Stafford v. Cross Country Bank

Decision Date08 May 2003
Docket NumberNo. CIV.A. 3:01CV-534-H.,CIV.A. 3:01CV-534-H.
Citation262 F.Supp.2d 776
CourtU.S. District Court — Western District of Kentucky
PartiesJohn & Julie STAFFORD, Plaintiffs, v. CROSS COUNTRY BANK, Defendant.

Chadwick N. Gardner, Louisville, KY, for Plaintiffs.

Janet Smith Holbrook, Scott K. Sheets, Huddleston, Bolen, Beatty, Porter & Copen, Huntington, WV, for Defendant.


HEYBURN, Chief Judge.

Plaintiffs John and Julie Stafford filed this action against Defendant Cross Country Bank, (the "Bank"), in connection with debt accumulated on a Bank credit card under John Stafford's name. The Staffords contend that someone else fraudulently obtained the credit card. They have now filed suit alleging violations of federal and state consumer protection statutes as well as state common law. The Bank filed a motion for summary judgment arguing that all of the claims should be dismissed. These motions require the Court to explore the intricate relationship between state and federal regulation of consumer credit practices.


The Court concludes that the Staffords' strongest viable claims are those under the federal Truth-in-Lending Act, as well as those state law claims for invasion of privacy and harassment. While Staffords' claims under the federal Fair Credit Reporting Act and the Kentucky Consumer Protection Act are not dismissed, there appears a great likelihood that each will not survive the required factual scrutiny. In their complaint Staffords allege significant problems with the Bank arising from a non-relationship between the two parties. For that reason, these circumstances are atypical of a Fair Credit Reporting Act case; Stafford has not alleged damage to his credit as a central part of his argument, nor has he alleged that any credit reporting agency caused him damage. The unusual nature of these facts has certainly complicated the analysis. Nevertheless, the results make sense when considered in the light of the purposes of each of the competing statutes and their logical interaction. The most complex analysis is that concerning whether the federal statutes preempt Stafford's state cause of actions for defamation and slander. After a necessarily lengthy examination, the Court concludes that these claims are preempted.


The Bank is headquartered in Wilmington, Delaware that sends as many as 60 million credit card applications a year to potential customers. The Bank obtains the names and addresses of potential customers from mailing lists and accounts are opened if the name, address and a portion of the social security number match a credit bureau report the Bank pulls for the individual. This case arises from one of the millions of the Bank credit cards that was issued during the 1990s.

Plaintiff John Stafford first learned about this credit card in 2000 when he attempted to buy a lawnmower and was denied financing because his credit report showed he was delinquent on a Bank credit card in excess of $700. Stafford phoned the Bank and learned that their records reflected that a "John Stafford" had applied for, and obtained a Bank credit card. The person who applied for the Bank card listed Stafford's former address, Stafford's correct social security number, Stafford's mother as the next relative, and a signature using Stafford's full name. During this same telephone conversation, Stafford told the Bank that he neither had any credit cards, nor currently had an account with the Bank. At the Bank's request, Stafford provided his current phone number and residence and they updated their records.

Shortly after this phone conversation, Stafford and his wife, Julie, allege they received incessant phone calls from the Bank regarding the delinquent account. On some occasions, the Staffords contend, the Bank called as many as 8 to 10 times in one day. Additionally, on August 22, 2000, the Bank wrote Stafford at his correct address and advised him that they had conducted a thorough investigation of his complaint and were reposting the $713.64 balance on his account. The letter was signed by the Bank's Vice President for credit card security, James R. Wallace, whom the Staffords allege does not exist. The Staffords also claim the Bank has a habit of sending letters to its customers and signing them by machine with nonexistent phony names.

Stafford did not supply the Bank with a signed affidavit or with any writing bearing his signature, as the Bank requested. Instead, the Staffords turned to an attorney, Chad Garner, to help resolve the situation. On September 5, 2000, Garner wrote the Bank's legal department, advising it that Stafford did not use credit cards, did not have a Bank account, and had never received a bill from the Bank. Garner further requested that the Bank send any information supporting its assertion that Stafford was responsible for the card or had ever used it. Finally, Garner asked that the account not be turned over to a collection agency and that the Bank not take any steps that would harm Stafford's credit until it had undisputed proof that he owed the debt.

