FAIR CREDIT REPORTING ACT
Holden v. Holiday Inn Club Vacations Inc.
Date: April 24, 2024
Issue: Whether the Fair Credit Reporting Act (FCRA) requires furnishers to investigate and resolve legal disputes.
Case Summary: In a 3-0 decision, an Eleventh Circuit Panel affirmed a district court’s dismissal holding alleged inaccurate information must be “objectively and readily verifiable” to support a Fair Credit Reporting Act (FCRA) claim.
Tanethia Holden sued Holiday Inn Club Vacations for allegedly reporting inaccurate information to Experian, failing to conduct an appropriate investigation, and failing to correct inaccuracies. Mark Mayer also sued Holiday Inn, claiming it violated the FCRA when it verified the accuracy of the information in his credit report. In both cases, the district court granted Holiday Inn summary judgment, holding disagreements over whether Holden and Mayer owed a debt is a legal dispute, rather than an “inaccuracy” under the FCRA. Holden and Mayer appealed the decisions, and the Eleventh Circuit consolidated the cases. The plaintiffs argued the FCRA imposes a duty on furnishers to ensure all information reported to credit reporting agencies is accurate and complete—whether characterized as “legal” or “factual.”
The Consumer Financial Protection Bureau (CFPB) filed an amicus brief urging the Eleventh Circuit to reverse the district court’s decision. The CFPB argued the FCRA requires furnishers to investigate reasonable disputes, even if the inaccuracy is a legal dispute. The CFPB asserted the FCRA does not categorically exempt legal issues from the investigations furnishers must conduct. The bureau also emphasized the distinction between legal and factual issues is ambiguous and potentially unworkable. In response, the American Bankers Association filed a coalition amicus brief urging the Eleventh Circuit to reject the CFPB’s attempt to expand the FCRA’s obligations to require consumer reporting agencies (CRAs) and furnishers to resolve legal disputes. ABA argued the FCRA addresses factual inaccuracies, not legal disputes, and the CFPB’s contrary approach is unworkable and inefficient.
In affirming the district court, the Eleventh Circuit panel first examined how the FCRA operates. According to the panel, the FCRA imposes two duties on furnishers. A furnisher has a duty not to furnish information about a consumer to a reporting agency if the furnisher knows or has reasonable cause to believe the information is inaccurate. A furnisher must also act once notified a consumer disputes the accuracy or completeness of their furnished information. When notified of a dispute, the furnisher must: investigate disputed information; review all relevant information provided by the CRA; and report the results of the investigation to the CRA.
Next, the panel determined plaintiffs’ FCRA claims were not actionable because the alleged inaccuracies were not objectively and readily verifiable. The panel opined Holden and Mayer could not prevail because they could not identify inaccurate or incomplete information Holiday Inn provided to the CRAs. The panel explained a report must be factually incorrect or objectively likely to mislead its intended user to violate the FCRA. According to the panel, Holden and Mayer’s allegedly inaccurate information stemmed from a contractual dispute rather than a straightforward factual inaccuracy.
The panel also discussed whether furnishers must investigate legal disputes such as whether debts are due and collectible. The panel noted some circuits have reasoned the furnisher of credit information is better positioned to thoroughly investigate a disputed debt instead of a CRA. The panel concluded the FCRA sometimes requires furnishers to investigate and even resolve questions of legal significance. But here, the panel concluded Holiday Inn sufficiently assessed Holden and Mayer’s debts. The panel noted its decision did not mean furnishers are never required by the FCRA to accurately report information derived from the readily verifiable and straightforward application of law to facts.
Bottom Line: The panel declined to impose a bright-line rule declaring only purely factual or transcription errors are actionable under the FCRA.
Documents: Opinion
