In Ingram v. Experian Info. Sols., Inc., No. 21-2430, 2023 WL 6386517, at *1 (3d Cir. Oct. 2, 2023), the Court of Appeals held that furnishers are permitted to find that a direct dispute submitted by a consumer is frivolous, and consumer reporting agencies may find that an indirect dispute submitted by a consumer is frivolous, but the FCRA provides no such discretion to furnishers that receive an indirect dispute secondhand from a consumer reporting agency.

Appellant Stefan Ingram was simply trying to clear his credit report of an account that was falsely created in his name. The Fair Credit Reporting Act (“FCRA”) provides consumers two ways to accomplish this; the first is by filing a “direct” dispute with the entity that furnished the consumer reporting agency with the disputed information, referred to as “the furnisher.” The second is by filing an “indirect” dispute with the consumer reporting agency, which will then pass it to the furnisher for further investigation. Ingram pursued his claim through both avenues and, when these measures were unsuccessful, through the courts. On summary judgment, the District Court rejected Ingram’s claim that his indirect dispute was inadequately investigated by the furnisher in this case, after concluding that it had no duty to investigate because Ingram did not provide enough documentation to inform a “bona fide,” nonfrivolous dispute. R. at 15.
This appeal asks whether we may imply into the FCRA an exception allowing a furnisher discretion to refuse to investigate an indirect dispute it deems frivolous or irrelevant, as the District Court did. We hold today that such an exception is unsupported by the plain text of the statute; furnishers are permitted to find that a direct dispute submitted by a consumer is frivolous, and consumer reporting agencies may find that an indirect dispute submitted by a consumer is frivolous, but the FCRA provides no such discretion to furnishers that receive an indirect dispute secondhand from a consumer reporting agency.

The Court of Appeals explained

Meanwhile, Section 1681i of the FCRA governs the duties of consumer reporting agencies upon receipt of an indirect dispute from a consumer, like the one at issue here. Id. § 1681i. When a consumer notifies a consumer reporting agency that they dispute the accuracy or completeness of the information in their consumer file, the agency has two principal obligations. First, within five (5) days of receiving the dispute, the agency must provide notice of the dispute to the furnisher that provided the disputed information. Id. § 1681i(a)(2)(A). The notice to the furnisher must include “all relevant information regarding the dispute that the agency has received from the consumer.” Id. Second, within thirty (30) days of receiving the dispute, the agency “shall” conduct a “reasonable” investigation to determine whether the disputed information is inaccurate. Id. § 1681i(a)(1)(A). After completing the investigation, the consumer reporting agency is required, among other responsibilities, to delete any information that could not be verified from the consumer’s file and notify the consumer in writing of the results of the investigation. Id. § 1681i(a)(5)(A), (6).  As with furnishers investigating direct disputes, the FCRA explicitly allows a consumer reporting agency to “terminate” its investigation into an indirect dispute “if the agency reasonably determines that the dispute by the consumer is frivolous or irrelevant, including by reason of a failure by a consumer to provide sufficient information to investigate the disputed information.” Id. § 1681i(a)(3)(A). If the agency determines that a dispute is frivolous or irrelevant, it must notify the consumer, provide the reasons for the determination, and identify any information that is needed to investigate the dispute. Id. § 1681i(a)(3)(B)–(C).  After receiving notice of an indirect dispute from a consumer reporting agency, the furnisher has similar, though not identical duties. Within the same timeframe in which the consumer reporting agency must complete its investigation, id. § 1681s-2(b)(2), the furnisher “shall” also (1) investigate the disputed information, (2) review all relevant information provided by the consumer reporting agency, and (3) report the results of the investigation to the consumer reporting agency, id. § 1681s-2(b)(1). The furnisher’s investigation must be “reasonable.” Seamans, 744 F.3d at 864. If the furnisher finds the disputed information is incomplete or inaccurate, it must notify all other consumer reporting agencies to which it furnished the information, and modify, delete, or permanently block reporting of such information going forward. See 15 U.S.C. § 1681s-2(b)(1)(E). Here, in holding that Waypoint had no duty to investigate Ingram’s indirect dispute because Ingram failed to provide the additional information previously requested, the District Court cited provisions governing a furnisher’s rights and duties when treating a direct dispute in its analysis of how furnisher Waypoint treated Ingram’s indirect dispute. This was an error. Once Waypoint received Ingram’s indirect dispute from Experian, it had a duty to perform a reasonable investigation, regardless of (1) Ingram’s prior failures to comply with requests for additional information, or (2) the fact that Waypoint could have made such requests if it was investigating a direct dispute. As such, there remains a material question of fact as to the reasonableness of Waypoint’s investigation under the FCRA. For the reasons stated below, we will accordingly reverse the grant of summary judgment and remand for resolution of this factual dispute.

The Court of Appeals was not concerned with burdening furnishers with responding to frivolous, indirect disputes because the CRAs are obligated to act as a filtering mechanism.

Further, enforcing the FCRA according to its terms and requiring a furnisher to investigate an indirect dispute forwarded to it by a consumer reporting agency produces no unreasonable results. Bonkowski, 787 F.3d at 200 (“When the statute’s language is plain, the court’s obligation is to enforce the statute according to its terms, at least where the disposition is not absurd ….”). Furnishers may still protect themselves from inane direct disputes by performing a preliminary review for frivolousness. Further, the FCRA provides no cause of action to consumers challenging a furnisher’s failure to investigate under Section 1681s–2(a). 15 U.S.C. § 1681s–2(c); Seamans, 744 F.3d at 864. As to indirect disputes, Congress provided a “filtering mechanism” to protect furnishers from overexposure through consumer suits under Section 1681s–2(b) by setting up the consumer reporting agencies to receive indirect disputes and “allowing [the agencies] to terminate [their] investigation of disputed item if [they] ‘reasonably determine[ ] that the dispute by the consumer is frivolous or irrelevant.’ ” Nelson v. Chase Manhattan Mortg. Corp., 282 F.3d 1057, 1060 (9th Cir. 2002) (quoting 15 U.S.C. § 1681i(a)(3)).  As a further clarification, the FCRA’s statutory history puts any lingering questions to rest. Indeed, a glance at that history only further supports that this structure was intended to require that a furnisher receiving notice of an indirect dispute investigate, suspicions of frivolity aside. Originally enacted in 1970, the FCRA was amended in 1996 to add a new section describing the responsibilities of furnishers, in attempt to close a “gap in the FCRA’s coverage,” that had previously allowed furnishers to “irresponsibly” frustrate a consumer reporting agency’s efforts to verify inaccurate information, while still avoiding liability. S. Rep. No. 103–209, at 6 (1993); Consumer Credit Reporting Reform Act of 1996, Pub. L. No. 104–208, Subtitle D, ch. 1, § 2413, 110 Stat. 3009, 447–49 (1996) (codified as amended at 15 U.S.C. § 1681s–2). It would make little sense, considering this intended purpose of 15 U.S.C. § 1681s–2, to allow a furnisher to shirk its duty to act on an indirect dispute to which it was referred by a consumer reporting agency, in many cases after the agency has itself determined that the dispute is not frivolous.