Investigating disputes, especially in a situation where an individual is claiming to be the victim of identity theft, is important. A District Court judge in Minnesota has denied a defendant’s motion to dismiss after it was sued for violating the Fair Credit Reporting Act because it failed to investigate a dispute filed by the plaintiff, who had her identity stolen by the girlfriend of her brother in order to purchase a used car.
The background: Back in 2022, the plaintiff received a call from her brother, who was at a car dealership, requesting help with financing a vehicle purchase. Although the plaintiff agreed to review the necessary paperwork, she did not authorize any transaction. She did send some personal information, but stated she was not giving permission to process the financing until she saw all of the paperwork.
- Her brother and his girlfriend returned to the dealership a few days later and the girlfriend pretended to be the plaintiff. The pair proceeded to purchase a vehicle using the plaintiff’s personal information, which the girlfriend fraudulently provided. The girlfriend forged the plaintiff’s signature as a co-buyer to secure financing through the defendant
- The girlfriend made payments on the loan for about a year before defaulting, after which the defendant began contacting the plaintiff for repayment. Despite repeated attempts by the plaintiff to explain that she had not co-signed the loan and was the victim of identity theft, the defendant allegedly failed to investigate her claims.
- The plaintiff subsequently filed a dispute with credit reporting agencies, but the defendant continued reporting the debt as delinquent without verifying her claims or contacting the dealership to investigate the issue further.
The ruling: The plaintiff had alleged that the defendant violated Section 1681s-2(b) of the FCRA by failing to conduct a reasonable investigation into her dispute. The defendant argued that the allegations were not supported by specific facts. However, Judge Jeffrey M. Bryan of the District Court for the District of Minnesota found that the plaintiff had provided sufficient detail to support her claims, including evidence that she had alerted the defendant to the identity theft and that it had neglected to take reasonable steps to verify the information.
- Judge Bryan determined that the defendant had a duty to conduct a reasonable investigation when it was notified of the dispute by the credit reporting agencies. In this case, the defendant’s failure to contact the dealership or verify the identity of the individuals involved in the transaction raised plausible claims of non-compliance with the FCRA.
- Judge Bryan ruled that the plaintiff’s allegations were enough to proceed with the case, allowing her claim for damages to continue.
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