiffs hired Mr. Mitchell Sussman (Sussman) in order to exit their timeshare obligations. Sussman is a California-based attorney specializing “in ridding timeshare owners of their timeshare obligations” and has been criticized by the courts for his questionable timeshare exit practices. In this case, Sussman sent a letter to Diamond Resorts declaring that Plaintiffs would no longer be paying for their timeshare. Four months later, Sussman mailed Plaintiffs a congratulatory letter, advising Plaintiffs that they were no longer timeshare owners and were not responsible for any more payments. Attached to the congratulatory letter was a quitclaim deed-in-lieu of foreclosure, which supposedly transferred the timeshare’s title to Diamond Resorts. Following Sussman’s advice, Plaintiffs stopped paying Diamond Resorts even though there was no evidence that Diamond Resorts ever communicated with Sussman or agreed to cancel the Plaintiffs’ timeshare. Diamond Resorts—a “credit furnisher” under the Fair Credit Reporting Act (the Act) because it reports consumer credit information to credit reporting agencies such as Experian Information Solutions, LLC (Experian)—continued to comply with its duties by reporting Plaintiffs’ delinquent accounts to the credit bureaus. Unsatisfied that the timeshare obligations continued to be reported to Experian, among others, Plaintiffs made five credit disputes claiming inaccuracies on their reports. Relying on information and the quitclaim deed provided to them by Sussman, Plaintiffs alleged that their Diamond Resorts’ accounts were in fact “closed.” Diamond Resorts’ credit-reporting team thoroughly investigated all five disputes. In response to each, Diamond Resorts verified the accounts as open and asked Experian to reduce Plaintiffs’ accounts to reflect only the principal balances owed. After having been unable to remove the timeshare obligations from their credit reports, Plaintiffs commenced an action against Diamond Resorts and Experian in the United States District Court for the District of New Jersey (the Court), alleging violations of the Act. Plaintiffs claimed that both defendants reported inaccurate information regarding the status and balance of Plaintiffs’ accounts. THE DISTRICT COURT’S DECISION
In granting Diamond Resorts’ motion for summary judgment, the Court held that companies who report consumer credit information to the credit bureaus (Credit Information Furnishers) are not obligated to investigate the legal validity of disputed debts. This ruling follows several other federal circuit and district court cases.1
The Court explained that when a consumer disputes information on her credit report, a Credit Information Furnisher must reasonably investigate the accuracy of the information it reported. However, a Credit Information Furnisher will only be liable for failure to investigate or for conducting an inadequate investigation if the reported information is found inaccurate or materially misleading. The Court rejected the claim that Diamond Resorts provided inaccurate information to Experian when, despite the quitclaim deed, it reported Plaintiffs’ accounts as open. Agreeing with Diamond Resorts, the Court limited the company’s duties under the Act by requiring it to investigate only disputed factual inaccuracies. Thus, a plaintiff relying on the Act cannot argue that its credit report is inaccurate because it does not legally owe the debts (a question of law rather than a question of fact). The Court found that Diamond Resorts was not liable under the Act because the basis of Plaintiffs’ dispute, whether the quitclaim deed was valid and sufficient to terminate Plaintiffs’ loan obligations, was a legal question. Therefore, Diamond Resorts was not required to investigate  the legal validity of the quitclaim deed obtained by Sussman. The Court additionally rejected Plaintiffs’ claim that Diamond Resorts furnished inaccurate information by reporting fluctuating balances to Experian. While the Court found that Diamond Resorts did report inconsistent balances, the Court held that these discrepancies did not amount to liability under the Act. As long as the information was not misleading, the Court said, a Credit Information Furnisher is not required “to report one way or the other—including fees and interest to the principal balance or not.”
Lastly, in rejecting Plaintiffs’ argument that it was inaccurate to report Plaintiffs’ account as open and not charged-off, the Court held that Diamond Resorts was not legally required to charge-off Plaintiffs’ accounts. Although Diamond Resorts’ SEC filings provided that it charges off accounts that are 180 days delinquent, no law binds Diamond Resorts to its charge-off procedures contained in its SEC filings. Based on this, the Court held that as a matter of law, Diamond Resorts was entitled to summary judgment. WHAT DOES THIS MEAN FOR CREDIT INFORMATION FURNISHERS? Duties Under the Act
Under the Act, a Credit Information Furnisher must reasonably investigate the factual accuracy of disputed information. For example, whether a plaintiff was billed for the disputed services is a factual question. However, a Credit Information Furnisher is not required to resolve legal questions, such as the legal validity of the underlying debt. When determining whether the basis of a dispute falls outside of the Act’s investigatory duties, Credit Information Furnishers should consider whether the underlying issue is a factual or legal question. Liability Under the Act
While Credit Information Furnishers should strive to report consistently, this case shows that inconsistently reporting consumer information, in a non-misleading way, will not likely result in liability under the Act. When reporting consumer information to the credit bureaus, the Act does not impose liability on a Credit Information Furnisher that reports an account as open despite the account being eligible for a charge-off. Charging off an account is not legally required, even if the company’s ancillary regulatory filings allow for the account to be charged-off. 1 Chiang v. Verizon New England, 595 F.3d 26, 35 (1st Cir. 2010); Hunt v. JPMorgan Chase Bank, Nat’l Ass’n, 770 F. App’x 452, 458 (11th Cir. 2019); Herrell v. Chase Bank USA, N.A., 218 F. Supp. 3d 788, 793 (E.D. Wis. 2016); Alston v. Wells Fargo Home Mortg., No. 13-3147, 2016 WL 816733, at *10 (D. Md. Feb. 26, 2016).

