The Court of Appeals for the Eleventh Circuit has affirmed a lower court’s ruling that a furnisher performed a reasonable investigation into a consumer’s dispute, even though the charges in question were fraudulent and led to one of the consumer’s employees being charged with multiple felonies.
A copy of the ruling in the case of Milgram v. Chase Bank USA can be accessed by clicking here.
An employee of the plaintiff opened up a credit card in the plaintiff’s name and made charges of “tens of thousands of dollars” The employee accessed the plaintiff’s bank accounts and used the funds from those accounts to partially make payments on the debt. When the plaintiff discovered the scheme, she reported the fraud to the defendant, but it refused to categorize the charges as illegitimate because her bank accounts had consistently paid for the charges on the card. The plaintiff disputed the charges, but the defendant refused to change its mind. The plaintiff sued, alleging the defendant violated the Fair Credit Reporting Act by not conducting a reasonable investigation into her dispute, but a District Court judge granted summary judgment for the defendant, ruling the investigation that was conducted met the threshold for being “reasonable.”
When the plaintiff reported the fraud, the defendant’s investigation determined that since the plaintiff’s bank accounts were used to make payments on the card, the plaintiff was therefore liable for the charges. The fact that the individual who opened and used the cards was being prosecuted for identity theft was not enough evidence to overcome the apparent authority, nor was the fact that she was ultimately sentenced to three years in jail.
Ultimately, the Appeals Court ruled, the plaintiff could not prove that the defendant’s investigation was not reasonable. The criminal conviction was not relevant to the investigation, the Appeals Court noted, because the defendant did take that into consideration before rendering a decision on its investigation. And, the plaintiff didn’t offer a solution into what the defendant should have done differently. Disagreeing with the conclusion is not grounds for overturning the lower court’s ruling, the Appeals Court determined.