News & Insights

Recent case you might find of interest where Fifth Circuit Draws a Sharp Line Between Negligent and Willful FCRA Violations

Mar 10, 2026

In Schultz v. HomeBridge Financial Services, Inc., 2025 WL 1467431 (5th Cir. May 22, 2025), the Fifth Circuit addressed the scope of liability for furnishers of credit information under the Fair Credit Reporting Act (FCRA). The case arose from a mortgage servicing error that resulted in duplicate payments, refunds, and ultimately inaccurate delinquency reporting on the borrower’s credit report. Schultz alleged that HomeBridge willfully and negligently violated the FCRA and also asserted claims under the Texas Debt Collection Act (TDCA). The Fifth Circuit affirmed dismissal of the TDCA claims as time-barred and held that Schultz failed to plead facts sufficient to support a willful FCRA violation, emphasizing that willfulness requires allegations of knowing or reckless disregard of statutory duties—not merely poor customer service or failure to correct errors.

However, the Fifth Circuit reversed the dismissal of Schultz’s negligent FCRA claim. It reiterated that a furnisher’s duties under § 1681s-2(b) are triggered only after the furnisher receives notice of a dispute from a credit reporting agency, which occurred when Schultz filed written disputes in January 2021. Accepting the pleaded facts as true, the Fifth Circuit explained that HomeBridge’s alleged failure to reasonably investigate and correct inaccurate reporting after receiving notice plausibly caused Schultz actual damages, including a higher interest rate and emotional distress. Critically, the court distinguished non-actionable pre-dispute conduct from actionable post-dispute negligence, holding that even if earlier conduct caused the error, a furnisher may still be liable for negligently allowing inaccurate information to persist after proper notice.

This decision matters to banking and mortgage-servicing clients because it clarifies both the limits and the risks of FCRA exposure. While Schultz narrows willfulness claims by requiring facts showing reckless disregard, it underscores that once a furnisher receives notice of a dispute, its investigation and correction efforts likely should be timely and well documented. Post-dispute failures can now apparently support plaintiff’s claims and actual damages even when the original error was non-actionable, highlighting the need for disciplined dispute-handling procedures.

No information in this communication is intended to constitute specific legal advice. For specific legal advice, please contact an attorney, and if you have any such questions or would like more information about this issue, please contact William “Pat” Huttenbach at 713.752.8616, or email at phuttenbach@craincaton.com.

Thanks,

Pat

Schultz v HomeBridge Financial Services