District Court Shows Timeshare "Exit" Attorney the Exit

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In Theresa Tailford, et al. v. Experian Information Solutions , the U.S. Court of Appeals for the Ninth Circuit recently affirmed a district court decision which held that Experian Information Solutions, Inc. did not violate the Fair Credit Reporting Act because none of the information the plaintiffs alleged Experian should have disclosed was subject to disclosure by a consumer reporting agency (CRA) under the FCRA. In their underlying putative class action, plaintiffs argued that under 15 U.S.C. § 1681g(a)(1), (3), and (5), Experian was required to disclose, in addition to its traditional credit information (credit accounts, creditors, debts, and credit inquiries), other types of information stored by Experian for various purposes, including (i) behavioral data from its “ConsumerView” marketing database; (ii) “soft” credit inquiries from third parties and affiliates; (iii) the identity of all parties who procured consumer reports from Experian; and (iv) the date on which employment data was reported to Experian. Section 1681g(1) provides that, upon a consumer’s request, a CRA must provide “[a]ll information in the consumer’s file at the time of the request [subject to exceptions not relevant to the appeal].”  The plaintiffs argued that under § 1681g(1), “[a]ll information in the consumer’s file” should be interpreted to mean that CRAs must furnish even information for internal and marketing use. Experian filed a motion to dismiss for failure to state a claim, and the district court held that Experian had no obligation to include the information alleged to be missing by plaintiffs in its § 1681g disclosures. The district court dismissed the plaintiffs’ lawsuit with prejudice. On appeal, the Ninth Circuit agreed with Experian and the district court, holding that none of the information  alleged to be missing from Experian’s disclosures was required to be disclosed under § 1681g. The panel, first looking to § 1681g(a)(1), focused on what constitutes “all information in the consumer’s file,” and determined  that such information did not constitute all information that “might be furnished” as argued by the plaintiffs. While agreeing with the plaintiffs that a consumer’s “file” was not limited to information that was previously contained in a consumer report, the Ninth Circuit determined that it only included “information similar to that shown to have been included by the CRA in a consumer report in the past or planned to be included in the future.”  The Ninth Circuit found that none of the information that the plaintiffs alleged Experian should have disclosed was of this type. Additionally, the Ninth Circuit rejected the plaintiffs’ argument that Experian should have disclosed certain of the “soft inquiries” under § 1681g(a)(3), which requires disclosure of each person who has procured a consumer report. The Ninth Circuit indicated that actual procurement of a consumer report by an identified party is necessary to trigger disclosure under § 1681g(a)(3) and the plaintiffs had failed to allege that the parties making “soft inquiries” were actually sent anything by Experian or that what was sent was a consumer report. The Ninth Circuit also rejected the plaintiffs’ argument that because two of the “soft inquiries” were promotional inquiries, they should have disclosed under § 1681g (a)(5). § 1681g(a)(5) requires the disclosure of inquiries received by a CRA during the 1-year period preceding the consumer’s request “that identified the consumer in connection with a credit or insurance transaction that was not initiated by the consumer. The Ninth Circuit indicated that the provision’s reference to a “transaction” meant that it only applies to inquiries leading to a firm offer of credit and the plaintiffs had failed to allege that the two inquiries led to an offer. Accordingly, the Ninth Circuit affirmed the district court’s dismissal of the plaintiffs’ claims with prejudice. While the Ninth Circuit was unwilling to accept the plaintiffs’ broad reading of what must be disclosed under § 1681g, the decision should serve as a reminder to CRAs to review their policies and procedures for responding to consumer requests under § 1681g to confirm they are disclosing all required information.

