District Court Opinion Upholds Reasonable Investigation of Credit Dispute

A recent decision out of the Northern District of Georgia serves as a reminder to both consumers and furnishers of information as to the furnisher’s obligation to reasonably investigate a dispute under the federal Fair Credit Reporting Act.  In Taylor v. Georgia Power Company, the consumer disputed the power company’s reporting of her account as delinquent with the consumer reporting agencies (“CRA”).  The consumer submitted a dispute to the CRA disputing that she owed anything to the power company.  The CRA, in turn, passed on the dispute to the power company. 

Under section 1681s-2(b) of the FCRA, upon receipt of the dispute from the CRA, the power company was required to conduct a reasonable investigation of the identified dispute and report the results of its investigation to the CRA.  The power company investigated the dispute based upon the information it had been provided by the consumer and the information it had in its file.  Based upon its investigation, the power company verified the information being reported was accurate.  The consumer filed suit alleging the power company failed to conduct a reasonable investigation. 

The district court granted summary judgment in favor of the power company.  In doing so, the court held that the issue of whether an investigation is reasonable turns on whether the furnisher acquired sufficient evidence to support the conclusion that the information was true.  “A furnisher ‘need not do more than verify that the reported information is consistent with the information in its records’ for an investigation to be reasonable.  Moreover, “the scope of the furnisher’s investigation may be narrow if the plaintiff provides only ‘scant information’ regarding the nature of the dispute.”  Because the consumer failed to provide any information beyond stating that she told an employee of the power company that she did not owe on the account, the power company’s investigation was reasonable when it reviewed all the information in its possession and verified the consumer’s name, birthdate, social security number and the amount owed on the account.

Consumers should take note that the burden to effectively dispute a credit reporting lies with the consumer.   A reasonable investigation can only be based upon information in the possession of the credit furnisher at the time of the dispute.