Tag: Consumer Disputes

CFPB Argues That FCRA Requires Furnishers to Consider Legal Questions in Consumer Disputes The Consumer Finance Protection Bureau (CFPB) has recently filed an amicus brief with the Eleventh Circuit court of appeals urging the court to break with longstanding legal precedent in litigation under the Fair Credit Reporting Act (FCRA) by removing any distinction between factual and legal disputes. The CFPB's brief argues that furnishers of information should be required to conduct a reasonable investigation of not only factual questions as to the accuracy but legal questions as well. In the case, before the Eleventh Circuit, the plaintiff allegedly suffered from identity theft which occurred when an employee of the plaintiff opened a credit card in her name and, over a period of several years, ran up greater than $30,000 in debt and made several payments from business bank accounts owned by the plaintiff. Upon discovering this, the plaintiff contacted the bank to close the account, and the employee was ultimately convicted of identity theft. However, this did not stop the bank from continuing to furnish information regarding the debts to credit bureaus. The plaintiff repeatedly filed disputes with credit reporting bureaus which were then transmitted to the bank which originally furnished them. The bank acknowledged the accounts were opened without the consent of the plaintiff; however, they concluded that she remained responsible for the debt due to her negligence in supervising her employees and failure to object to the previous payments which came from her bank accounts. Therefore, the bank continued to verify these debts and furnish the disputed information to consumer reporting agencies. The plaintiff filed a lawsuit against the bank, alleging that it had violated the FCRA by failing to perform a reasonable investigation following the receipt of her indirect disputes. The defendant's bank moved for summary judgment arguing, among other points, that the plaintiff's dispute hinged upon the question of her legal liability for the debts rather than any factual inaccuracies. The district court agreed, concluding that the investigative duties of furnishers do not encompass legal questions, only factual inaccuracies. The plaintiff appealed this decision, to which the CFPB has filed its amicus brief urging the Eleventh Circuit to reverse the decision. The CFPB argues that the legislative history of distinguishing between factual and legal questions in determining the investigative duties of consumer reporting agencies (CRA) and furnishers is not supported by the FCRA, which makes no such distinction. As a result, it argues that the cases were incorrectly decided. The CFPB argues that CRAs are required under the FCRA to make a reasonable investigation of legal disputes even though they are not required to provide a legal opinion on their merits. Further, the CFPB argues that furnishers are in a position to assess whether a debt is due and collectible and regularly do so. As a result, the CFPB urges the Eleventh Circuit to do away with any formal distinction between factual and legal questions when determining the duties of CRAs and furnishers. If the Eleventh Circuit should agree in its ruling, it will fall in contrast with the precedents set in several federal circuits, which have made the same distinction. This would also create a far greater investigative burden for furnishers and potentially CRAs under the FCRA, which would be required to consider legal questions as to the ownership of debt in deciding whether to include information on a consumer report. Pre-employ offers resources to help employers stay compliant and incorporate fair chance hiring practices. To learn more, download our free resource 5 Tips To Avoid FCRA Non-Compliance. Source

Tag: Consumer Disputes

CFPB Argues That FCRA Requires Furnishers to Consider Legal Questions in Consumer Disputes

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