The Court of Appeals for the Tenth Circuit has reversed a $500,000 jury verdict against a defendant in a Fair Credit Reporting Act case, ruling that a consumer must make a threshold showing that disputed information was objectively and readily verifiable as inaccurate before the reasonableness of a furnisher’s investigation ever comes into play.
The background: The dispute traces back to an apartment the plaintiff never lived in.
- The plaintiff’s daughter used his Social Security number and driver’s license to apply for a rental property in Texas in his name, submitting altered pay stubs from her own retail job and a fake Social Security income letter, both bearing his name.
- After the daughter fell behind on rent and was evicted, the landlord assigned the unpaid balance to the defendant, which reported the debt to the credit reporting agencies under the plaintiff’s name.
- The plaintiff said he first learned of the collection account when he tried to refinance the mortgage on his Colorado home.
- The plaintiff disputed the debt with the CRAs and the defendant, claiming he was the victim of identity theft by an unknown perpetrator, and submitted an FTC Identity Theft Report, copies of his ID, and documents showing he lived and worked in Colorado.
- In his affidavit, the plaintiff acknowledged the pay stubs on the application came from his daughter’s employer and that he had let her use his driver’s license in the past, but maintained that an unknown thief must have stolen their information.
- The defendant investigated for several months, found the driver’s license on the application matched the plaintiff’s and that the balance and identifying documents were correct, and continued reporting the debt.
- The plaintiff sued under the FCRA, alleging the defendant negligently failed to conduct a reasonable investigation of his dispute. A jury agreed and awarded him $500,000 for emotional distress. The defendant appealed after the trial court refused to overturn the verdict.
The ruling: The Appeals Court reversed and directed that judgment be entered for the defendant, holding the plaintiff never proved the reported information was actually inaccurate.
- Judge Timothy Tymkovich of the Court of Appeals for the Tenth Circuit, who wrote that inaccuracy is a required element of an unreasonable investigation claim, joining several other circuits, because if the information is accurate, then even the most deficient investigation could not have caused the consumer’s injury.
- To satisfy that element, the disputed information must be objectively and readily verifiable as containing a mistake or error. Disputes that require credibility determinations or the resolution of unsettled legal questions do not qualify.
- Here, every piece of objective evidence available to the defendant tied the plaintiff to the debt, including true copies of his driver’s license and Social Security card, his correct address, and his daughter’s phone number and job information. Confirming his innocence would have required the defendant to simply take him at his word.
- Even if the defendant had tracked down the daughter and she confessed to the fraud, Judge Tymkovich wrote, the accuracy of the information would still depend on her credibility, and subjectively assessing credibility “is something a furnisher is not qualified nor obligated to do.”
- The judge noted that identity theft disputes are not categorically unverifiable; a consumer who submits objective evidence disconnecting them from a debt may still meet the standard, and consumers in the plaintiff’s position can pursue the matter with law enforcement or seek a court declaration that the debt is not owed.
