A derogatory blemish on a consumer’s credit report can have long-lasting effects, and present numerous obstacles to purchasing a home, leasing a car, obtaining a credit card, or securing a business loan. In a recent unpublished opinion issued by the United States District Court for the District of New Jersey, Grossman v. Barclays Bank, Delaware, Civ. Act. No. 12-6238 (PGS)(LHG), the Court offers an excellent summary of the Fair Credit Report Act and the standards that a private litigant must establish to sustain a claim against a creditor based on the reporting of inaccurate or incomplete information to a credit reporting agency.
The Fair Credit Reporting Act (“FCRA” or “the Act”) “was crafted to protect consumers from the transmission of inaccurate information about them, and to establish credit reporting practices that utilize accurate, relevant, and current information in a confidential and responsible manner.” Cortez v. Trans Union, LLC, 617 F.3d 688, 706 (3d Cir. 2010)(internal citations omitted). In drafting the statute, Congress sought “‘to ensure fair and accurate credit reporting, promote efficiency in the banking system, and protect consumer privacy.’” Fuges v. Southwest Fin. Servs.,Ltd., 707 F.3d 241, 247 (3d Cir. 2012) (quoting Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47, 52, 127 S. Ct. 2201, 167 L. Ed. 2d 1045 (2007).
The Court outlined the procedures and requirements to maintain a private cause of action under 15 U.S.C. § 1681s-2(b) against a creditor (also referred to as a “furnisher of information”) who reports information to a credit reporting agency. This statute imposes an affirmative duty upon the furnisher who receives notice of a dispute from a credit reporting agency to conduct an investigation and report the results of its investigation to the consumer reporting agency. Section 1681s-2 states in pertinent part as follows:
(b)Duties of furnishers of information upon notice of dispute
(1) In general
After receiving notice pursuant to section 1681i(a)(2) of this title of a dispute with regard to the completeness or accuracy of any information provided by a person to a consumer reporting agency, the person shall –
(A) conduct an investigation with respect to the disputed information;
(B) review all relevant information provided by the consumer reporting agency pursuant to section 1681i(a)(2) of this title;
(C) report the results of the investigation to the consumer reporting agency;
(D)if the investigation finds that the information is incomplete or inaccurate, report those results to all other consumer reporting agencies to which the person furnished the information and that compile and maintain files on consumers on a nationwide basis; and
(E)if an item of information disputed by a consumer is found to be inaccurate or incomplete or cannot be verified after any reinvestigation under paragraph (1), for purposes of reporting to a consumer reporting agency only, as appropriate, based on the results of the reinvestigation promptly—
In order to establish a violation of 15 U.S.C. § 1681s-2(b), a plaintiff must plead that “‘(1) [he] sent notice of disputed information to a consumer reporting agency, (2) the consumer reporting agency then notified the defendant furnisher of the dispute, and (3) the furnisher failed to investigate and modify the inaccurate information.’” Martinez v. Granite State Mgmt. & Res., 2008 U.S. Dist. LEXIS 94995, at *6 (D.N.J. Nov. 20, 2008) (quoting Ruff v. America’s Servicing Co., 2008 U.S. Dist. LEXIS 33447, at *4 (W.D. Pa. Apr. 23, 2009)). In other words, the consumer must first report the dispute to a credit reporting agency. The credit reporting agency then is required to notify the creditor or furnisher about the dispute, and then the furnisher must conduct an investigation and report its findings back to the credit reporting agency.
In Grossman, the District Court emphasized that the creditor or furnisher’s investigation of a reported dispute need only be reasonable. The Court explained the factors determining the reasonableness of the investigation:
The determination as to whether a reinvestigation conducted by a furnisher in response to a consumer’s notice of dispute is reasonable “depends in large part on the allegations made by the consumer and the notice of the allegations provided to the furnisher by the consumer reporting agency.” . . . In the absence of allegations of fraud, identity theft, “or other issues not identifiable from the face of its records, the furnisher need not do more that verify that the reported information is consistent with the information in its records.” . . . Furthermore, § 1681s-2(b) “does not require . . . any data furnisher to take extraordinary means to investigate and discover disputed information but rather calls for a more passive investigation where the data furnisher is determining only that the information provided to it matches the information in its records.” . . . .
Id. at * 17 (internal citations omitted).
Because the reasonableness standard is not reduced to a precise definition, but rather depends upon the circumstances of a particular case, private claims brought under the Fair Credit Report Act can be difficult to win.