A judge in California has highlighted one of the issues when it comes to defending reasonable investigation claims under the Fair Credit Reporting Act — making that determination is for a jury to decide. The judge denied the plaintiffs’ motion for summary judgment and partially granted the defendant’s motion.
The background: The case stems from a dispute involving a lease agreement between the plaintiff and the defendant. The plaintiffs had leased a vehicle and, upon the lease’s termination, were charged a “disposition fee.” However, the plaintiffs disputed the charge, asserting that it was inaccurate and unfairly reported by the defendant, negatively impacting their credit.
- The dispute escalated when the defendant reported the charge-off of the disposition fee to the credit reporting agencies, which the plaintiffs claimed contributed to a significant drop in their credit scores. This decrease, the plaintiffs argued, hindered their ability to purchase a home, further exacerbating the issue.
- The plaintiffs initially filed the lawsuit under the California Consumer Reporting Agencies Act (CCRAA) and the FCRA. Specifically, they contended that the defendant had furnished inaccurate information regarding the charge-off, which ultimately affected their credit scores and their mortgage prospects.
- The defendant, on the other hand, argued that the reporting was accurate and that the charge-off was justified based on the terms of the lease agreement.
The ruling: As is the case with FCRA cases dealing with whether an investigation was reasonable or not, Judge Sheila K. Oberto of the District Court for the Eastern District of California ultimately ruled that the case could not be resolved on summary judgment because material issues of fact remained regarding whether the defendant’s reporting was inaccurate.
- Judge Oberto specifically noted that the question of whether the disposition fee was correctly reported or if it was subject to dispute was a matter for a jury to decide. In her view, a jury could reasonably interpret whether the defendant, as a furnisher of information to credit reporting agencies, acted in a manner that violated the requirements under the FCRA and the CCRAA.
- “A jury could find that, given all of the information in the ACDVs, [defendant] had a duty to do more than just confirm from its ‘system of record’ that Plaintiffs had not paid the Disposition Fee, but rather to determine whether they owed it in the first place,” the judge wrote. “On the other hand, a jury could side with [defendant] and find, for example, that its investigation was reasonable based on the ACDVs and that it had no obligation to contact unnamed dealerships to determine the meaning or veracity of the ‘lack of car inventory’ notation.
