FILED

of the FCRA by failing to perform a reasonable reinvestigation into the acgurs y.of
the Sears and Discover accounts after she notified them that she had beens % 2006
victim of identity fraud.’ Specifically, she contends that it was unreasonable for

Experian to rely solely on the information provided by Sears and Paget bis tage
responses to Experian’s CDVs without further investigating her dispute.’ Althoug! {CT COURT
courts are (o focus on the reasonableness of a credit reporting agency's

reinvestigation in determining whether the agency violated the FCRA, as we

recently highlighted in Ruffin-Thompkins v. Experian Information Solutions, the
reasonableness inquiry is unnecessary until the plaintiff has “show[n] that she

‘suffered damages as a result of the inaccurate information.” 422 F.3d at 608

(quoting Sarver, 390 F.3d at 970); see also Wantz, 386 F.3d at 832 (“It is the

plaintiff's burden to establish that [s]he is entitled to damages.”) (citation omitted).

Thus, rather than delving into a reasonableness inquiry before one is necessary, we

begin our analysis with damages.

In order to prevail on her claims, Bagby must. not only present evidence of
damages, she must also establish that she suffered damages as a result of
Experian’s conduct in reinvestigating the alleged inaccuracies in her credit report.
Sarver, 390 F.3d at 971. “Without a causal relation between the violation of the
statute and the loss of eredit, or some other harm, a plaintiff cannot obtain an
award of ‘actual damages.” Crabill v. Trans Union, L.L.C., 259 F.3d 662, 664 (7th
Cir. 2001) (citations omitted). Under § 1681i(a), Experian must he made aware of
an inaccuracy before it has a duty to reinvestigate. Sarver, 390 F.3d at 971, see also
Ruffin-Thompkins, 122 F.3d at 610. Thus, Experian’s window of potential liability
did not open until November of 2002, the date Experian received Bagby’s dispute
letter.

Bagby has not alleged that she was ever denied credit as a result of the
Discover and Sears accounts appearing on her eredit report. Instead, she claims
that. she suffered actual, pecuniary damages in having to pay off the balances on
these two accounts. Bagby argues that she would not have paid the balances but
for Experian’s refusal to delete them from her credit report. Initially, this argument
strikes us as misplaced. The balances on the Discover and Sears accounts were
incurred as a result of charges made by Bagby and her mother, in the case of the
Discover account, and as a result of the alleged identify theft, in the case of the
Sears account. None of the charges were incurred as a result of something

5 At the trial court, Bagby also asserted a claim that Experian violated & 1681¢(b) of the FCRA,
which obligates a credit reporting agency to “following reasonable procedures to assure maximum
possible accuracy” of information contained in a consumer credit report, However, Bagby has not
presented the issue to this court; thus, she has abandoned her claim under § 168te(b). See Luellen
v. City of East Chicago, 350 F.3d 604, 612 (7th Cir. 2003) (arguments not raised on appeal are
waived); Ruffin-Thampkins, 422 F.3d at 607 n.1.

5



ys Totnes or accuracy of any item of information contained

ssumer's file at a consumer reporting agency is disputed by the
soGosine and the consumer notifies the agency directly . . . of such

ispute, the agency shall, free of charge, conduct a reasonable

reinvestigation to determine whether the disputed information is
inaccurate and record the current status of the disputed information,
or delete the item from the file . .. before the end of the 80-day period
beginning on the date on which the agency receives the notice of the
dispute from the consumer ....

os

15 U.S.C. § 1681i(a)(1)(A). In Henson v. CSC Credit Services, we discussed the
reasonable reinvestigation requirement of §1681i(a):

Whether the credit reporting agency has a duty to go beyond the
original source will depend, in part, on whether the consumer has
alerted the reporting agency to the possibility that the source may be
unreliable or the reporting agency itself knows or should know that the
source is unreliable. The credit reporting agency’s duty will also
depend on the cost of verifying the accuracy of the source versus the
possible harm inaccurately reported information may cause the
consumer.

29 F.3d 280, 287 (7th Cir. 1994). Thus, pursuant to Henson, we examine two
factors to deLermine whether Experian had a duty to go beyond the information it
received from Sears and Discover in their responses to Experian’s CDV forms: (1)
whether Bagby informed Experian that Sears or Discover may have been unreliable
sources or Experian knew or should have known the same; and (2) the cost. to the
credit reporting agency of verifying the accuracy of the information versus the
possible harm the inaccurate information could have caused Bagby. Id. at 287.

