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

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. § 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

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

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

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

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.