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Reasonable FCRA dispute investigation... Who decides?

Posted by Brett D. Sherman | Sep 08, 2021 | 0 Comments

The Fair Credit Reporting Act (FCRA) is intended to protect consumers from the consequences of inaccurate credit reporting.

Among other things, the FCRA requires both credit bureaus and furnishers to conduct reasonable investigations of consumer credit disputes and delete, modify, or appropriately update disputed credit report information that cannot be affirmatively verified as accurate. The mechanics are fairly straightforward, although it is generally advisable to consult with a law firm, like Sherman & Ticchio, that knows the FCRA well. 

The consumer disputes to a credit bureau (by letter, telephone, or online) all inaccurate information that the credit bureau, also known as a consumer reporting agency or CRA (mainly Experian, Equifax, and TransUnion), has reported about the consumer. Upon receiving a dispute, the credit bureau must forward that dispute to the furnisher, which is the entity that furnished the disputed information.  At that point, the credit bureau and the furnisher each must perform their respective reasonable investigations within 30 days. 

At the end of the 30-day period, the credit bureau will report the investigation results to the consumer.  If (a) there is a legitimate inaccuracy, and (b) that inaccuracy is not corrected following the consumer's dispute, the consumer then can -- subject to a few specific exceptions and with the help of a qualified law firm -- file a lawsuit in federal court pursuant to the Fair Credit Reporting Act. If there was no reasonable investigation that permitted the furnisher and/or the credit bureau to verify disputed information, then the furnisher and/or the credit bureau is/are liable to the consumer for damages, costs, and reasonable attorney's fees.  

But who decides whether the investigations were reasonable?  In rare cases, where it is exceptionally obvious, the court will decide whether or not an investigation was reasonable on a pre-trial summary judgment motion. But those types of decisions are rare. 

Nearly every federal court that has ruled on the issue has decided that it is almost always the jury that gets to decide if the investigation done by a furnisher and/or credit bureau was reasonable under the FCRA. There is no definition of the phrase "reasonable investigation" in the Fair Credit Reporting Act.  So the jury's answer to that dispositive question will largely depend on how well your attorney presents your case.  

It is our view that, as a matter of unspoken policy, investigations are rarely "reasonable."  Often they are completed in a matter of minutes without the type of inquiry and fact-checking that we would consider as even arguably reasonable. We believe that credit bureaus and most furnishers simply accept the fact that they will be liable for failure to do a reasonable investigation from time to time as a cost of doing business that is far cheaper than doing what is necessary to assure maximum possible accuracy of the information reported about consumers. 

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