When Experian received Bagby’s dispute letter, it sent CDVs to all of the
disputed creditors. Based on Experian’s investigation, a number of the disputed
accounts were deleted from Bagby’s credit report. However, both Sears and
Discover responded to Experian that the information on the CDV matched the
information they had on Bagby’s accounts, and, as a result, Experian refused to
delete those two accounts from her credit report. Experian informed Bagby of the
investigation results via an updated credit report and encouraged her to contact
Sears and Discover personally if she suspected fraud. Despite this suggestion,
Bagby did not contact. Sears or Discover regarding her fraud allegations. She also
failed to inform Experian that she believed Sears and Discover to be unreliable
sources. In fact, she had no further contact with Experian, Sears, or Discover prior
to filing this lawsuit. Given Bagby’s failure to present evidence that Sears or
Discover were unreliable sources, this is not a circumstance where a more in-depth

8



FIL B

JAN 2 © 2008 .

INS, . . : . - :
SOWRTredil,* and that this stress sometimes manifests itself in the

CLERun of tension headaches.

On June 7, 2004, the district court granted Experian’s motion for summary
judgment, finding that Experian’s investigation into the disputed accounts was
reasonable and that Bagby did not suffer any damages as a result of Experian’s
conduct. On June 23, 2004, Bagby filed a timely notice of appeal.

Il. DISCUSSION

Summary judgment is appropriate if “the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavils, if any, show
that there is no genuine issue as to any material fact and that the moving party is
entitled to a judgment as a matter of law.” Fed. R. Civ. P. 56(c); Celotex Corp. v.
Catrett, 477 U.S. 317, 322 (1986). We review the district court’s grant of summary
judgment de novo to determine whether, viewing the facts in the light most
favorable to Bagby, there remains a material issue of fact for trial. Sarver v.
Experian Solutions, 390 F.3d 969, 970 (7th Cir. 2004); Patterson v. Avery Dennison.
Corp., 281 F.3d 676, 679 (7th Cir. 2002).

‘The FCRA was enacted to protect consumers from the transmission of
inaccurate information. Kates v. Croker National Bank, 776 F.2d 1396, 1897 (9th
Cir. 1995). Under the FCRA, when a consumer credit reporting agency prepares a
consumer credit report, it is required to “follow reasonable procedures to assure
maximum possible accuracy of the information concerning the individual about
whom the report relates.” 15 U.S.C. § 1681e(b). “Once a consumer report exists,
[the FCRA] triggers various duties on the part of a reporting agency, including the
obligation to reinvestigate when a consumer contends that [her] consumer report 1s
inaccurate or incomplete.” Ruffin-Thompkins v. Experian Info. Solutions, 422 F.3d
603, 607 (7th Cir. 2005) (quoting Wantz v. Experian Info. Solutions, 386 F.3d 829,
832 (7th Cir. 2004)); 15 1J.S.C. § 168li(a). A credit reporting agency that
negligently violates any duty imposed by the FCRA is potentially liable for “actual
damages,” costs, and attorneys fees. 15 U.S.C. §§ 1681n, 16810. Ifa credit
reporting agency willfully violates the FCRA, punitive damages may be awarded.
15 U.S.C. §1681n.

In her appeal, Bagby argues that the district court’s grant of summary
judgment was improper because Experian willfully and negligently violated §1681i

* Bagby asked the credit reporting agencies, including Experian, to put a “fraud alert” on her
credit report, a safeguard that alerts potential creditors that they should not issue credit in her name
unless they first contact Bagby and receive her verbal consent to open an account.


$

2
.
periagggid or did not do. Furthermore, the record belies Bagby’s argument that
she tdy’paid 8 WMances on the Discover and Scars accounts because Experian
refused Lo, hem from her credit. report. In her deposition, Bagby testified
iNat shew the Sears account and paid the balance “shortly after” she
digg ‘QF it on her credit report in February of 2001. Prior to this time, she had
net pdtified Experian of the inaccuracies in her credit report. In fact, according to
estimony, her first contact with Experian was not until twenty-one months
Tater, in November of 2002. Consequently, because Experian was not aware of a
problem with Bagby’s credit report at the time that she paid off her Sears account,
it cannot be held responsible for damages ensuing from her decision to pay the
Sears’ balance. See Sarver, 390 F.3d at 971, Similarly, in the case of the Discover
account, Bagby testified in her deposition that she had been paying on the Discover
account since 1996. Again, because she began making payments on the balance
long before she notified Experian of the inaccuracies in her report, Experian’s
conduct could not have been the proximate cause of her damages.

