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What’s a “Reasonable” Reinvestigation: Defining Consumer Reporting Agency Obligations Under FCRA

Last week, the District Court for Colorado offered important insight into what it means for consumer reporting agencies to conduct a “reasonable reinvestigation” into a dispute. In Thomas v. Hyundai Capital Am., the plaintiff filed FCRA claims against a car dealership, collection agency, and Equifax. See 2018 U.S. Dist. LEXIS 173594. The dispute arose after the plaintiff leased a vehicle from a Hyundai dealership. When he returned the vehicle at the end of his lease, the plaintiff incurred more than $623.00 in fees for excess wear on the vehicle, $400.00 for a “disposition fee,” and roughly $80.00 in taxes. The Plaintiff, an attorney, sent a check for $623.42 – equal to the amount owed for the wear on the vehicle – and noted on the instrument that the payment was in full settlement of the outstanding sum owed.

The dealership accepted the check and hired a collections agency to collect the outstanding sum. Yet the plaintiff refused to pay the fees, asserting that the dealership’s acceptance of the $623.42 payment was an accord and satisfaction for the full amount. Subsequently, plaintiff discovered derogatory information on his credit report – Equifax reported an overdue balance for the fees owed to the collection agency. When Equifax refused to remove the information from his report, Plaintiff filed suit. Plaintiff argued, among other things, that Equifax failed to conduct a reasonable reinvestigation, which would have revealed that the information from the collection agency was inaccurate.

Under 15 U.S.C. § 1681i(a)(1)(A), the FCRA requires consumer reporting agencies (or “CRAs”) to conduct a “reasonable reinvestigation” to determine whether disputed information in a consumer’s file is inaccurate. The statute, however, does not clearly define what constitutes a “reasonable reinvestigation,” so courts have sought to fill in the gaps. Critically, while the statute demands that CRAs conduct more than a cursory investigation into a dispute, it decidedly does not require CRAs to evaluate and adjudicate the legal merits of a dispute between a debtor and the collection agency. In Thomas, the district court concluded that for Equifax to have found that the information provided by the collection agency was inaccurate, as Plaintiff argued, Equifax would have to determine that Plaintiff did not in fact owe the fees claimed by Defendant HMF. This overstated the CRAs obligations under 15 U.S.C. § 1681i(a)(1)(A). Ultimately, the plaintiff’s credit reporting agency reflected a true statement: the collection agency sought payment, which Plaintiff refused to make. Consumers have other, more appropriate avenues than the Fair Credit Reporting Act for seeking redress under these circumstances.

In sum, resolving contract disputes is not something that consumer reporting agencies are “equipped or required by law to do.”

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About this Author

Thomas M. Cull, Womble Carlyle, mid market corporations lawyer, limited liability companies attorney

As a member of the firm’s business litigation practice group, Thomas represents mid-market corporations, limited liability companies, and other business entities in commercial disputes involving claims for breach of contract, civil RICO, fraud, and breach of warranty, among others. He also frequently works on matters involving financial services and product liability litigation.

Thomas also works closely with clients throughout the appeals process. His corporate clients benefit from his experience working with the Innocence Project, a non-profit...

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