FTC, CFPB File Joint Brief in FCRA Case Over How Disputes are Investigated

Given the increased scrutiny and shifting landscape surrounding credit reporting, furnishers would do well to pay attention to a brief filed by both the Federal Trade Commission and the Consumer Financial Protection Bureau in a Fair Credit Reporting Act case before the Court of Appeals for the Third Circuit, which centers around how disputes are investigated.

In the underlying case, a District Court judge granted a defendant’s motion for summary judgment after it was accused by the plaintiff of not properly investigating a disputed debt because the plaintiff did not do his part in submitting documents to substantiate his claim that he was the victim of identity theft.

The joint brief argues that the District Court judge made a mistake in interpreting the dispute provisions of Section 1681s-2(b) of the FCRA by saying that furnishers were only required to investigate “bona fide” indirect disputes and could decline to investigate indirect disputes it deemed to be frivolous.

“This atextual, judge-made exception to the plain language of the FCRA would have the effect of denying consumers an investigation to which they are legally entitled as well as notice of the result of that investigation,” the regulators wrote in their brief. “This outcome would undercut a central remedial purpose of the FCRA, which is to ensure that consumers are able to dispute and correct inaccurate information in their credit reports.”

There is nothing in the FCRA that allows for the filtering of what are deemed to be frivolous disputes, the regulators claim in their brief, and if that’s what Congress wanted, then that’s what Congress would have done when it enacted the statute. Consumers are also entitled to notice of the outcome of their disputes and an opportunity to cure any deficiencies, and “judge-made” exceptions are not necessary because credit reporting agencies are also bestowed with determining whether a dispute is frivolous before forwarding it to a furnisher, the regulators wrote.

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