Fourth Circuit Expands Obligations of Data Furnishers Under the FCRA

Bradley reports that a recent decision by the US Court of Appeals for the Fourth Circuit, Roberts v. Carter-Young, Inc., has expanded the scope of responsibilities for data furnishers under the Fair Credit Reporting Act (FCRA).

“Data furnishers” are entities that provide information about consumers to consumer reporting agencies, i.e., credit bureaus.

The court ruled that such entities must investigate credit report disputes if the contested information is “objectively and readily verifiable,” regardless of whether the dispute centers on a legal or factual issue.

The decision aligns the Fourth Circuit with the Second and Eleventh Circuits, further shaping the legal landscape for FCRA obligations.

The case involved Shelby Roberts, a consumer who disputed a tradeline on her credit report involving a residential lease debt. After the debt was reported by the collection agency, Carter-Young, Roberts contested it with major credit reporting agencies.

Carter-Young only confirmed the debt with the landlord. Roberts sued, alleging an insufficient investigation under the Fair Credit Reporting Act. The district court dismissed her case as a legal dispute beyond the FCRA’s reach, but the Fourth Circuit reversed, emphasizing the need for a substantive review of verifiable information.

In its ruling, the Fourth Circuit established that data furnishers must investigate disputes if the underlying information can be verified objectively, even in cases involving legal interpretation.

The Court acknowledged that not all legal disputes fall within this remit, especially if the facts cannot be clearly validated. The case was remanded for further proceedings, leaving open the factual question of whether the debt was indeed verifiable.

According to Bradley, data furnishers operating under Fourth Circuit jurisdiction now have increased investigation responsibilities in tradeline disputes. Not only must they evaluate factual inaccuracies, but also legal disputes that rest on clear, verifiable data.

Lawyers should review their clients’ reinvestigation protocols and prepare for increased scrutiny in jurisdictions adopting this broader interpretation of furnisher liability under the FCRA.