A U.S. District Court in Michigan ruled last month that a foreclosure notice published by the Detroit Legal News did not violate the Fair Credit Reporting Act. FCRA is a federal law designed to protect the privacy of consumer credit information held by credit reporting agencies.
The case was filed earlier this year after plaintiffs Matthew and Stephanie Walker lost their home in a foreclosure proceeding. Their complaint alleged that Detroit Legal News violated their privacy rights under FCRA by publishing notice of an impending sheriff sale of the property. The notice included information about the sale and stated the Walker’s mortgage was in default and the amount they owed was $56,825.94.
Legal News filed a motion to dismiss the Walker’s complaint, which the court granted on Nov. 2. According to Detroit Legal News Publishing President Brad Thompson, his company declined a settlement offer despite the risk inherent in proceeding to trial in federal court.
“The potentially negative national impact of this case on newspapers and on citizens’ right to know was enormous, so we decided to fight it as aggressively as possible,” said Thompson, who is also president of the Public Notice Resource Center. “Very thankfully, the judge saw the merit in our arguments and ruled to dismiss the case.”
The court ruled that Legal News is not a “consumer reporting agency” under FCRA because it serves as a mere conduit of information and doesn’t re-organize or filter the information it receives. The court also found the statutorily mandated foreclosure notice is not a “consumer report” as defined by FCRA even though service providers who subscribe to Legal News use the foreclosure notices it publishes to market their services to those in default.
[Download PDF of the court ruling]
Detroit Legal News Publishing publishes 10 newspapers and associated websites in Michigan.
The Walkers also sued the law firm that handled the foreclosure, claiming the foreclosure notice and the firm’s efforts to collect their mortgage debt violated their rights under state and federal debt collection laws. That part of the case is still pending.