Fair Credit Reporting Act Requires Furnishers to Conduct Reasonable Investigations of Consumer Disputes

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The Fair Credit Reporting Act (FCRA) defines a furnisher as a company that furnishes information about consumers to credit bureaus (formally known as consumer reporting agencies or CRAs) like Equifax, Experian, Innovis, and TransUnion. Furnishers include, among others, credit card issuers, other types of lenders, and collection agencies.

A furnisher's duty to investigate a consumer's dispute is governed by § 1681s-2(b) of the FCRA. To trigger a furnisher's duty to investigate allegedly inaccurate information on a consumer's credit report or other consumer report under FCRA § 1681s-2(b), the consumer must first dispute the inaccurate information directly to the consumer reporting agency that issued a credit report or other consumer report with inaccurate information.  Pursuant to Fair Credit Reporting Act § 1681i(a), the CRA that receives the dispute must conduct a reasonable reinvestigation of the dispute. The Consumer Reporting Agency also must notify the furnisher of the dispute. That is generally done electronically through an automated consumer dispute form, or ACDV.

Once notified by a CRA of a consumer dispute, the furnisher of the disputed information must do its own reasonable investigation. A reasonable investigation under FCRA § 1681s-2(b) requires the furnisher to examine sufficient evidence to determine whether the disputed information is accurate. If a furnisher cannot affirmatively verify that it has accurately reported disputed information, § 1681s-2(b)(E) of the Fair Credit Reporting Act requires the furnisher to modify, delete, or permanently block the reporting of the disputed information.

While the language of the FCRA clearly places a duty on furnishers to modify, delete, or permanently block disputed information it cannot verify as accurate, the reality is that furnishers rarely conduct the type of reasonable investigation that the law requires.  Instead, many furnishers treat the FCRA as if it requires consumers to prove that disputed accounts do not belong to them. As such, most furnishers rubber stamp disputed information as accurate on  ACDV responses to Equifax, Experian, Innovis, and/or TransUnion.

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