Credit Report Errors: Disputes and Lawsuits Under the FCRA

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The Fair Credit Reporting Act (FCRA) defines two different types of disputes of inaccurate information on your credit report -- “direct disputes” and “indirect disputes” -- and it may surprise you which one provides the consumer with more rights. 

When you dispute incorrect information on your credit report directly to the company that is the source of the information (called a “furnisher” under the Fair Credit Reporting Act), often a creditor, that is called a direct dispute.  When you dispute inaccurate information to a consumer reporting agency (CRA), such as a dispute to Equifax or a dispute to Experian or a dispute to TransUnion, that is called an indirect dispute. Many consumers assume that their best option is to make a direct dispute to the data furnisher. After all, it is the furnisher that reported the inaccurate information on your credit report. Moreover, you may think that the term direct dispute sounds more meaningful or more important than the term indirect dispute.

The Fair Credit Reporting Act (FCRA) defines two different types of disputes of inaccurate information on your credit report -- “direct disputes” and “indirect disputes” -- and it may surprise you which one provides the consumer with more rights. 

When you dispute incorrect information on your credit report directly to the company that is the source of the information (called a “furnisher” under the Fair Credit Reporting Act), often a creditor, that is called a direct dispute.  When you dispute inaccurate information to a consumer reporting agency (CRA), such as a dispute to Equifax or a dispute to Experian or a dispute to TransUnion, that is called an indirect dispute. Many consumers assume that their best option is to make a direct dispute to the data furnisher. After all, it is the furnisher that reported the inaccurate information on your credit report. Moreover, you may think that the term direct dispute sounds more meaningful or more important than the term indirect dispute.

But very often an indirect dispute -- a dispute from you to a credit bureau about inaccurate information on credit reports -- can be the better option. 

Why?  Because an indirect dispute from a consumer to a consumer reporting agency like Equifax, Experian, and/or TransUnion accomplishes three things.  

First, an indirect dispute triggers an obligation by a credit bureau pursuant to 15 U.S.C. 1681i to conduct a “reasonable” investigation of the information you disputed.  

Second, the CRA must notify the data furnisher (the entity that supplied the incorrect information) about your dispute. The furnisher is then required to conduct a separate “reasonable” investigation pursuant to 15 U.S.C. 1681s-2(b).  

Third, in the all too frequent case that neither the consumer reporting agency nor the furnisher fixes the inaccurate information you disputed, the Fair Credit Reporting Act allows you to sue Equifax, Experian, and/or TransUnion AND sue the data furnisher in federal court. 

Unfortunately, (a) federal litigation is often the only way to have inaccuracies on your credit reports removed, and (b) indirect disputes, rather than direct disputes open the door for you to file a lawsuit under the FCRA.    

First, an indirect dispute triggers an obligation by a credit bureau pursuant to 15 U.S.C. 1681i to conduct a “reasonable” investigation of the information you disputed.  

Second, the CRA must notify the data furnisher (the entity that supplied the incorrect information) about your dispute. The furnisher is then required to conduct a separate “reasonable” investigation pursuant to 15 U.S.C. 1681s-2(b).  

Third, in the all too frequent case that neither the consumer reporting agency nor the furnisher fixes the inaccurate information you disputed, the Fair Credit Reporting Act allows you to sue Equifax, Experian, and/or TransUnion AND sue the data furnisher in federal court. 

Unfortunately, (a) federal litigation is often the only way to have inaccuracies on your credit reports removed, and (b) indirect disputes, rather than direct disputes open the door for you to file a lawsuit under the FCRA.    

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