Ninth Circuit draws line on FCRA required disclosures

The Global Debt Collection Software Market is estimated to be USD 3.9 Bn in 2022 and is expected to reach USD 6.06 Bn by 2027, growing at a CAGR of 9.23%. Market dynamics are forces that impact the prices and behaviors of the Global Debt Collection Software Market stakeholders. These forces create pricing signals which result from the changes in the supply and demand curves for a given product or service. Forces of Market Dynamics may be related to macro-economic and micro-economic factors. There are dynamic market forces other than price, demand, and supply. Human emotions can also drive decisions, influence the market, and create price signals. As the market dynamics impact the supply and demand curves, decision-makers aim to determine the best way to use various financial tools to stem various strategies for speeding the growth and reducing the risks. Countries Studied
America (Argentina, Brazil, Canada, Chile, Colombia, Mexico, Peru, United States, Rest of - Americas)
Europe (Austria, Belgium, Denmark, Finland, France, Germany, Italy, Netherlands, Norway, Poland, Russia, Spain, Sweden, Switzerland, United Kingdom, Rest of - Europe)
Middle-East and Africa (Egypt, Israel, Qatar, Saudi Arabia, South Africa, United Arab Emirates, Rest of MEA. Asia-Pacific (Australia, Bangladesh, China, India, Indonesia, Japan, Malaysia, Philippines, Singapore, South Korea, Sri Lanka, Thailand, Taiwan, Rest of Asia-Pacific)
Competitive Quadrant
The report includes Competitive Quadrant, a proprietary tool to analyze and evaluate the position of companies based on their Industry Position score and Market Performance score. The tool uses various factors for categorizing the players into four categories. Some of these factors considered for analysis are financial performance over the last 3 years, growth strategies, innovation score, new product launches, investments, growth in market share, etc. Why buy this report? The report offers a comprehensive evaluation of the Global Debt Collection Software Market. The report includes in-depth qualitative analysis, verifiable data from authentic sources, and projections about market size. The projections are calculated using proven research methodologies. The report has been compiled through extensive primary and secondary research. The primary research is done through interviews, surveys, and observation of renowned personnel in the industry. The report includes an in-depth market analysis using Porter's 5 forces model and the Ansoff Matrix. In addition, the impact of Covid-19 on the market is also featured in the report. The report also includes the regulatory scenario in the industry, which will help you make a well-informed decision. The report discusses major regulatory bodies and major rules and regulations imposed on this sector across various geographies. The report also contains the competitive analysis using Positioning Quadrants, the analyst's competitive positioning tool. Market Dynamics

Global Debt Collection Software Market (2022 to 2027) - Featuring Experian Information Solutions, Nucleus Solutions and Temenos Among Others - ResearchAndMarkets.com

