When you think of the reasons a creditor might repossess a car in which it has a security interest, you probably think of the most likely scenario: the car owner defaults on car payments. A creditor, however, usually also has the right to repossess a car on which it has a lien in other instances. In one Florida case, a creditor repossessed a car because the car had been towed and was in the towing company’s possession for months. According to the reported opinion, the car’s owner did not dispute the repossession. Instead, the car owner disputed the way the repossession was reported on her credit report. Let’s see what happened.
Sharlene Jacobs’s car was towed for being illegally parked while she was away for several months. The towing company mailed a notice to Capital One Bank, N.A., the car’s lienholder, and Capital One mailed notices to Jacobs informing her that her car had been towed. After 99 days, Capital One paid the towing fees, repossessed the car, mailed Jacobs a notice of repossession, and began the process of selling the car. Capital One also notified various credit reporting agencies of the repossession. Jacobs disputed Capital One’s reporting and sued Capital One and three CRAs for violating the Fair Credit Reporting Act. Capital One and one CRA, Equifax Information Services, LLC, moved for summary judgment, and the U.S. District Court for the Southern District of Florida granted the motions.
Jacobs claimed that Capital One violated the FCRA by reporting inaccurate and false information to CRAs and failing to conduct a reasonable investigation of her dispute. The court found that the information that Capital One reported to the CRAs was accurate because it was undisputed that Capital One repossessed Jacobs’s car. Jacobs claimed that Capital One should have provided more information to the CRAs to make clear that the repossession was not due to nonpayment. The court disagreed, noting that Capital One’s reporting was not misleading because it “affirmatively reported (at the time of repossession) that the Plaintiff’s account was not past due” (under the Consumer Data Industry Association’s Metro 2 data furnishing guidelines, furnishers can report the repossession event as a status that is independent of the reporting on payment performance, and the guidelines specifically contemplate that the amount past due at the time of repossession can be zero—see FAQ 62). Because the information that Capital One provided to Equifax was accurate, the court determined that Equifax could not be liable for reporting that same information.
If you repossess a car for reasons other than nonpayment and report the repossession to the CRAs, follow the lead of Capital One. Protect yourself from claims of car owners by making sure that your credit reporting is clear that the repossession was not due to the car owner’s failure to pay.
Jacobs v. Capital One Bank, N.A., 2024 U.S. Dist. LEXIS 136269 (S.D. Fla. August 1, 2024).
