Eight months later when BB&T decided to follow up on this error, not only did they not acknowledge his futile efforts to pay them and inform them of their error, they informed him he would be receiving late fees and must pay the loan in full in ten days time.

Understandably Mr. Saunders was unwilling to pay any late fees as he felt he had went above and beyond his responsibility. He met with a BB&T lending officer in March of 2004 and informed them that he would be more than happy to pay what he owed them, but he would not be paying any penalties as he not only tried to inform them of their error on numerous occasions but also had no way in which to pay them as there was no account number. In fact this was the first time in eight months that BB&T even acknowledged his loan with them.

Although BB&T offered to wait to assess late fees until after he had made all of the remaining payments on the loan, the bank refused to waive the late fees or penalties. Saunders responded that he was unwilling to pay down the loan if BB&T was going to charge late fees and penalties resulting from its own admitted accounting errors.

On April 14, 2004, BB&T repossessed Saunders’ new car and informed Saunders that he could only redeem it by paying the full amount due, including principal, interest, late fees, and a “repossession expense.” Saunders tried to obtain a new loan from a credit union in order to redeem the BB&T loan and avoid further interactions with BB&T. However, BB&T had reported Saunders’ loan as “in repo-[ssession] status” to the credit reporting agencies (CRAs), causing Saunders’ credit score to drop from 754 to 599. Because of this substantial drop in his credit score, Saunders could not obtain a new loan from the credit union at a favorable interest rate.

Saunders contacted the CRAs (including Trans Union), lodging a dispute over the recorded information about the BB&T debt and triggering the CRAs’ obligation to reinvestigate pursuant to 15 U.S.C.A. § 1681i(a). Trans Union issued an automated consumer dispute verification form to BB&T.  BB&T had previously reported the repossession to Trans Union, resulting in a negative score on the loan, and in response to the dispute verification form, BB&T updated the record to reflect a “profit and loss writeoff,” resulting in the worst possible score for Saunders on the loan. The dispute verification form provided BB&T with two opportunities to indicate that Saunders had contested the legitimacy of the debt with BB&T. BB&T therefore could have indicated that it considered the debt uncollectible and also reported that Saunders had disputed the debt; if BB&T had done so, Trans Union would have reported both the debt and the dispute and would not have considered the debt in determining Saunders’ total credit score. Thus, BB&T’s decision to report the debt but not the dispute resulted in a much lower credit score for Saunders than a report of both the debt and the dispute.

On October 24, 2005, Saunders brought this suit, alleging that BB&T violated its duties as a furnisher of information under FCRA, 15 U.S.C.A. § 1681s-2(b)(1), by failing to report the dispute. At the conclusion of the trial, the court instructed the jury on BB&T’s statutory duties as a furnisher of information. The trial court also instructed the jury that it could find BB&T had violated FCRA by failing to report the ongoing dispute only if the jury concluded that BB&T’s conduct excused Saunders from making his payments on the loan, i.e., if the jury considered the dispute meritorious. After deliberation, the jury returned a verdict finding that BB&T had intentionally violated its duties under FCRA. The jury awarded Saunders no compensatory damages but did award the maximum possible statutory damages of $1,000 and punitive damages of $80,000.

On appeal, BB&T argues that the district court erred in denying its motion for judgment as a matter of law, because Saunders presented insufficient evidence to establish a willful violation of FCRA. BB&T also maintains that a punitive damages award of $80,000 violates the due process clause of the Constitution, and thus the district court erred in denying its motion for remittitur of the award to $4,000.

The court has since upheld its verdict on numerous appeals.

– Link to Rex Richard Saunders vs BB&T – United States Court of Appeals for the Fourth Circuit –