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Fair Credit Reporting: 4.5.2.4.3 Keep a file

In many cases, a request for reinvestigation is just the beginning of a protracted battle with the CRA that may ignore correspondence or fail to follow up as promised. Thus, it is good practice for the consumer to establish a file of all correspondence sent to and received from the CRA, and to have proof that the CRA has received the consumer’s correspondence.

Fair Credit Reporting: 4.5.2.4.4 Send a copy to the furnisher

Consumers should also directly notify the creditor or other furnisher of the disputed information at the same time, if not before.1243 Furnishers must participate in the CRA reinvestigation procedures and conduct their own reinvestigation.1244 A furnisher’s investigation obligation arises when it receives the consumer’s dispute indirectly through the CRA.1245 However, furnishers sometimes claim that they did not receive adequate notice of the

Fair Credit Reporting: 4.5.2.4.5 Submit a dispute to all of the nationwide CRAs

An additional, major problem in correcting errors is that the consumer’s file at each nationwide CRA is independent of that at the other nationwide CRAs. While the FCRA does require that furnishers report any errors corrected by their investigations to the other nationwide CRAs,1251 this mechanism cannot be relied upon to correct the error at all of the nationwide CRAs. Therefore, the safest course is to send the dispute to all of the “Big Three” nationwide CRAs—Experian, Trans Union, and Equifax.

Fair Credit Reporting: 4.5.2.4.6 The dispute notice should be clear, complete, and unambiguous as possible

For practitioners familiar with other federal consumer laws such as the Fair Debt Collection Practices Act or state UDAP statutes, there may be a temptation to view the dispute requirement merely as a technical threshold, used simply to trigger liability. This may tempt the advocate to send a pro forma dispute, without careful consideration. However, the FCRA is different because it does not provide for strict liability. Throughout the statute, the CRA’s conduct is evaluated for its reasonableness.

Fair Credit Reporting: 4.5.2.4.8 Suggest steps for investigation

While it is certainly not a threshold liability requirement, a consumer may choose to suggest what the CRA could do to best accomplish the reinvestigation.1258 If the CRA does not follow reasonable suggestions, this lack of responsiveness can be raised in arguing that the CRA did not conduct an adequate reinvestigation.1259 Conversely, the lack of suggestions may lead a court to conclude that an investigation was reasonable.1260

Fair Credit Reporting: 4.5.2.5.2 Exceptions

There are several exceptions to the requirement that the consumer directly notify the CRA of a dispute. First, a CRA that receives a consumer’s complaint of identity theft is required to forward it to all other nationwide CRAs.1284

Fair Credit Reporting: 4.5.2.6 Resellers and Affiliates

There are two categories of CRAs for which the FCRA reinvestigation requirements vary. The first category is a “reseller,” which is a CRA that purchases, often combines, and then resells a consumer’s file from another CRA and does not itself maintain an independent database.1294 The most prominent resellers are CRAs that purchase and combine a consumer’s credit reports from each of the “Big Three” CRAs into one “tri-merge report.” These are most often used for mortgage credit.

Fair Credit Reporting: 4.5.2.7.1 Introduction

The FCRA permits a CRA to refuse to reinvestigate or delete disputed information if the CRA “reasonably determines” a dispute is frivolous or irrelevant.1310 The FTC Staff Summary states that CRAs must assume that a consumer’s dispute is bona fide, unless there is evidence to the contrary.1311 Despite this, the nationwide CRAs have a policy of automatically treating certain types of disputes as frivolous, such as disputes they believe originate from credit repair organizations

Fair Credit Reporting: 4.5.2.7.2 Disputes from credit repair organizations

If a request is from a credit repair organization, instead of the consumer, it is likely the CRA will refuse to reinvestigate because the request did not come from the consumer.1327 The nationwide CRAs will often complain that the large number of credit repair disputes overburden their dispute processing procedures. They also claim that a great percentage of disputes are generated by such organizations.

Fair Credit Reporting: 4.5.2.7.3 Repeat request for investigation

A consumer’s repeated request for an investigation, after the CRA has already reinvestigated the same item, may be viewed as frivolous.1342 As a rule, the nationwide CRAs impose a window of six months before they will again process an identical dispute. However, the response of the nationwide CRAs is inconsistent, sometimes rejecting such disputes and other times processing them.

Fair Credit Reporting: 4.5.3.1 Generally

If a consumer disputes the accuracy or completeness of information in a consumer report, the CRA normally must conduct an investigation. The investigation is called a reinvestigation, presumably because the CRA initially added to its files the item of disputed information only after employing reasonable procedures to ensure maximum possible accuracy in the first place.1355 The CRA may avoid a reinvestigation by simply deleting the disputed information from its reports.1356

Fair Credit Reporting: 4.5.3.3 Investigation Required If Information Is Incomplete or Not Updated

The FCRA provides a right of reinvestigation where the consumer disputes the “completeness or accuracy” of any item in a file.1401 Obviously, the term “completeness” implies more than just accuracy, so that the consumer has a right to require reinvestigation if information relevant to an item is not included in the file.1402 However, the Fifth Circuit has held that the right to a reinvestigation is not triggered if the consumer disputes the absence of a specific acc

Fair Credit Reporting: 4.5.3.4.3 Balancing test and heightened standard

Underlying the “reasonableness” of a CRA’s compliance with its FCRA “accuracy” duties is a two-step balancing test used expressly or implicitly by nearly every court to apply the statute. The balancing test was formulated by the Seventh Circuit in Henson v. CSC Credit Services:

Fair Credit Reporting: 4.5.3.4.5 When exclusive reliance upon the furnisher’s response is not reasonable

For decades, the “Big Three” nationwide CRAs have consistently contended that the FCRA dispute mechanism for furnishers frees them of any independent responsibility. This position has been soundly rejected, as the courts have consistently held that the CRAs must do more than simply confirming that the disputed information was in fact reported as it was received from the furnisher.1459 The obligations of CRAs and furnishers are independent.

Fair Credit Reporting: 4.5.3.4.6 When the consumer has an underlying legal dispute with the furnisher

Most, but not all, of the Courts of Appeals that have considered the issue have held that CRAs are not required to investigate or resolve issues concerning the legal validity of debts.1488 However, the CFPB and FTC have taken the opposite position in an amicus brief filed in the Second Circuit, maintaining that the FCRA does not contain an exception for legal disputes and urging rejection of any distinction between factual and legal inaccuracies.

Fair Credit Reporting: 4.5.4.1 Generally

The FCRA requires the creditor or other person who furnished the information disputed by the consumer to participate in the reinvestigation conducted by the CRA.1550 The furnisher that fails to properly participate in this reinvestigation may be liable to the consumer.1551

Fair Credit Reporting: 4.5.4.2.1 CRA notice of dispute to furnisher

Within five business days of receipt of a notice of dispute from a consumer, the CRA must provide a notice of the dispute to any person who furnished any item of information in dispute.1558 Failure to do so is an actionable violation.1559 The only exceptions are if the CRA has determined the dispute to be frivolous1560 or has deleted the disputed information pursuant to an expedited dispute resolution process.