- Fact Issues Regarding Credit Data Furnisher's Investigation Precluded Summary Judgment in FCRA Case
- March 10, 2009 | Author: Marc Kirkland
- Law Firm: Strasburger & Price, LLP - Frisco Office
Ferrarelli v. Federated Fin. Corp. of America, 2009 U.S. Dist. LEXIS 7286 (S.D. OhioFeb. 2, 2009)
Facts: Plaintiff’s credit card account with Advanta was sold to Federated. Plaintiff disputed the account with a CRA, claiming it was fraudulently opened in his name, and also mailed a copy of the dispute letter to Federated. Plaintiff enclosed a fraud affidavit and a police report. Federated verified the account to the CRA as being accurate. Plaintiff sued Federated claiming negligent and willful violations of the FCRA based on furnisher’s alleged failure to conduct a reasonable investigation under § 1681s-2(b). Federated moved for summary judgment and the Court denied the motion.
- Furnisher Investigation. Section 1681s-2(b) of the FCRA provides a private right of action by a consumer against a data furnisher. The Court rejected the minority position, which had been adopted by the Northern District of Ohio, that § 1681s-2(b) only provides a private cause of action against CRAs.
- Furnisher Investigation. A furnisher has no responsibility to investigate a dispute until it receives notice of a dispute from a CRA. The duties described in § 1681s-2(b) are not triggered by receipt of a notice received directly from a consumer.
- Furnisher Investigation. One measure of the reasonableness of an investigation is to compare prevailing industry standards against those standards used by the furnisher in conducting its investigation. Another factor to consider is the cost of verifying the accuracy of the source versus the possible harm of reporting inaccurate information. The determination of the reasonableness of the furnisher’s procedures cannot be resolved on summary judgment unless the reasonableness of the procedures is beyond question.
- Furnisher Investigation. The Court found that there was a fact issue as to whether Defendant acted reasonably based on the following facts: 1) Defendant gave little weight to the fraud affidavit and police report during its investigation, 2) Defendant employed only one dispute investigator, 3) Defendant verified the account even though Defendant’s employee was unable to match Plaintiff’s address, date of birth, or phone number, and 4) Defendant provided its employee only on-the-job training.
- Willfulness. Because the Defendant failed to follow up on or clarify the information contained in the affidavit and police report and seemed to disregard the content of those documents during its investigation the Court found that there was a genuine issue of material fact as to whether Defendant willfully violated § 1681s-2(b).
- Damages. To prevail on an FCRA claim, a plaintiff must prove that the defendant's violation caused his injury. A plaintiff must prove that the inaccurate entry was a "substantial factor in bringing about" the denial of credit, but need not eliminate the possibility that correct adverse entries or any other factors also entered into the decision to deny credit. In some instances the inaccurate entry and another factor may each, considered separately, be insufficient to cause the denial of credit but when taken together are sufficient. Each may then be considered a substantial factor in bringing about the denial of credit and, therefore, a cause of plaintiff's injury. In this case, Plaintiff need not show that Federated's failure to investigate was the sole cause of his injury, only that it was a substantial factor in causing his damages.
- Damages. Because the only adverse information on Plaintiff’s credit file was the fraudulent accounts, one of which was the Federated/Advanta account, the Court found that a genuine issue of material fact existed as to whether Defendant’s failure caused Plaintiff damage.
- Damages. No violation can occur and no liability can attach under § 1681s-2(b) until after the expiration of the 30-day period in which the furnisher is to conduct its reasonable investigation. The Court limited Plaintiff’s damages to those which arose after the expiration of the 30-day investigation period.
- Mental Anguish. Evidence in the form of Plaintiff’s testimony and independent medical evidence is enough to establish damages for emotional distress.