Hammond v. Bank of America: Can a Creditor Keep Reporting You as Liable Without Proof You Ever Agreed to the Debt?
A recent decision from the Western District of North Carolina provides an important reminder that the Fair Credit Reporting Act (FCRA) requires more than simply checking a name and Social Security number when a consumer disputes responsibility for a debt.
In Hammond v. Bank of America, the district court denied summary judgment on the borrower's principal FCRA claims, holding that a jury must decide whether Bank of America conducted a reasonable investigation after repeatedly being told that the plaintiff was never legally liable on a credit card account.
The Facts
Linda Hammond alleged that a Bank of America credit card account actually belonged to her late husband and that she was never an obligor on the account—only, at most, an authorized user. After her husband's death, however, Bank of America asserted that she remained legally responsible for the debt, charged the account off, reported it to the credit reporting agencies, and continued reporting the account after she repeatedly disputed liability.
The case presented an unusual evidentiary problem.
Bank of America acknowledged that it could not produce the original signed credit application, explaining that it had been destroyed under its document retention policy. Instead, when the credit reporting agencies forwarded the consumer's disputes, the bank compared identifying information—name, address, date of birth, and Social Security number—with information already contained in its internal records and concluded that the reporting was accurate.
The plaintiff argued that merely confirming her identity did not answer the real question:
Was she ever legally obligated on the account?
The Court: Identity Is Not the Same as Liability
The most significant aspect of the opinion concerns the FCRA's requirement that furnishers conduct a reasonable investigation after receiving notice of a consumer dispute under 15 U.S.C. § 1681s-2(b).
Relying heavily on the Fourth Circuit's decision in Johnson v. MBNA America Bank, the court emphasized that simply verifying identifying information may not satisfy the statute when the consumer disputes legal responsibility, rather than identity.
The court noted that confirming a consumer's name, address, and Social Security number may establish who the consumer is—but not whether the consumer ever agreed to become legally liable for the debt. Because Bank of America could not produce the original application and apparently did little more than verify identifying information, a reasonable jury could conclude that its investigation was inadequate.
That issue therefore must be decided at trial.
The Missing Application Matters
One interesting aspect of the opinion is the discussion of the missing credit application.
The court rejected both extremes.
It did not hold that every furnisher must always possess the original signed application.
Nor did it accept the bank's argument that the absence of the application simply did not matter.
Instead, following Johnson, the court explained that a jury may conclude that an investigation is unreasonable where a creditor cannot locate the underlying application and nevertheless continues reporting the debt without adequately addressing the consumer's dispute over liability.
For creditors and servicers, this serves as a reminder that document-retention policies cannot substitute for meaningful investigations.
Emotional Distress Claims Survive
The court also rejected Bank of America's argument that the plaintiff lacked sufficient evidence of emotional distress.
The plaintiff alleged significant emotional and physical consequences—including cardiac problems, palpitations, dizziness, fainting, and Takotsubo cardiomyopathy—and supported those allegations with both her own testimony and medical records.
Relying on recent Fourth Circuit authority, the court emphasized that a plaintiff need not present expert medical testimony establishing causation to survive summary judgment. Detailed testimony, coupled with supporting factual context, can be sufficient.
The emotional distress claims therefore proceed to trial.
Economic Damages Did Not
The plaintiff was less successful on her claims for economic damages.
She alleged a denied apartment lease, denial of credit, reduced credit limits, lower credit scores, higher insurance costs, and lost earning capacity.
The court held, however, that she failed to connect those losses to the alleged FCRA violation.
Most importantly, the apartment denial occurred before Bank of America received notice of the dispute from the credit reporting agencies, meaning it could not have resulted from any post-dispute failure to investigate. Other claimed financial injuries likewise lacked evidence establishing causation. Those claims were dismissed.
Willfulness Also Goes to the Jury
Perhaps surprisingly, the court also refused to dismiss the plaintiff's claim for willful violation of the FCRA.
The plaintiff had disputed liability repeatedly over several years. Viewing the evidence in her favor, the court concluded that a jury could determine that Bank of America intentionally continued reporting the account without adequately reflecting or investigating the ongoing dispute.
Whether the conduct ultimately proves "willful" remains for the jury to decide.
Most State-Law Claims Were Preempted
The plaintiff also asserted claims under the North Carolina Debt Collection Act.
Consistent with Fourth Circuit precedent in Ross v. FDIC, the court held that most of those claims were preempted by the FCRA because they were based on the same alleged inaccurate credit reporting regulated by § 1681s-2.
Only the harassment claim survived preemption, but it nevertheless failed because the plaintiff could not establish that the alleged collection calls proximately caused her injuries.
Commentary
This opinion illustrates an issue that consumer attorneys encounter with surprising frequency.
When consumers dispute whether they ever became legally obligated on an account, some furnishers appear to investigate only whether the identifying information matches their database—not whether the consumer actually signed the agreement or otherwise became legally responsible for the debt.
Those are very different questions.
The FCRA's investigation requirement would have little meaning if a furnisher could simply respond:
"Our computer says she's the borrower."
without examining whether the underlying records actually support that conclusion.
The opinion also highlights an increasingly important practical issue. Financial institutions understandably adopt document-retention policies, particularly for accounts that may have been opened decades earlier. But when a creditor continues reporting a consumer as legally obligated on an account while lacking the documents establishing that obligation, a jury may reasonably question whether the investigation was truly "reasonable" under the FCRA.
For bankruptcy practitioners, the case also has implications beyond credit reporting. Consumer bankruptcy cases frequently involve proofs of claim based on decades-old credit card accounts, loan assumptions, or transferred debts. When the original documentation has disappeared, questions naturally arise regarding both the creditor's ability to prove liability and the adequacy of any investigation into disputes over that liability.
Hammond does not hold that missing documents automatically defeat a creditor's position. It does, however, reinforce an important principle: when a consumer specifically disputes legal liability, a reasonable investigation ordinarily requires more than confirming that the consumer's identifying information appears in the creditor's database. Whether that investigation was adequate remains, in many cases, a question for the jury.
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