The Global Debt Collection Software Market is estimated to be USD 3.9 Bn in 2022 and is expected to reach USD 6.06 Bn by 2027, growing at a CAGR of 9.23%. Market dynamics are forces that impact the prices and behaviors of the Global Debt Collection Software Market stakeholders. These forces create pricing signals which result from the changes in the supply and demand curves for a given product or service. Forces of Market Dynamics may be related to macro-economic and micro-economic factors. There are dynamic market forces other than price, demand, and supply. Human emotions can also drive decisions, influence the market, and create price signals. As the market dynamics impact the supply and demand curves, decision-makers aim to determine the best way to use various financial tools to stem various strategies for speeding the growth and reducing the risks. Countries Studied
America (Argentina, Brazil, Canada, Chile, Colombia, Mexico, Peru, United States, Rest of – Americas)
Europe (Austria, Belgium, Denmark, Finland, France, Germany, Italy, Netherlands, Norway, Poland, Russia, Spain, Sweden, Switzerland, United Kingdom, Rest of – Europe)
Middle-East and Africa (Egypt, Israel, Qatar, Saudi Arabia, South Africa, United Arab Emirates, Rest of MEA. Asia-Pacific (Australia, Bangladesh, China, India, Indonesia, Japan, Malaysia, Philippines, Singapore, South Korea, Sri Lanka, Thailand, Taiwan, Rest of Asia-Pacific)
Competitive Quadrant
The report includes Competitive Quadrant, a proprietary tool to analyze and evaluate the position of companies based on their Industry Position score and Market Performance score. The tool uses various factors for categorizing the players into four categories. Some of these factors considered for analysis are financial performance over the last 3 years, growth strategies, innovation score, new product launches, investments, growth in market share, etc. Why buy this report? The report offers a comprehensive evaluation of the Global Debt Collection Software Market. The report includes in-depth qualitative analysis, verifiable data from authentic sources, and projections about market size. The projections are calculated using proven research methodologies. The report has been compiled through extensive primary and secondary research. The primary research is done through interviews, surveys, and observation of renowned personnel in the industry. The report includes an in-depth market analysis using Porter’s 5 forces model and the Ansoff Matrix. In addition, the impact of Covid-19 on the market is also featured in the report. The report also includes the regulatory scenario in the industry, which will help you make a well-informed decision. The report discusses major regulatory bodies and major rules and regulations imposed on this sector across various geographies. The report also contains the competitive analysis using Positioning Quadrants, the analyst’s competitive positioning tool. Market Dynamics

Global Debt Collection Software Market (2022 to 2027) – Featuring Experian Information Solutions, Nucleus Solutions and Temenos Among Others – ResearchAndMarkets.com

Brazilian startup PayHop raised $2.2 million in a seed round to go towards helping the FinTech scale its business, which enables retailers to use credit card receivables as collateral for loans, according to reports. The funding was led by Serasa Experian’s investment arm, with participation by Domo Invest and Citrino Gestão. Founded in August 2020 by Eduardo Rossi , CEO, and Arthur Fontana , CTO, the startup allows retailers to get credit using card receivables as collateral. “We are inserted in B2B credit. For suppliers, we work on issues related to requests that come to the commercial area and are denied. In that respect, the partnership with Serasa is perfect because it gives us access to 50,000 distributors throughout Brazil who sell to retailers. Like any B2B business, we have the acquisition cost, which is facilitated by Serasa’s base,” Rossi told The Rio Times. The Central Bank of Brazil’s adoption of a new regulation in June 2021 allowed for the registration, negotiation and trading of card receivables. The new law registers all card transactions in a central office that certifies the receivables as legitimate. The creditor can then use the future payments as collateral for better credit rates and without having to pay upfront fees, according to reports. PayHop’s rival in the new business space is Brazilian FinTech TruePay , which also came into play because of the new regulation.

FinTech PayHop’s $2.2M Seed Will Help Scale Business

Incognia provides zero friction mobile authentication to banks, fintech, and mCommerce companies for increased mobile revenue and lower fraud losses. Incognia’s location technology uses signals and motion sensors to silently recognize trusted users based on their unique behavior patterns and is a key enabler for zero-factor authentication. It was founded in 2020 and is based in Palo Alto, California.

Incognia

Brazilian startup Incognia announced a partnership with Serasa Experian for fraud prevention in Brazil .

Mobile fraud prevention startup Incognia takes first steps in the B2B2C market in partnership with Serasa Experian

J.P. Morgan Chase & Co.

Other Investors

Serasa Experian is an information services company. The company offers credit consultation, granting, analytics, consulting, client management, marketing, identity, fraud prevention, debt recovery, and digital certification. It is based in Sao Paulo, Brazil.

Name	Lisias Lauretti
Work History	J.P. Morgan Chase & Co.
Title	Chief Information Officer
Status	Former

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