On September 12, 2000, however, the Bank sent Stafford a letter saying it planned to report the account to a collection agency and credit bureaus if the amount due was not paid within 48 hours. The letter was signed by a man named Shane Neff who allegedly worked in the Bank's collections department. Stafford alleges the Bank cannot prove that Neff is a real person. Stafford claims that the Bank further refused to send any proof that he had signed an application with the Bank, that he owed the Bank money, or that any changes had been made.following his complaints. To the contrary, the Bank sent Stafford a letter requesting a copy of Stafford's driver's license and social security card, along with an affidavit for Stafford to sign and notarize, stating that he did not apply for a Bank credit card, did not use such a card, and would cooperate with the Bank in its investigation. Through an October 11, 2000 letter by his attorney, Stafford refused to do both of these things unless the Bank forwarded any documentation to support its claim that Stafford was responsible for the account. This disagreement continued on October 20, 2000, when Stafford again requested verification of the charges which the Bank refused to provide, contending Stafford himself refused to comply with their requests.

Despite the Staffords repeated complaints, the Bank continued to report the account in the name of John Stafford as delinquent until the Staffords filed this suit. It appears that the Bank was on notice as early as August 3, 2000 that the account was not Plaintiff's: The Bank's computer records reflect that it recorded on its notes that a "woman at home phone said cardholder moved out 3 years ago." Nevertheless, not until the Staffords sued did the Bank change the reporting of the account from "delinquent" to "disputed." Stafford was listed as owing approximately $750 for charges, financing, late fees, and overlimit fees.


The Bank has now moved for summary judgment on all five counts in the Stafford's amended complaint.1 First, the Bank contends the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. § 1681 et seq., provides no private right of action for plaintiffs against a furnisher of information to a consumer reporting agency. Second, the Bank requests the Court find the FCRA preempts the state causes of action for defamation, invasion of privacy, slander, and harassment. Additionally, the Bank contends the Truth in Lending Act ("TILA"), 15 U.S.C. § 1601 et seq., is inapplicable because there were no "billing errors" in this case. Further, the Bank argues the FCRA also preempts all of Stafford's Kentucky Consumer Protection Act ("KCPA") claims. Last, the Bank argues the Staffords cannot bring claims under the Fair Debt Collection Practices Act, ("FDCPA"), 15 U.S.C. § 1692 et seq., because the Bank is not a "debt collector," as the Act requires.

As a preliminary matter, all of the claims, with the exception of the harassment claim, must be dismissed to the extent Julie Stafford is the Plaintiff. In their Reply Memorandum, Plaintiffs concede that, at best, Julie Stafford only has standing to raise the state tort claims. Having analyzed the facts, the Court concludes, she was not an injured party and therefore is not a proper plaintiff to bring the defamation, slander, or invasion of privacy claims. The Court will therefore now addresses each of the Bank's arguments, only considering John Stafford's claims.


Two of Stafford's claims require the Court to engage in a highly detailed review of several portions of the FCRA. While the outcome in this case is ultimately achieved by applying the statute's provisions in a step-by-step fashion as the statute requires, the Court thinks the complexity of this task is aided by reviewing the FCRA's purpose, scope, and general framework. The Court therefore begins by briefly discussing the relevant FCRA provisions and then considers (1) whether the FCRA affords Stafford a private right of action based on these facts, and (2) the extent to which the FCRA provides the Bank with qualified immunity from state law claims.

In 1968, Congress enacted the FCRA in order to promote "efficiency in the Nation's banking system and to protect consumer privacy," 15 U.S.C. § 1681(a). In so doing, Congress sought to protect the needs of commerce and facilitate the dispersion of credit information while, at the same time, requiring accuracy and confidentiality. See Jones v. Federated Financial Reserve Corp., 144 F.3d 961, 965 (6th Cir. 1998) (noting that "the FCRA is aimed at protecting consumers from inaccurate information in consumer reports and at the establishment for credit reporting procedures that utilize correct, relevant and up-to-date information in a confidential and responsible manner"). To achieve these ends while also allowing deference to the...

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