language requires furnishers to investigate all indirect disputes — arguing that Congress would have written in an exception for frivolous disputes if they intended to include one. The amicus brief claimed that the FCRA already protects furnishers from frivolous disputes by allowing CRAs to determine whether a dispute is frivolous prior to notifying a furnisher.Under § 1681s-2(b) of FCRA, after receiving notice of an indirect dispute from a CRA, the furnisher must investigate the disputed information, review all relevant information provided, and report the results of the investigation to the CRA. The court of appeals found that, unlike direct disputes, the FCRA does not provide an exception for furnishers to decline to investigate indirect disputes deemed to be frivolous:The FCRA is not ambiguous on this point. It expressly states that if a [CRA] ‘reasonably determines that [an indirect] dispute . . . is frivolous or irrelevant,’ it is not required to continue with its investigation. 15 U.S.C. § 1681i(a)(3)(A). Similarly, when a furnisher receives a direct dispute, the FCRA clearly provides that the furnisher is not required to investigate so long as it ‘reasonably determines that the dispute is frivolous or irrelevant.’ Id. § 1681s-2(a)(8)(F)(i). The statute is structured such that, in these parallel provisions, the party that first receives the dispute from the consumer retains explicit discretion to discontinue its investigation should the consumer’s dispute appear frivolous or irrelevant. Meanwhile, Section 1681s-2(b), which governs ‘duties of furnishers of information upon notice of a dispute’ from a [CRA], charges furnishers with a duty to investigate indirect disputes forwarded to them by the agencies, without providing for any similar exception.The court of appeals found that enforcing the FCRA according to its terms would produce “no unreasonable results.” For direct disputes, furnishers can perform a preliminary review for frivolousness. As for indirect disputes, Congress provided

do not.Even apart from the circuit court split on standing rules, the FCRA allows claims in federal or state court (i.e., there is concurrent jurisdiction), and state courts may not be bound by Article III even when adjudicating claims under a federal statute.5Pre-Adverse Action NoticeAs a reminder, if an employer intends to take any “adverse action” against a candidate based on information in a background report (e.g., criminal convictions), the employer must follow a two-step notice process. First, before the employer takes any adverse action (e.g., rescinds a conditional job offer), the employer must send a pre-adverse action notice, including copies of the report and the Consumer Financial Protection Bureau’s Summary of FCRA Rights,6and provide the candidate with a meaningful opportunity to review the documents and raise concerns about any inaccurate or incomplete information.7 (Candidates also have a right to “dispute” the report directly with the consumer reporting agency under 15 U.S.C. § 1681i.) Second, if the employer decides to take the adverse action, the employer must send an “adverse action” notice.8The plaintiff’s bar routinely asserts pre-adverse action claims as nationwide class actions seeking to recover statutory damages under 15 U.S.C. § 1681n. The plaintiff must prove the FCRA violation was “willful” (i.e., intentional or reckless) to recover statutory damages. Recent cases have refused to dismiss pre-adverse action notice claims without a jury trial if the plaintiff presented evidence of willfulness, including evidence the employer lacked policies and procedures for using background reports and failed to train employees about complying with the FCRA.9 Prudent employers will mitigate against this risk by, among other things, establishing necessary policies and procedures and providing training.Because FCRA lawsuits against employers will not abate in 2023, employers should ensure that fortifying FCRA compliance, including conducting audits, remains on their to-d

For all three Appellants, TransUnion’s investigation concluded the credit reports were accurate.Appellants commenced separate actions against TransUnion for violations of 15 U.S.C. § 1681i. Specifically, Appellants alleged that TransUnion’s credit reports contained inaccurate or misleading information because, although Appellants’ accounts were transferred, the Pay Status on their credit reports showed they were currently 120 days past due.

Bibbs v. Trans Union LLC was one of three district court cases consolidated on appeal in which the plaintiff alleged that Trans Union had violated the FCRA requirements (1) in 15 U.S.C. Sec. 1681e(b) for a consumer reporting agency (CRA) to “assure maximum possible accuracy” in its credit reports, and (2) in 15 U.S.C. Sec. 1681i(a) for a CRA to “conduct a reasonable reinvestigation to determine whether [information disputed by the consumer] is inaccurate.” The plaintiffs in each of the three cases had obtained student loans, with two of the plaintiffs having obtained their loans from the same lender.