Bagby also blames Experian for the out-of-pocket costs she incurred in
obtaining two copies of her credit report. However, in her deposition, Bagby
admitted that she purchased the copies of her credit report prior to informing
Experian of her dispute. ‘Thus, there is no causal link between Experian’s alleged
misconduct and this expense.

Bagby next argues that she is entitled to damages for emotional distress.
She urges us to follow the Third Circuil’s approach in FCRA cases, in which a
plaintiff need not present evidence of emotional damages with a great degree of
specificity. See Philbin v. Trans Union Corp., 101 F.3d 957, 963 n. 3 (3d Cir. 1996).
However, we have declined to follow this reasoning. See Ruffin-Thompkins, 422
F.3d at 609 (stating our disagreement with the Third Circuit's approach to
emotional damages in FCRA cases). Instead, “[w]e have maintained a strict
standard for a finding of emotional damage” because this type of harm is “‘so easy to
manufacture.” Sarver, 390 F.3d at 971 (quoting Aiello v. Providian Fin. Corp., 239
F.3d 876, 880 (7th Cir. 2001)). Where the plaintiff's own testimony is the only
evidence of emotional damages, she must explain her injury “in reasonable detail’
and not rely on conclusory statements, unless the ‘facts underlying the case are so
inhcrently degrading that it would be reasonable to infer that a person would suffer
emotional distress from the defendant's action.” Wantz, 386 F.3d at 884 (citing
Denius v. Dunlap, 330 F.3d 919, 929 (7th Cir. 2003)).

Bagby’s allegations, that she “stress[es],” gets tension headaches, and clashes
with her fiancé over her credit problems, are, at most, self-serving and conclusory
statements about her emotional distress. Jd.; see also Ruffin-Thompkins, 422 F.3d


FILED

investigation by Experian was warranted. But see Cushman v. Trans Union L926 2006

115 F.3d 220 (3d Cir. 1997) (finding that additional investigation by credit °
reporting agency was warranted after consumer alerted agency to unreliabilit; of Ww DOBBINS
source); Stevenson v. TRW Inc., 987 F.2d 288 (5th Cir, 1993) (same). Ad iM YpISTRICT COURT
Bagby has not offered any evidence that Experian knew or should have nown that

the information provided in the CDVs was anything other than reliable. Although

Experian conducted no further investigation beyond sending out the CDVs, we

agree with the district. court that its standard reinvestigation procedure was

sufficient to satisfy its obligations under these circumstances.

Moreover, as to the second Henson inquiry, we conclude that the cost of
verifying the accuracy of the information in the Sears and Discover CDV responses
would have outweighed any harm that Bagby allegedly suffered as a result of the
inaccurate information. Bagby contended during oral argument that Experian
should have taken additional measures, such as hiring a handwriting expert, lo
verify the accuracy of the information regarding the Sears and Discover accounts.
However, we agree with Experian that such measures would have been quite costly
and unnecessary since Experian had no reason to doubt that the information it
received from Sears or Discover was anything other than accurate and reliable.
Because the two [Henson factors weigh heavily in favor of Experian, we find that it
had no duty to investigate beyond the CDV inquiry and that its actions complied
with requirements of §1681i(a). Thus, even if Bagby could demonstrate that she was
damaged as a result of Experian’s conduct, we agree with the district court's
alternative finding that Experian performed a reasonable reinvestigation after
receiving notice from Bagby about potential inaccuracies in her credit report.’

1, CONCLUSION

We AFFIRM the district court’s grant of summary judgment in favor of
Experian.

7 Bagby also argues briefly that the trial court erred in granting summary judgment to Experian
on her defamation claim. However, under the Act, “no consumer may bring any action or proceeding
in the nature of defamation, invasion of privacy, or negligence with respect to the reporting of
information against any consumer reporting agency based on information disclosed pursuant to [the
Act) . . . except as to false information furnished with malice or willful intent to injure such consumer.”
15 U.S.C. 8 1681h. As we have concluded that Experian complied with the requirements of the FCRA,
such compliance precludes a finding of malice or willful intent to injure Bagby. Therefore, Bagby’s
defamation claim also fails.


