In a recent case from the Eastern District of Pennsylvania, the court provided some helpful clarifications regarding the reinvestigation obligations of a consumer reporting agency (“CRA”) under the Fair Credit Reporting Act (“FCRA”). Section 611(a) of the FCRA requires a CRA to conduct a reasonable reinvestigation of any item of information in a consumer’s file if the consumer alleges the item to be inaccurate.
In this case, a home security company called Safe Home pulled a credit report on the plaintiff. Not only did he not authorize Safe Home to do so, he explicitly instructed them not to. The plaintiff noticed the inquiry on this credit report and disputed the inquiry with TransUnion (“TU”), the CRA that had prepared the credit report. When plaintiff called TU to dispute, they told him they could not remove the inquiry and to call Safe Home. When plaintiff then wrote to TU, TU responded with a form letter not tailored to the facts of plaintiff’s dispute. Discovery then revealed that TU had taken the same position with numerous consumers.
While TU conceded that the plaintiff had lodged the dispute and that it conducted no reinvestigation, TU asserted several arguments as to why it was not obligated to do so. Three of TU’s arguments and the court’s responses are summarized below.
TU was not obligated to reinvestigate because plaintiff’s file was accurate. First, TU argued that an inquiry in a consumer’s file “is merely a factual notation that a user . . . received [a TU credit report] about a consumer on a specific date.” Therefore, TU argued, such an inquiry is accurate if the inquiry in fact occurred and TU subsequently reported that it occurred. In its view, the Safe Home inquiry on plaintiff’s file necessarily was “accurate” because the inquiry indeed occurred. However, the court concluded that TU had an “artificially narrow view of its obligations” under §611, one that is inconsistent with the text and structure of §611, and Third Circuit precedent. The court pointed out that TU’s argument was based on the assumption that inquiries were neutral facts when in reality, they often have negative effects on consumer’s credit scores. As a result, the court was persuaded by a recent Ninth Circuit decision concluding that an item of information on a consumer’s credit report is “inaccurate” if it either is “patently incorrect” or is “misleading in such a way and to such an extent that it can be expected to adversely affect credit decisions.” Therefore, while the inquiry in this case was technically accurate, it was misleading and, therefore, inaccurate. FULL ARTICLE