FTC, CFPB Submit Amicus Brief Defending Consumers’ Ability to Dispute Inaccurate Items on Credit Reports

The Federal Trade Commission joined the Consumer Financial Protection Bureau (CFPB) in filing an amicus brief with the U.S. Court of Appeals for the Third Circuit in the case of Ingram v. Experian. The brief asks the appeals court to overturn a lower court’s decision that could create an exception to the Fair Credit Reporting Act (FCRA) allowing furnishers of credit information to decline to investigate when consumers dispute inaccurate information in certain circumstances. The brief argues that the holding could undercut a key protection provided by the FCRA that allows consumers to dispute and correct inaccurate information in their credit reports.

“The law gives consumers a right to dispute inaccurate information and have their claim investigated,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “The FTC-CFPB brief rejects the argument that there are circumstances when furnishers do not have to follow the law.”

The FCRA provides consumers with two avenues for disputing the accuracy of their credit information that furnishers provide to credit reporting agencies. Consumers can file a dispute directly with furnishers or file a dispute indirectly with the credit reporting agencies, which may refer the dispute to the furnishers.

The FTC and CFPB amicus brief relates to a case involving a request made by a consumer to a furnisher, Comcast Communications, to remove an account from his credit report that was listed as delinquent. The consumer reported to Comcast that he was the victim of identity theft and did not open the account. Comcast rejected this claim after it said the consumer failed to submit proof of his identity theft and later referred the matter to a debt collector. The consumer later made what is considered an indirect dispute by disputing the delinquent account with the credit reporting agency Experian, which sent the dispute to the debt collector, as the furnisher of the inaccurate information.

In response to litigation from the consumer, the lower court ruled in favor of the debt collector, saying that the furnisher is only obligated to investigate “bona fide” indirect disputes and may therefore decline to investigate any dispute it deems frivolous. The FTC and CFPB, however, say that the lower court erred, arguing in their brief that:

• Furnishers are Required to Investigate: The brief argues that there is nothing in the text of the FCRA that suggests that a furnisher can choose not to investigate indirect disputes if it deems them to be not “bona fide.” The statutory text is unambiguous: furnishers must investigate all indirect disputes, according to the brief.

• Consumers Would Be Left in the Dark: Under the FCRA, consumers are entitled to be notified about the outcome of their disputes and must be given an opportunity to address any problems with their dispute claims. The district court’s ruling would circumvent those requirements, leaving consumers in the dark and undercutting a central remedy under the FCRA that ensures consumers are able to dispute and correct inaccurate information on their credit reports.

• Exception is Unnecessary: The exception created by the lower court’s decision is unnecessary because furnishers are already protected in other ways from having to investigate a frivolous dispute. For example, the FCRA requires credit reporting agencies to determine if a dispute is frivolous before forwarding a dispute to the furnisher.

The Commission voted 5-0 to file the amicus brief with the CFPB.