11th Circuit Vacates FCRA Summary Judgment For Credit Reporting Agency

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A panel of the U.S. Court of Appeals for the Eleventh Circuit recently vacated a district court’s grant of summary judgment to a credit reporting agency (CRA) in a case involving a consumer’s claim that the CRA negligently violated FCRA by failing to follow reasonable procedures to ensure maximum accuracy in its credit reports and to conduct a reasonable reinvestigation of disputed information.

The case arose from a consumer’s claim that, when he noticed his credit report still reflected a delinquent mortgage after he had discharged his debts in Chapter 7 bankruptcy, he notified the CRA of the inaccuracy.  In response, the CRA submitted an automated consumer data verification (ACDV) form to the consumer’s mortgage servicer, who then confirmed the delinquency to the CRA.  The CRA took no further steps to verify the debt at that time.

After the consumer filed suit, the district court granted the CRA summary judgment, finding its actions in response to the dispute notification were reasonable as a matter of law.  The district court reasoned that FCRA only requires CRAs to notify the furnisher of information (in this case, the mortgage loan servicer) of the dispute and examine information submitted by the consumer, and that the CRA has no affirmative duty to examine court orders or other legal documents if the consumer does not provide specific information from which the CRA can verify the consumer’s claim.

The 11th Circuit panel disagreed that the measures the CRA took after being notified of the possible inaccuracy were necessarily reasonable, noting that the CRA relied solely on the data furnisher to verify the debt, disregarding the information provided by the consumer and failing to do “even a minimal investigation—for instance, by reviewing the bankruptcy docket.”  Thus, a jury could find that the CRA was negligent in discharging its obligations to conduct a reasonable investigation and reinvestigation into the disputed information, and the CRA was not entitled to summary judgment.

The 11th Circuit panel stopped short of requiring CRAs to examine court records in every case where a consumer informs a CRA of an inaccuracy.  Instead, the panel said, the reasonableness inquiry is fact-specific and depends on the circumstances of the consumer’s notification and the CRA’s response.