Court Says Furnishers Face Reinvestigation Liability

The U.S. District Court for the Northern District of Illinois has ruled that consumers may sue those who furnish data to credit reporting agencies for failure to carry out their reinvestigation responsibilities under Section 623 of the FCRA. (Dornhecker v. Ameritech Corp., N.D. Ill., No. 00 C 26, 6/7/00). The judge ruled that while the FCRA does not specifically create such a liability, one could be implied from the way the law is written. The case involved telephone accounts that were fraudulently opened in some consumers names. When the subsequent debts were not paid, the phone company retained a collection firm to pursue the bad debts. The collector reported the adverse information to the credit reporting agencies and when the consumers found out about it they asked the credit reporting agencies for reinvestigation of the data as well as reported the fraud to the phone companies.

Two of the consumers sued the phone company, alleging it violated Section 623(b)(1) of the FCRA by failing to properly reinvestigate the disputed data. The phone company said it was only obligated to pursue a reinvestigation when contacted by the credit reporting agency. The consumers argued that furnishers duties under Section 623(b)(1) are indeed owed to consumers. They pointed out that Congress' exemption of furnishers from liability under subsection (a) implicitly made them liable under subsection (b). If Congress had meant to exempt furnishers from liability under subsection (b), it would have stated that fact as it did in subsection (a).

The court said it ruled as it did because it's apparent consumers are members of a class that the FCRA sought to protect and that legislative history shows an affirmative attempt by Congress to hold furnishers of information accountable if they continue to supply inaccurate data after they have been notified. It also backed its decision based on two cases that had been previously adjudicated.

The first involved a similar suit by a consumer over reinvestigation responsibilities under Section 623(b)(1). The court held that "there is no authority supporting the proposition that the FCRA does not create a private right of action". The court recognized that furnishers were exempt from civil liability from subsection (a), the FCRA did give consumers a cause of action against "persons" who are willful or negligent in complying with the Act.

The second citation concerned a case that set forth factors for determining if a private cause of action is implicit in a statute. Saying this case met all four factors, the court concluded that the consumers could file suit against furnishers of data for failing to comply with Section 623 (b)(1).