On August 19, the U.S. Court of Appeals for the Sixth Circuit reversed a District Court’s decision on the FCRA’s reasonable procedures and reasonable reinvestigation provisions. The 6th Circuit found that a consumer reporting agency’s (CRA) unilateral reliance on a state agency’s unpaid balance report, without reviewing a consumer’s submission of a court order abating that unpaid balance, did not meet the FCRA’s reasonable procedures or reasonable reinvestigation standards.

The plaintiff alleged that in mid-2021, following a divorce, a state agency recorded an unpaid spousal support balance in error. Plaintiff sought, and obtained, a court order abating that obligation. But, when the plaintiff attempted to refinance his student loan debt, a lender notified him that a CRA reported unpaid spousal support. Plaintiff obtained another court order, to the same effect, and filed three disputes with the CRA, including one attaching the court orders. The CRA, however, merely confirmed the unpaid spousal support obligation through an automated inquiry and did not remove the unpaid balance mark.

In response, plaintiff filed suit, alleging willful and negligent failure to (i) use reasonable procedures to assure consumer report accuracy, and (ii) reasonably reinvestigate the accuracy of the state agency reports. The District Court, on the CRA’s motion to dismiss, found as sufficient the CRA’s verification of the unpaid balance with the state agency. The FCRA requires CRAs to include in consumer reports “any” failure-to-pay information from state child support agencies.

However, the 6th Circuit found the CRA’s consumer report could be “materially misleading” based on the facts alleged, and therefore inaccurate. The CRA’s alleged failure to consider, and inquire into, the consumer-submitted court orders, and a reliance on automated verification processes, could fail the FCRA’s reasonableness standard. The 6th Circuit explained that the plaintiff raised a factual dispute — one the CRA was capable of resolving — and thus not a legal dispute — which the CRA would not be capable of resolving. In addition, the “unquestioned authenticity” of the court order warranted reliance. As such, the 6th Circuit reversed and remanded.