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Fair Credit Reporting: 4.5.6.2 Translation of Disputes into Limited Number of Codes

The ACDV contains only a limited amount of information, including: (1) identifying information about the consumer in the CRA’s file; (2) one or two codes summarizing the consumer’s dispute; and (3) if the CRA deems it necessary, a one-line free-form narrative field that supplements the dispute codes. This free-form field is sometimes referred to as the “FCRA Relevant Information field,” but is not used in the majority of cases. The CRAs’ procedures manuals offer almost no instructions for their ACDV employees as to what information should be placed in this one-line text field.

Fair Credit Reporting: 4.3.6.3 Treatment of Deficiencies After a Short Sale or a Foreclosure

A “deficiency,” is the difference between the amount realized from a short sale or foreclosure sale, and the balance due on the mortgage. In a few states, lenders are prohibited from recovering this deficiency. In some of these states (notably California prior to 2014), this prohibition does not extinguish the debt, but only prohibits the lender from using judicial process to collect it.

Fair Credit Reporting: 4.3.6.4 Loan Modifications

Problems may occur after a servicer or lender has agreed to a loan modification with the homeowner. Servicers sometimes continue to report the mortgage as delinquent, per the original terms of the mortgage, even though the consumer is paying in compliance with the terms of the new modified loan terms.514 Other servicers have promised to report payments pursuant to a loan modification, but failed to do so.515

Fair Credit Reporting: 4.3.7 Consumer Reporting Agency’s Refusal to Provide Reports on Targeted Consumers

Incomplete or misleading reports are also furnished when a CRA responds to a prospective creditor’s inquiry with the statement “FILE UNAVAILABLE ONLINE,” “CONTACT BUREAU,” or “FILE UNDER REVIEW.”528 Use of these terms may leave the creditor or user with questions about the creditworthiness of the consumer, and is often interpreted in the credit industry to mean that the credit file does not exist.

Fair Credit Reporting: 4.4.1 Overview

The FCRA provides consumers with two primary inaccuracy claims against consumer reporting agencies, one governing predispute accuracy and the other governing the dispute and reinvestigation process.583 The first of these, 15 U.S.C. § 1681e(b), is the subject of this section and provides as follows:

Fair Credit Reporting: 4.4.2 The Consumer Report Must Be Inaccurate

To challenge a CRA’s procedures to ensure maximum possible accuracy, the procedures must not only be inadequate, but the report information must also be inaccurate.595 In other words, if inadequate procedures produce a report on a consumer that is completely accurate, that consumer cannot bring a section 1681e(b) action.

Fair Credit Reporting: 4.4.3 The CRA Must Furnish a Consumer Report

Unlike an FCRA reinvestigation claim, which regulates the content of a consumer’s “file,”609 the accuracy requirements of section 1681e(b) govern the content of a “consumer report.” As considered elsewhere in this treatise, there is a distinction between a “consumer report” and a “consumer file disclosure.”610 The latter is provided directly to the consumer by the CRA as a copy of the consumer’s file pursuant to the disclosure provisions of the FCRA.61

Fair Credit Reporting: 4.4.4 Resellers Must Follow Reasonable Procedures

A reseller is a CRA that purchases a credit file or report from another CRA and then resells it to the end-user.631 While a reseller has a different set of duties with respect to reinvestigations and other FCRA requirements, it is still subject to the FCRA’s requirement that it use reasonable procedures to ensure maximum possible accuracy in its preparation of a report.632 No FCRA provision contains any language that explicitly exempts a reseller from the obligation to ensure the accuracy of

Fair Credit Reporting: 4.4.5.1.3 Factors bearing on reasonableness

In addition to cost and the size of the CRA,652 the reasonableness of procedures will depend upon the particular circumstances of the case.653 The FTC has construed the Act to require a CRA to do whatever is reasonable under the circumstances “to minimize the chances that consumers will be harmed by inaccurate reporting.”654

Fair Credit Reporting: 4.4.5.1.5 Establishing the availability and minimal burden of corrective measures

Although a plaintiff is not required to identify specific deficiencies in a CRA’s practices or procedures,676 they will be in a stronger position if they can articulate concrete and available procedures that the CRA has not followed. The objective should be to develop evidence that such procedures, implemented across the board at the CRA, would cost little or impose only a minimal additional burden. Simultaneously, practitioners will want to explain and develop the significance of and harm caused by the inaccuracy.

Fair Credit Reporting: 4.4.5.2.1 Burden of proof

In the “overwhelming” majority693 of cases, the reasonableness of the procedures will be a question for the jury.694 However, there is a variance amongst the circuits on the plaintiff’s burden of proof for a claim under section 1681e(b) for failing to follow reasonable procedures, as well the order of the burden shifting.

Fair Credit Reporting: 4.4.5.2.2 Sources of proof

If the plaintiff has the burden to show the unreasonableness of the CRA’s procedures, there are a number of potential sources of evidence in addition to the consumer’s file or report. Practitioners should seek to discover all prior consumer complaints and lawsuits against the defendant CRA alleging similar conduct or FCRA violations.721 Such evidence is directly relevant to the degree of unreasonableness.722 It will constitute notice that the CRA cannot then refute.

Fair Credit Reporting: 4.4.6.2 Reasonable Procedures for Reinvestigation

The FCRA requires that CRAs conduct “reasonable” investigations of consumer disputes, discussed in § 4.5, infra. In addition, the CRAs must have and follow reasonable procedures to conduct such investigations.760 Despite this requirement, the nationwide CRAs have developed investigation procedures that are almost entirely automated and perfunctory.