## Facts

- An identity thief applied for a credit card using James Wolfe’s name and Social Security number but listed an address where Wolfe had never lived.
- MBNA America Bank, N.A. issued the card and mailed it to the fraudulent address.
- The thief made approximately $864 in charges on a $500-limit account and then defaulted.
- MBNA treated the account as Wolfe’s, referred it to collections, and reported the delinquency to consumer reporting agencies.
- Wolfe repeatedly notified MBNA that the account was the result of identity theft and disputed the debt; he alleged MBNA did not investigate or correct the reporting.
- Wolfe alleged the negative credit reporting harmed his credit and contributed to losing a job opportunity after a credit check.
- MBNA initiated arbitration regarding the account but sent notice to the fraudulent address; Wolfe did not receive notice, did not appear, and a default arbitration award was entered against him.
- Wolfe sued asserting negligence and misrepresentation theories, defamation/libel based on credit reporting, federal Fair Credit Reporting Act (FCRA) claims, and challenges to the arbitration award.

## Issues

1. Whether MBNA owed Wolfe a common-law duty to verify a credit-card application’s authenticity or to protect him from an identity thief’s criminal acts.
2. Whether the FCRA preempted Wolfe’s state-law tort claims to the extent they were based on MBNA’s furnishing of information to consumer reporting agencies.
3. Whether Wolfe plausibly stated FCRA claims based on MBNA’s alleged failure to investigate and correct credit reporting after receiving disputes.
4. Whether the default arbitration award barred Wolfe’s claims at the pleading stage when notice was allegedly sent only to the fraudulent address.

## Decision

- The court granted MBNA’s Rule 12(b)(6) motion in part and denied it in part.
- It dismissed negligence-based theories premised on a broad duty to prevent identity theft or to authenticate applications before issuing credit.
- It held that FCRA preemption barred state-law claims insofar as they sought to impose liability for routine credit-reporting conduct regulated by the FCRA, but it allowed limited defamation-type theories to proceed to the extent malice or willful intent to injure was plausibly alleged.
- It held Wolfe adequately pleaded FCRA claims based on MBNA’s post-dispute obligations relating to investigation and correction of furnished information.
- It declined, at the motion-to-dismiss stage, to treat the default arbitration award as conclusively preclusive given allegations that Wolfe never received notice.

## Legal Principles

- Under Tennessee negligence principles, a duty to protect another from third-party criminal acts generally does not arise absent a special relationship or circumstances; extending credit alone does not create a general duty to prevent identity theft against the named consumer.
- FCRA § 1681t(b)(1)(F) broadly preempts state-law requirements or prohibitions concerning subject matter regulated by § 1681s-2 (duties of furnishers of information).
- FCRA § 1681h(e) permits certain state defamation-type actions concerning furnished information only upon allegations of malice or willful intent to injure.
- A furnisher’s post-dispute duties under FCRA § 1681s-2(b) (triggered by dispute notice through consumer reporting agencies) include investigating, reviewing relevant information, and correcting or updating inaccurate reporting; allegations of failure to do so can state a claim.
- At the pleading stage, a default arbitration award may not foreclose claims where the plaintiff plausibly alleges lack of notice and an inability to participate.

## Conclusion

The court rejected expansive common-law theories that would require a credit-card issuer to prevent identity theft at the application stage, while permitting claims focused on post-dispute credit reporting to proceed, including FCRA furnisher-duty allegations and limited state tort theories not barred by FCRA preemption or falling within its malice-based exception.


Wolfe v. MBNA Am. Bank, N.A., 485 F. Supp. 2d 874 (W.D. Tenn. 2007)