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A recent decision from the Northern District of Georgia serves as a reminder to both consumers and furnishers of information as to the furnisher’s obligation to reasonably investigate a dispute under the federal Fair Credit Reporting Act. In Taylor v. Georgia Power Company, the consumer contested a power company’s reporting of her account as delinquent. The consumer submitted a dispute to the Consumer Reporting Agency (the “CRA”) challenging she owed anything to the power company. The CRA, in turn, sent her dispute to the power company with a request for verification.
Under section 1681s-2(b) of the FCRA, upon receipt of the dispute from the CRA, the power company was required to conduct a reasonable investigation of the identified dispute and report the results of its investigation to the CRA. The power company investigated the dispute based upon the information the consumer provided and the information the CRA had in its file. Based upon its investigation, the power company verified the information being reported was accurate. The consumer filed suit alleging the power company failed to conduct a reasonable investigation.
On the power company’s motion for summary judgment, the district court ruled in favor of the power company. In doing so, the court held that the issue of whether an investigation is reasonable rests upon whether the furnisher acquired sufficient evidence to support the conclusion that the information was true. “A furnisher ‘need not do more than verify that the reported information is consistent with the information in its records’ for an investigation to be reasonable. Moreover, “the scope of the furnisher’s investigation may be narrow if the plaintiff provides only ‘scant information’ regarding the nature of the dispute.” Because the consumer failed to provide any information beyond stating that she told an employee of the power company that she did not owe on the account, the power company’s investigation was reasonable when it reviewed all the information in its possession and verified the consumer’s name, birthdate, social security number and the amount owed on the account.
Consumers should take note that the burden to effectively dispute a credit reporting lies with the consumer. A reasonable investigation can only be based upon the information the credit furnisher has at the time of the dispute.
Caren Enloe leads Smith Debnam’ s consumer financial services litigation and compliance group. In her practice, she defends consumer financial service providers and members of the collection industry in state and federal court, as well as in regulatory matters involving a variety of consumer protection laws. Caren also advises fintech companies, law firms, and collection agencies regarding an array of consumer finance issues. An active writer and speaker, Caren currently serves as chair of the Debt Collection Practices and Bankruptcy subcommittee for the American Bar Association’s Consumer Financial Services Committee. She is also a member of the Defense Bar for the National Creditors Bar Association, the North Carolina State Chair for ACA International’s Member Attorney Program and a member of the Bank Counsel Committee of the North Carolina Bankers Association. Most recently, she was elected to the Governing Committee for the Conference on Consumer Finance Law. In 2018, Caren was named one of the “20 Most Powerful Women in Collections” by Collection Advisor, a national trade publication. Caren oversees a blog titled: Consumer Financial Services Litigation and Compliance dedicated to consumer financial services and has been published in a number of publications including the Journal of Taxation and Regulation of Financial Institutions, California State Bar Business Law News, Banking and Financial Services Policy Report and Carolina Banker. ...LEARN MORE