Plaintiff Properly Asserted an FCRA Claim Against Furnisher Because He Provided Details of His Dispute and Claimed Furnisher Received Notice of the Dispute from a CRA

Waters v. Hollywood Tow Serv., 2010 U.S. Dist. LEXIS 93091 (C.D. Cal. July 27, 2010)

Facts: Plaintiff filed suit alleging thirty-three federal and state claims for damages and injunctive relief against a litany of defendants arising from the ticketing, towing, and impoundment of his car for alleged parking violations. With respect to the FCRA, Plaintiff alleged that one of the defendants, a furnisher under the FCRA, incorrectly reported to Experian that Plaintiff opened a credit account with Defendant Hollywood Tow and owed $183 on the account. The furnisher contended that Plaintiff did not adequately allege that Experian gave it notice of Plaintiff’s dispute or the nature of the information provided to it by Experian. The Court rejected the furnisher’s argument and denied the furnisher’s motion to dismiss.

Furnisher Reinvestigation. Upon notice of a consumer’s dispute from a consumer reporting agency (“CRA”), § 1681s-2(b) imposes a duty on the furnisher to investigate the dispute. The requirement that furnishers investigate consumer disputes is procedural. An investigation is not necessarily unreasonable because it results in a substantive conclusion unfavorable to the consumer, even if that conclusion turns out to be inaccurate.

Failure to State a Claim. The Court found that the furnisher’s motion to dismiss lacked merit because Plaintiff alleged (1) the dollar amount of the dispute; (2) the date of the dispute; (3) that he disputed the account in writing to Experian on the grounds that he never participated in a credit transaction with Hollywood Tow; (4) that Experian provided written notice of the existence and grounds for the dispute to the furnisher in or about February 2007; and (5) that the furnisher knowingly refused to conduct an investigation of the dispute, improperly to correct or remove the disputed information, and re-reported the information to Experian. The Court concluded that Plaintiff’s allegations properly asserted a claim for relief under § 1681s-2b.