FACTA: CRA's Reinvestigation Must Be Reasonable

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FACTA: CRA's Reinvestigation Must Be Reasonable

Postby Administrator » Sun Oct 02, 2005 7:42 pm

[u:57c4b35bd6][b:57c4b35bd6]Agency’s reinvestigation must be “reasonable.”[/b:57c4b35bd6][/u:57c4b35bd6]

The FCRA’s agency reinvestigation provision has been revised to provide as follows:

Subject to subsection (f), if the completeness or accuracy of any item of information contained in a consumer's file at a consumer reporting agency is disputed by the consumer and the consumer notifies the agency directly, or indirectly through a reseller, of such dispute, the agency shall, free of charge, conduct a reasonable reinvestigation to determine whether the disputed information is inaccurate and record the current status of the disputed information, or delete the item from the file in accordance with paragraph (5), before the end of the 30-day period beginning on the date on which the agency receives the notice of the dispute from the consumer or reseller.

Accordingly, the FCRA now explicitly provides that the reinvestigation of information must be reasonable, a standard lower than that of §607's “reasonable procedures to assure maximum possible accuracy” which applies to the initial preparation of the consumer report. This seems like an improvement, but it raises questions about its effect on furnisher investigations under §623(b), a section of the FCRA which does not explicitly include the “reasonable” language.

Industry may argue that because Congress saw it necessary to put “reasonable” in regarding the agency’s investigation duty, it does not require that the investigation under §623(b) be reasonable. This argument should not work. The word “reasonable” is inserted here because of the addition of the words “whether the disputed information is accurate.” By adding these words, the statute without the word “reasonable” could be construed to create a strict liability standard that requires the agency to conclusively determine whether the information is accurate. Congress clearly did not want advocates to argue that it created a strict liability standard by the addition of what had to be determined (the accuracy), and thus the word “reasonable” is used to foreclose that possible strict liability argument. It is not used to modify the plain word “investigation” nor even to modify the term “investigate the accuracy of the disputed information” but is really being used to modify the requirement “to determine whether the disputed information is accurate.” This language, which by itself is susceptible of a strict liability reading, does not appear in §623(b) because it requires “an investigation with respect to the disputed information.” Consequently, §§ 623(b)’s language is not susceptible of a strict liability reading and does not need the word “reasonable.”

It appears that by adding this “reasonable” language in §623(a), Congress has sought to address positions taken by some furnishers that a reinvestigation only required an investigation into whether the consumer reporting agency was accurately reporting the information provided by the furnisher, rather than an investigation into whether the information itself was accurate. This new provision forecloses that argument entirely; the investigation has to be about the accuracy of the disputed information. The consumer reporting agency must act reasonably in making that investigation. Because the agency will contact the furnisher and then claim to “reasonably” rely on the furnisher, the furnisher’s investigation into the accuracy of the information must necessarily be reasonable. Otherwise, it is not reasonable to rely on an unreasonable or inadequate investigation. Consequently, because the furnisher’s duty is truly how the reasonable requirement of the agency’s investigation is implemented, both must be reasonable.

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