The Court affirmed the judgment on the pleadings and held the credit reports were accurate under 15 U.S.C.S. § 1681e(b).The court also resolved the two remaining issues in TransUnion’s favor. In assessing the reasonableness of TransUnion’s reinvestigation of the credit report, the court noted that a finding of inaccuracy was a prerequisite to recovery for a claim based on an unreasonable reinvestigation under 15 U.S.C.S. § 1681i(a). Because the court concluded the tradeline was accurate, it again affirmed the judgment entered by the District Court.

The U.S. Court of Appeals for the Third Circuit has ruled that in determining whether a credit report is accurate or misleading under the Fair Credit Reporting Act’s “maximum possible accuracy” requirement, a district court should apply a “reasonable reader” standard. Ballard Spahr attorneys are currently representing clients in cases involving this legal issue.Bibbs v. Trans Union LLC was one of three district court cases consolidated on appeal in which the plaintiff alleged that Trans Union had violated the FCRA requirements (1) in 15 U.S.C. Sec. 1681e(b) for a consumer reporting agency (CRA) to “assure maximum possible accuracy” in its credit reports, and (2) in 15 U.S.C. Sec. 1681i(a) for a CRA to “conduct a reasonable reinvestigation to determine whether [information disputed by the consumer] is inaccurate.” The plaintiffs in each of the three cases had obtained student loans, with two of the plaintiffs having obtained their loans from the same lender.

On appeal, the CFPB filed an amicus brief, arguing that furnishers are statutorily obligated to investigate both legal and factual questions raised in consumer disputes. The CFPB’s brief acknowledges that several federal courts have distinguished between “factual” and “legal” questions in determining the obligation of CRAs to investigate disputes under 15 U.S.C. § 1681i and that other decisions, including Chiang and unpublished decisions of the Eleventh Circuit, likewise recognize such a distinction in the context of furnisher investigations under Section 1681s-2(b)(1). Nevertheless, the CFPB argues that these cases in the furnisher investigation context were “incorrectly decided” because the FCRA does not make any such distinction.

The plaintiffs claimed that they contacted CLSA which refused to investigate the alleged inaccuracies.The plaintiffs sued CLSA, alleging that it violated the FCRA by failing to follow reasonable procedures to assure maximum possible accuracy when preparing a consumer report (15 U.S.C. Sec. 1681e(b)) and by failing to conduct a reasonable reinvestigation of the plaintiffs’ dispute (15 U.S.C. Sec. 1681i(a)). CLSA moved for summary judgment, asserting that it was not subject to the FCRA as a matter of law because it was not a CRA and did not supply “consumer reports” within the meaning of the FCRA.

As part of the settlement, the FTC is ordering Dun & Bradstreet to "conduct a reasonable investigation" in all instances where a business disputes the accuracy of information contained on its commercial credit report. The process outlined by the FTC mirrors portions of the dispute provisions of the FCRA (see 15 U.S.C. § 1681i). For example, the investigation must entail a review of all relevant information, and Dun & Bradstreet must "correct, modify, or delete that item of information" if it is found to be inaccurate or cannot be verified, and "maintain reasonable procedures to prevent the reappearance of the information."

Holland v. Chase Bank USA, N.A., 475 F.Supp.3d 272, 276 (S.D.N.Y. 2020) (citing Chiang v. Verizon New Eng. Inc., 595 F.3d 26, 38 (1st Cir. 2010)). Accordingly, consumers cannot state claims against CRAs under 15 U.S.C. § 1681e(b) or 15 U.S.C. § 1681i based on allegations that a CRA reported a debt for which the claims to not be liable.In light of this trend, furnishers faced with § 1681s-2(b) claims and CRAs faced with §1681e(b) claims should carefully consider whether the inaccuracy the plaintiff alleges is actually a legal dispute regarding the legal validity of the legal obligation underlying the reported debt.[View source.]