[FCRA] THIS IS BIG– Fifth Circuit Agrees that a Furnisher Does Not Have to Go Beyond ACDV in Reinvestigation

 

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            In Barron v. Equifax Info. Servs., L.L.C, No. 19-60817, 2020 U.S. App. LEXIS 13026 (5th Cir. Apr. 22, 2020), the Fifth Circuit agreed with the lower court that Equifax and Experian performed a reasonable reinvestigation of plaintiff’s file under the Fair Credit Reporting Act (“FCRA”) when they verified the plaintiff’s file through the Automated Consumer Dispute Verification (“ACDV”) system to Citibank (the furnisher).  See 15 U.S.C. §1681i(a)(1)(A).  And since there was no genuine issue of material fact on the reasonableness question, the Court affirmed the district court’s grant of summary judgment.

            In 2015, Mr. Barron had a Best Buy credit card through Citibank.  Citibank informed the Credit Reporting Agencies (CRAs) of a late payment on Mr. Barron’s account.  After which, Mr. Barron was denied a loan application in March 2016.  TransUnion provided the credit report in support of the loan application, not Equifax or Experian.  Mr. Barron disputed the late-payment notation with the CRAs.   Both Equifax and Experian reinvestigated the delinquency with Citibank through the ACDV system; they did not contact Best Buy directly.  After Citibank confirmed the same late payment, Equifax and Experian notified Mr. Barron that his report was accurate.  After they reported the results to Mr. Barron, Best Buy sent Mr. Barron a separate letter confirming that it was “unable to change the information reported to the credit reporting agencies” because it was accurate. 

            Mr. Barron filed suit under the FCRA.  He alleged that Equifax and Experian’s reinvestigations were unreasonable because the CRAs did not contact Best Buy directly.  What?  

            First, Best Buy issued a letter to Mr. Barron confirming that the late payment report was accurate after Mr. Barron received the same confirmation from the CRAs.  The Court noted that even if contact with Best Buy was “a component of a reasonable reinvestigation” (which it was not), in light of Best Buy’s letter, there was “no evidence that such contact” with Best Buy would have changed CRAs reinvestigation conclusions. 

            Second, it was reasonable for CRAs to rely on the information exchange with Citibank thorough ACDV.  Indeed, the FRCA requires CRAs to “implement an automated system through which furnishers of information to [CRAs] may report results of a reinvestigation that finds incomplete or inaccurate information in a consumer’s file to other such consumer reporting agencies.”  15 U.S.C. §1681i(a)(5)(D).  It is logical that the use of this automated system to communicate between CRAs and furnishers satisfies reasonable reinvestigation methods in the absence of some notice (or additional evidence) that CRAs should extend beyond the automated platform.

            Mr. Barron also tried to shoehorn an allegation under 15 U.S.C. § 1681e(b) against Equifax and Experian, which requires CRAs to “follow reasonable procedures to assure maximum possible accuracy” in preparing consumer reports.  But neither Equifax nor Experian “prepared” the consumer report that formed the basis of the credit denial, TransUnion did.  Another strike and Mr. Barron was out, well, he did settle with Best Buy, TransUnion, and Citibank prior to the appeal, so maybe there was some merit to his claim.  Just not against Equifax and Experian.

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