UNPUBLISHED ORDER
Not to be cited per Circuit Rule 53

lkp Ties

Gnited States Court of Appeals Cj,

For the Seventh Circuit
Chicago, Illinois 60604

Argued December 2, 2004
Decided January 4, 2006

FILED

Before
Hon. JOHN L. COFFEY, Cireuit Judge JAN ab 2006
Hon. KENNETH F. RIPPLE, Circuit Judge MICHAEL W. DOBBINS
Cc

LERK, U.S. DISTRICT COURT
Hon. DANIEL A. MANION, Circuit Judge

No. 04-2593
Appeal from the United States

CHERYL BAGBY, District Court for the Northern
Plaintiff-Appellant, District of Illinois, Eastern Division
v. No. 03 © 2828
EXPERIAN INFORMATION Matthew P. Kennelly,
SOLUTIONS, INC., Judge.
Defendant-Appellee.
ORDER

In April of 2003, Chery] Bagby filed a complaint against Experian
Information Solutions, Inc. (“Experian”), alleging that Experian willfully and
negligently violated the Fair Credit Reporting Act (‘FCRA”), 15 U 5.C. § 1681 et
sec., by failing to conduct a reasonable investigation into disputed information
contained in her credit report. The district. court granted summary judgment in
favor of Experian, finding that Experian performed a reasonable investigation to
determine whether the disputed information on Bagby’s credit report was false and
that Bagby did not suffer any damages as a resull. of Experian’s alleged misconduct.
We affirm. i



FILED

at 607. According to the record before us, Bagby did not seek any medical gN 2 © 2006
psychological treatment for the emotional distress she claims resulted from

Experian’s actions. Morcover, she has failed to describe her emotional distnespam W. DOBBINS 7
“reasonable detail” or with any certainty, even going so far as Lo Lestifigytiak ¢h.BISTRICT cour
“not sure” if Experian’s reporting of the Sears and Discover accounts caused her

emotional distress. Wanitz, 386 F.3d at 834. Although Bagby argues that whether

Experian’s actions were inherently degrading or humiliating is a question of fact,

she has failed to satisfy our “high threshold for proof of damages for emotional

distress.” Ruffin-Thompkins, 422 F.3d at 610 (quoting Aiello, 239 F.3d at 880). As

we have stressed before, damages are not presumed under the FCRA; rather, the

consumer must affirmatively establish that she is entitled to damages. Wantz, 386

F.3d at 833. Since Bagby has failed to produce evidence of either out-of-pocket or

emotional damages that can be attributed to Experian, she has not met her burden.

Bagby’s remaining claim for damages is that she is entitled to statutory and
punitive damages pursuant to § 1631n because Experian “willfully fail[ed] to
comply with” the FCRA. 15 U.S.C. § 1681n. To act willfully under the FCRA, “a
defendant must knowingly and intentionally violate the Act, and it ‘must also be
conscious that [its] act impinges on the rights of others.” Waniz, 386 F.3d at 834
(quoting Phillips v. Grendahl, 312 F.3d 357, 368 (8th Cir. 2002)). To be awarded
damages under § 1681n, Bagby must establish that she suffered actual
compensatory damages or that she is entitled to punitive damages because
Experian willfully failed to comply with the FCRA. Crabill, 259 F.3d 662. As we
have just discussed, Bagby has not established that she suffered actual damages.
Id. at 664 (to be awarded damages under § 1681n, plaintiff must establish that she
suffered actual compensatory damages or that she is entitled to punitive damages).
And, as we shall discuss briefly infra, she has failed to demonstrate that Experian
negligently, let alone willfully, violated the FCRA by failing to conduct a reasonable
reinvestigation. See also Ruffin-Thomphins, 422 F.3d at 610 (“because [plaintiffs}
claim under the FCRA cannot survive, it follows, a fortiori, that the [clourt must
deny her claim for punitive or statutory damages.”). Therefore, Bagby is entitled to
neither statulory nor punitive damages under the Act.

Although we have determined that Bagby failed to demonstrate that she was
damaged by Experian’s conduct, we briefly address the reasonableness of Experian’s
reinvestipation into Bagby’s claims. Section 1681i(a) states:

® Bagby raises her claims of tension headaches and a conflict with her fiancé for the first time
in this appeal. Since “{tlhe well-established rule in this Circuit is that a plaintiff waives the right to
argue an issue on appeal if she fails to raise the issue before a lower court,” Bagby has waived these
arguments. See Doe v. Cunningham, 30 F.3d 879, 885 (7th Cir. 1994) (finding that the appellate
Stage “is too late to specify portions of the record which may create an issue of material fact.”).


FILED a

JAN 2 © 2006

MICHAEL W. DOBBINS 1, BACKGROUND
CLERK, U.S. DISTRI
In 1996, Bagby’s mother, Kathy Goodrich, opened a Discover credit card
account in her daughter’s name and gave it to her to use while in college. Bagby
used the card throughout her collegiate years and made regular payments on the
Discover account’s balance. While Baghy was using the card, her mother was also
incurring charges on the same card. Bagby was aware of her mother’s activities,
and both women continued to use and make payments on the card until 2002.
According to Bagby, she stopped using the Discover card in 2002 but continued to
make payments on the balance that she and her mother had incurred.

