On December 8, 2023, the Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC) filed a joint amicus brief in the United States Court of Appeals for the Fourth Circuit regarding a district court decision in July 2023 to dismiss a case involving alleged violations of the federal Fair Credit Reporting Act (FCRA).
To ensure fair and accurate credit reporting, the FCRA (15 U.S.C. § 1681 et seq.) – which was enacted by the United States Congress in 1970 – requires consumer reporting agencies (CRAs) and entities that furnish information to CRAs to follow various requirements when they compile and disseminate personal information about individuals.
According to the amicus brief, the CFPB has exclusive rule-writing authority for most provisions of the FCRA and, along with various other federal and state regulators, enforces the Act’s requirements, while the FTC has long played a key role in the implementation, enforcement, and interpretation of the FCRA as part of its mission to protect consumers.
In the case in question, the plaintiff refused to pay for alleged damage to an apartment vacated in 2021. The apartment complex referred the claim to a debt collector. The plaintiff filed a formal dispute with the three nationwide CRAs, who forwarded the dispute to the debt collector, who investigated the dispute and confirmed the validity of the claim.
The plaintiff filed a lawsuit in December 2022 alleging the defendant debt collector violated the FCRA by attesting to the accuracy of the debt allegedly owed without conducting reasonable investigations following receipt of “indirect disputes.” The defendant moved to dismiss the case for failure to state an FCRA claim and not disputes involving “legal” questions.
A district court held that furnishers need not investigate indirect disputes involving “legal” questions. However, the amicus brief warned that the “decision has no basis in the text of the FCRA, unduly narrows the scope of a furnisher’s obligations, and runs counter to the purpose of the FCRA to require a reasonable investigation of consumer disputes.”
The amicus brief explained when a CRA notifies a furnisher of a dispute about information furnished to a CRA, the FCRA requires the furnisher to “conduct an investigation with respect to the disputed information.” The case questions the scope of a furnisher’s duty to investigate “indirect disputes” filed by consumers with CRAs which are forwarded to furnishers.
“If it stands, the decision would limit consumers’ ability to ensure that potentially harmful inaccuracies on their consumer reports are corrected. Given their role in administering and enforcing the FCRA, the Bureau and the FTC have a substantial interest in correcting the decision,” the amicus brief from the CFPB and FTC stated.
“For the foregoing reasons, this Court should hold that, under the FCRA, furnishers must reasonably investigate indirect disputes, regardless of whether the dispute can be characterized as legal, and regardless of whether it may entail seeking information beyond what the furnished already possesses,” the amicus brief concluded.
ClearStar is a leading global Human Resources technology company that specializes in background checks, drug testing, and occupational health screening. ClearStar offers FCRA-compliant tenant background screening services to help landlords protect rental properties and FCRA-compliant credit history searches when appropriate. To learn more, contact ClearStar.
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Thomas Ahearn - Digital Content Editor
Thomas Ahearn is a Digital Content Editor at ClearStar, a leading Human Resources technology company specializing in background checks, drug testing, and occupational health screening. He writes about a variety of topics in the background screening industry including Artificial Intelligence (AI), "Ban the Box," class action lawsuits, credit reports, criminal records, drug testing, Equal Employment Opportunity Commission (EEOC), Fair Credit Reporting Act (FCRA), identity theft, privacy, social media screening, and workplace violence.
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