The Court of Appeals for the Seventh Circuit has partially affirmed, but also partially reversed and remanded that part of a Fair Credit Reporting Act case back to the District Court, ruling that credit reporting agencies bear some responsibility for investigating disputes filed by consumers and that the credit reporting agencies need to conduct reasonable investigations.
A copy of the ruling in the case of Chaitoff v. Experian Information Solutions can be accessed by clicking here.
The plaintiff ran into troubles on his mortgage and entered into a Trial Payment Plan that would reduce his monthly payment if he made three consecutive payments in a row. After selling the house, the plaintiff tried to buy another one, but was denied for a mortgage. Upon checking his credit report, the plaintiff noticed errors with how his previous mortgage was being reported, namely that it didn’t mention the Trial Payment Plan. The plaintiff filed a dispute with the defendant and provided documentation that he completed the Trial Payment Plan. The defendant forwarded the dispute to the mortgage company, which verified the information it was furnishing. After disputing the debt a second time, the plaintiff filed suit, accusing the defendant of violating the FCRA by negligently and willfully failing to follow reasonable procedures to ensure the maximum possible accuracy of its reports, negligently and willfully failing to reasonably reinvestigate the accuracy of its reporting after receiving the disputes, and failing to include a statement of dispute in its subsequent reporting. A District Court judge granted summary judgment for the defendant, agreeing with the defendant that the existence and effect of the Trial Payment Plan were legal questions that the defendant was not able to answer on its own.
This case boiled down to the line separating factual questions from legal questions when consumers file disputes. In this case, whether the plaintiff’s Trial Payment Plan existed was not a legal question, it was factual, the Appeals Court noted. “… Chaitoff asked that his credit report reflect his TPP, something well within Experian’s capabilities,” the Court wrote. “It is, after all, a credit reporting agency. Nothing about Chaitoff’s alleged inaccuracy required Experian to investigate beyond the face of the documents it was provided.”
Given the information that the plaintiff provided in his disputes, everyone knew that he entered into a Trial Payment Plan, which meant leaving it off the plaintiff’s credit report is a “misleading factual inaccuracy that can give rise to liability” under the FCRA, the Appeals Court noted. “The FCRA may place different investigative obligations on furnishers and CRAs, but the end goal is the same: an accurate credit report. And a credit report that omits a TPP is not accurate. We see no reason to treat a TPP any differently than the myriad legal documents CRAs deal with day in and day out.”