On July 20, the U.S. Court of Appeals for the 10th Circuit reversed a $500,000 jury verdict against a debt collector, holding that a consumer’s identity-theft dispute was not “objectively and readily verifiable,” and therefore not actionable under the FCRA’s reasonable-investigation requirement. The consumer originally sued the debt collector after it continued reporting a purportedly delinquent rental debt to credit reporting agencies despite his dispute claiming he was a victim of identity fraud, and a jury found the debt collector negligently failed to conduct a reasonable investigation, awarding the consumer $500,000 for emotional distress.

In reversing the lower court’s ruling, the 10th Circuit held that to prevail on an unreasonable-investigation claim, a consumer must first make a prima facie showing that the disputed information was in fact inaccurate, and that reported information is actionably inaccurate only if it is “objectively and readily verifiable” by the furnisher as containing a mistake or error, joining the 2nd, 4th, 5th and 11th Circuits in adopting that standard. The court noted it had not previously decided this inaccuracy standard, and it reasoned that proof of inaccuracy is a necessary predicate to establishing the FCRA’s but-for causation requirement, because an unreasonable investigation could not have caused a consumer’s claimed injury if the reported information was, in fact, accurate. The court noted that a consumer can alternatively satisfy this element by showing a furnisher’s report was so incomplete as to render the disputed information materially misleading, though the consumer here did not pursue that theory.

The court concluded the consumer’s claim did not meet that standard because whether the debt collector’s reporting was inaccurate depended on the veracity of the consumer’s assertion that he was an unknowing victim of his daughter’s fraud, a determination the court found required a subjective credibility assessment rather than an objective, readily verifiable fact. The court noted that the rental application at issue contained true copies of the consumer’s driver’s license and Social Security card, his correct address, and his daughter’s phone number and job information, and that this objective evidence pointed toward his connection to the debt through his daughter rather than definitively resolving the dispute. The court clarified that its holding does not mean claims of fraud or identity theft can never satisfy the objectively-and-readily-verifiable standard, noting a consumer whose dispute contains objective evidence showing no connection to the debt might still meet it. The court reversed and vacated the district court’s judgment and remanded with direction to enter judgment for the debt collector.