Tag: New Jersey Federal Court

Federal Court in New Jersey Finds Furnishers of Consumer Information Are Not Responsible for Considering Legal Inaccuracies A U.S. District Court based in New Jersey recently issued a ruling in favor of a timeshare company facing a lawsuit for furnishing inaccurate information to a consumer reporting agency (CRA). This case serves to provide valuable insight on the contested issue of whether a "furnisher" of consumer information under the Fair Credit Reporting Act (FCRA) is required to perform an investigation regarding the legal validity of the information that they report. In this case, the plaintiffs were two sisters who had purchased a timeshare from the predecessor to the defendant. After several years of making payments on the obligation, the plaintiffs hired an attorney to help them exit the commitment. First, the attorney sent a letter to the defendant, informing them that the plaintiffs would no longer be making payments on the timeshare. Then, after four months, the attorney followed up by sending a congratulatory letter to the plaintiffs, claiming they were no longer responsible for making payments. In addition, the letter contained a quitclaim deed-in-lieu of foreclosure, which allegedly transferred ownership of the title to the timeshare to the defendant. The plaintiffs did not make further payments despite the timeshare company's lack of communicated agreement regarding their canceled obligation. In light of this, the company continued reporting the plaintiffs' delinquent accounts to CRAs. The plaintiffs subsequently filed five disputes with one of the major CRAs, claiming the debt was inaccurate and that the accounts with the defendant were closed. After performing an investigation in response to the disputes, the defendant concluded the accounts were open and requested the balance to reflect the owed amount with each CRA. After failing to remove the information from their credit reports through these disputes, the plaintiffs filed a lawsuit in the U.S. District Court against the furnisher, claiming violations of the FCRA by reporting inaccurate information. The District Court subsequently granted the defendant's motion for summary judgment, deciding that furnishers of consumer information are not obligated under the FCRA to investigate the legal validity of disputes. Instead, they are only to perform a reasonable investigation to determine whether there are factual inaccuracies. This decision is in line with similar rulings by other federal circuit and district courts. However, the Federal Trade Commission and Consumer Financial Protection Bureau have recently filed amicus briefs in multiple cases challenging this interpretation of the Act's requirements. As a result of this interpretation, the Court found the defendant did not violate the FCRA for reporting the accounts as open and determined the defendant was entitled to summary judgment. What This Means For Furnishers of Consumer Information Despite the ongoing debate, this case continues to reaffirm that furnishers of consumer information are only obligated to perform a reasonable investigation of factual accuracy in response to consumer disputes. This affirmation still means furnishers should conduct a thorough and consistent inquiry to report accurate information. However, they are not obligated to consider legal questions that may be difficult or impossible for many organizations to answer. Stay updated on all the new rules of compliance with Pre-employ’s free news resources on FCRA, EEOC, and more. Contact a Sales Rep today for more information. Source

Tag: New Jersey Federal Court

Federal Court in New Jersey Finds Furnishers of Consumer Information Are Not Responsible for Considering Legal Inaccuracies

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