Temple University Held to Violate the Fair Credit Reporting Act

Edward Seamans sued Temple University for violations of the Fair Credit Reporting Act (“FCRA”), 15 U.S.C. Section 1681s-2(b). Seamans received a Perkins student loan from Temple in 1989 and subsequently dropped out of Temple without making any payments on the Perkins student loan.

In 2010, Seamans applied for financial aid from Drexel University, and Drexel told him it would not provide any financial aid until he paid the balance of his Perkins loan to Temple.

On April 28, 2011, Seamans paid his Perkins loan in full to Temple. The loan was outstanding and unpaid for over twenty (20) years.

Seamans act of paying the Perkins loan resulted in a 80 point drop on on his credit score along with a negative “trade line” on his credit report, all of which were illegal.

On May 17 and May 20, 2011, Seamans disputed with TransUnion Credit Bureau the reporting of the Temple Perkins loan on his credit file. Transunion notified Temple of the dispute and Temple decided to do nothing.

On August 1, 2011, Seamans wrote TransUnion Credit Bureau to dispute the reporting of the Temple Perkins loan on his credit file. Temple continued to fail to report the date of first delinquency and failed to report that the account was disputed.

The FCRA imposes an obligation to investigate on those who furnish information to credit reporting agencies (“furnishers”) that gives rise to a private cause of action under 15 U.S.C. Section 1681s-2(b). The FCRA also provides for civil liability when furnishers fail to comply with their reporting obligations.

Temple violated the FCRA by erroneously reporting Seamans Perkins loan by failing to furnish the Credit Bureaus with the date of the loan’s first delinquency, the payment history profile for his account and failing to mark the account as disputed. Temple’s failure to furnish the proper information to the Credit Bureaus negatively affected Seamans credit score.

The U.S. Court of Appeals for the Third Circuit agreed and ruled that Temple University is required under the law to report the date of the first delinquency and the collection history of students who had Perkins Loans to credit reporting agencies.

Without the date of delinquency, the credit reporting agencies can’t calculate the seven-year window provided by the Fair Credit Reporting Act after which delinquent loans “age off” of a consumer’s credit report, according to the opinion.

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