Tn February of 2001, while Bagby was in the process of buying a home, Home
Bank Mortgage Corporation called her to inquire about various accounts listed on
her credit report. None of the account charges were in arrears; however, the
number of open accounts had prompted an investigation by Home Bank. After the
inquiries from Home Bank, in March of 2001, Bagby ordered a copy of her credit
report from a credit reporting agency. She discovered several active accounts in her
name that. she did not recognize, including accounts with Sears and Discover.
According to Bagby, although she knew of the Discover account, she was not aware
that her mother had opened the account in Bagby’s name rather than in her
mother’s name. After receiving her credit. report, she immediately closed the Sears
account and continued paying the balance on the Discover account, even though she
maintained that most of the charges had been incurred by her mother.!

Bagby ordered a second credit report. in September of 2002. According to
Bagby, alter receiving this second report, she learned that she could dispute items
listed on her report. In November of 2002, Bagby wrote a letter to Experian, a
credit reporting agency, explaining that several of the accounts on her credit report
had been opened by her mother without Bagby’s consent. On November 12, 2002,
the date Experian reccived Bagby’s letter, Experian was reporting the Sears
account as closed and “Paid/Never late” and the Discover account as “Open/Never
late.” As acknowledged by Bagby, neither the Sears nor Discover account had ever
been identified by Experian asa “potentially negative item” on her credit report.

After receiving Bagby’s letter, a fraud department representative reviewed
the materials sent by Bagby and generated a “Consumer Dispute Verification” form
(CDV’). The CDV, which included Bagby’s full name, social security number, date
of birth, and current address, was sent to the disputed creditors on November 19,
2002, The CDV briefly explained the nature of Bagby’s dispute, informing the

' During her deposition, Bagby admitted that she had taken a cash withdrawal in the amount
of $400 from her Discover account sometime in 2002, According to Bagby, that was the last charge
she incurted on the Discover card.

Ne



FILED

creditors that Bagby was claiming “true identify fraud” duc to the fraudNeh® 2006
opening of several of her accounts, and asked the creditors to investigate and verify
their account information with the information provided by Experiqng¢pAbev@DOBBINS
Asa result of Experian’s investigation, several of the disputed a@bématd WelSTRICT COURT
deleted from Bagby’s credil report.?, However, both Sears and Discover responded
that the personal information on the CDV matched the information in their records
and was, as far as they could discern, accurate as reported. On December 12, 2002,
Experian notified Bagby of the results of its investigation, including its refusal to
delete the Scars and Discover accounts from her credit report. Experian also sent

her an updated copy of her credit report, which listed the accounts that had been
deleted pursuant. to her request and Experian’s subsequent investigation. Experian
also encouraged Bagby to contact. Sears and Discover personally if she still

suspected fraud. Despite Experian’s recommendation, Bagby never contacted Sears
or Discover, and she had no further contact with Experian prior to filing this

lawsuit.

In May of 2003, Bagby filed a lawsuit against Experian, Sears, and Discover,’
alleging that Experian had willfully and negligently violated the Fair Credit
Reporting Act (“FCRA") by reporting inaccurate information on her credit report
and by failing to conduct a reasonable and adequate investigation into disputed
accounts after she brought the accounts to Experian’s attention. She also asserted a
defamation claim, alleging that Experian had defamed her when it reported that
she had opened the Discover and Sears accounts in her own name and incurred the
account balances on the respective cards.

Bagby claimed that as a result of Experian’s conduct, she suffered out-of-
pocket expenses in excess of $3000, including the money she spent obtaining two
credit reports and paying off the balances on the Discover and Sears accounts. She
also claimed that she suffered emotional distress in connection with her efforts to
correct the errors in her credit report. In her deposition, Bagby testified that. she
“was really upset” when she found out her mother opened the accounts in her name
without her consent and that her relationship with her fiancé suffered as a result.
She stated that she gets “stressed” because she is required to speak with creditors

2 Bagby disputed a total of cight accounts listed on her credit report. Of the six additional
accounts that she disputed, two of the accounts were deleted after Experian received the creditors’
responses, one account was deleted when the creditor did not respond within the statutorily-allotted
time limit, one account was no longer being reported when the creditor responded to Experian’s inquiry,
and two accounts remained open after they were verified by the respective creditors. None of these
six accounts is at issue in this case.

3 Bagby voluntarily dismissed her claims against Discover and accepted an offer of judgment
from Sears, leaving only her claims against Experian.

3