Summary:
In this published decision, the Fourth Circuit reversed the district court’s refusal to compel arbitration in a Fair Credit Reporting Act (FCRA) case brought by a Chapter 13 debtor against Experian. The debtor, after receiving a bankruptcy discharge, discovered that Experian continued to report discharged debts as delinquent, allegedly contributing to credit denials. After repeated disputes failed to correct the inaccuracies, the debtor sued under 15 U.S.C. §§ 1681e(b) and 1681i(a).
Experian moved to compel arbitration based on an arbitration clause embedded in the “CreditWorks” service agreement—an online credit monitoring product operated by its affiliate ConsumerInfo.com. The district court excluded Experian’s supporting declaration (from its VP of Business Governance) on hearsay and foundation grounds and further held that the online enrollment process did not constitute mutual assent.
The Fourth Circuit reversed on both fronts:
- It held that the declaration was improperly excluded; a corporate officer can authenticate digital records and testify based on business records and oversight.
- It found that the website design clearly informed the user that clicking “Create Your Account” constituted agreement to the Terms of Use, which included a broad arbitration clause.
Accordingly, the Court ruled that the debtor had agreed to arbitrate his dispute and remanded the case.
Commentary:
While Austin v. Experian appears, at first blush, to be a straightforward win for mandatory arbitration enforcement, it raises significant questions for consumer advocates—especially in light of the Goldman Sachs Bank v. Brown, that is pending at the 4th Circuit, where NACBA and NCBRC have filed an amicus brief.
In Austin, the Fourth Circuit emphasized that a user who clicks a button labeled “Create Your Account” after being presented with a linked Terms of Use has given reasonable notice and manifested assent—even if the user is signing up for a free service from a related, but technically distinct, corporate entity. This continues the trend of courts stretching the reach of arbitration clauses embedded in clickwrap agreements.
But here’s the tension:
In Goldman Sachs Bank v. Brown, the consumer bankruptcy community has argued that arbitration should not be allowed to displace core functions of the Bankruptcy Code—especially judicial enforcement of the automatic stay under 11 U.S.C. § 362(k). In that case, the debtor brought a contempt action for stay violations by Goldman Sachs, who then sought to force the dispute into arbitration under the terms of the underlying loan agreement.
Where Austin* and Brown diverge—subtly but importantly—is in the source of the legal claim:
- *In Austin, the claim
was brought under the FCRA—a federal consumer protection statute enforceable in arbitration if parties so agree.
was for post-discharge causes of action
- In Brown, the claim is for violation of the automatic stay, a statutory injunction arising only upon the filing of a bankruptcy petition, with enforcement entrusted by Congress to the Bankruptcy Courts themselves.
1. Request a Free Credit Report Through AnnualCreditReport.com
- Why it’s safe:
This site is authorized by federal law under the Fair Credit Reporting Act (FCRA), specifically 15 U.S.C. § 1681j(a), and does not require users to agree to arbitration. It’s operated by the three nationwide credit bureaus (Equifax, Experian, and TransUnion) pursuant to a mandate from the FTC and CFPB.
-
How:
Fill out the request form (available on AnnualCreditReport.com) and mail it to:Annual Credit Report Request Service
P.O. Box 105281
Atlanta, GA 30348-5281
3. Dispute Errors via Written Correspondence (Not Online Portals)
-
Why it’s safe:
Disputing inaccuracies via online portals often requires agreement to terms—including arbitration. Writing by mail allows the consumer to preserve legal rights and avoid waiver. -
How:
Send a dispute letter directly to the credit bureau’s mailing address listed on the credit report. Always send via certified mail and retain proof.
⚠️ Avoid These Common Traps
| Trap | Why to Avoid |
|---|---|
| Credit monitoring “free trials” | These nearly always include forced arbitration clauses buried in Terms of Use. |
| Credit score apps (Credit Karma, Experian app, etc.) | Accessing your score or report through these often requires broad arbitration agreements. |
| Clicking "I Agree" to any Terms of Use | Even if you never open or read the terms, the courts (as in Austin v. Experian) may find that you agreed to arbitration. |
🛡️ Attorney Tip:
If you're representing a consumer or advising clients post-bankruptcy, warn them not to dispute credit errors online or sign up for credit monitoring services through Experian, Equifax, or TransUnion without understanding the arbitration implications. Instead, have them use AnnualCreditReport.com or send disputes via certified mail.
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