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Banks Confused On When They Must Investigate Under FCRA

In September of this year, the 6th Circuit Appellate Court clarified Justice _scalethe confusion that apparently existed within USAA Federal Savings Bank (Boggio v. USAA Federal Savings Bank, Docket No. 11-4040).  The bank was under the impression that when it received a dispute from a credit bureau regarding a consumers claims of inaccuracy on their credit report,  it need not do more than a cursory review of the account to satisfy its obligations under the Fair Credit Reporting Act if they were no provided documents that comply with their own internal procedures.  

In this case, the consumer claimed that a car was purchased by his soon to be ex-wife through the use of fraud. 
Prior to the divorce, the wife went to the dealership and purchased the vehicle in the consumer's name.  Subsequently they divorced, and the ex-wife did not keep up payments, causing the bank to begin reporting negatively on the consumer's credit report.  When the consumer began disputing the item on his credit report, the bank refused to make changes, citing the reason as the consumer's failure to send in a police report regarding the purported forgery.

The court stated that it was not necessary to turn over a police report to trigger USAA's investigation obligations under the FCRA.  The court ruled that USAA could not put additional conditions on its duty to investigate. The fact that USAA required a fraud affidavit or police report before it would conduct a further inquiry did not absolve it of its responsibility to conduct a reasonable investigation under the law. The text of 15 U.S.C. ยง 1681s-2 does not allow furnishers to require independent confirmation of materials contained in a CRA notice. In other words, the obligation to conduct a reasonable investigation does not hinge on whether the consumer provides information required by the bank's internal policies.

Under the Fair Credit Reporting Act, a furnisher of information to a credit bureau , such as a creditor, has obligations to conduct an investigation into the accuracy of its credit reporting that is kicked off by the consumer sending that dispute directly to the credit bureaus.  Once the credit bureaus receive a dispute from a consumer, the credit bureaus are to notify the creditor of the dispute, and the creditor is to conduct an investigation.  Upon receipt of that dispute, the creditor must:

1.  Conduct an investigation that is more than a "cursory review".

2.  Review all of the information provided by the credit bureau to the creditor.

3.  Report the results of their investigation.

4.  Correct inaccurate information or update the information reported so that it is accurate and not misleading. This corrected information must also be provided to the other credit bureaus regardless of whether they had any involvement or notice of this investigation.

5.  Modify, delete or permanently block the reporting the information it finds upon investigation to be inaccurate or  incomplete.

SmithMarco, P.C. has been protecting consumer rights since 2005 and handles Fair Credit Reporting Act cases. If information about you is inaccurately being reported, or if you feel that you're rights have been violated, please contact us for a free case review.

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