In Drew v. Equifax Information Services, LLC — F.3d —-, 2012 WL 3186110 (9th Cir. 2012), the Court of Appeals for the Ninth Circuit held that a furnisher could have violated its statutory duty under FCRA to block all reporting following its investigation of the consumer’s identity theft claim. A consumer had reported to a credit bureau that his identity had been stolen and that fraudulent accounts had been opened in his name at Chase and another credit card company. The Consumer Reporting Agency forwarded this information to Chase. The Court of Appeals found that the report of identity theft forwarded by the CRA to Chase was a sufficient notification of a dispute regarding information furnished by Chase to trigger Chase’s duty to investigate its account and take steps to correct inaccurate information. Though Chase conducted an adequate investigation, a jury could conclude that it violated its statutory duty to correct inaccurate information when, post-investigation, it continued to report the account as lost or stolen rather than blocking all reporting of the account, and when it also reported the identity thief’s address as plaintiff’s. The Court of Appeals described the case as follows:
This case lends credence to the old adage that bad things come in threes. Eric Drew is a cancer survivor, who required experimental leukemia treatment. During his treatment, Drew’s identity was stolen by a hospital worker. Finally, when Drew attempted to remedy the identity theft, the banks and credit rating agencies were allegedly uncooperative, and continued to report the fraudulently opened accounts, and in the case of one bank, the thief’s address was tagged as Drew’s. ¶ The district court granted summary judgment in favor of Chase Bank on Drew’s false-reporting claims under the Fair Credit Reporting Act, 15 U.S.C. § 1681s–2(b) (FCRA). Because issues of material fact remain as to Chase’s alleged violations of the FCRA, we reverse the judgment as to these claims. We also reverse the district court’s dismissal of similar claims against FIA Card Services (“FIA”) on statute of limitations grounds. We affirm the denial of Drew’s motion to amend to reinstate his claims under California law.
The Court of Appeals found the furnisher’s investigation adequate, but found that it failed to block further reporting of the item.
Chase’s investigation was legally sufficient under subparagraph (A). Drew had already spoken directly to Chase about the fraud in November 2003; Chase conducted an investigation and was already one step ahead of TransUnion by the time it received the fraud notification in January 2004. Chase’s investigation had in fact yielded the correct result—the bank concluded that the account was fraudulent and reported the fraud to the police. TransUnion’s report did not “indicat[e] … that the initial investigation lacked reliability or that new information was available to discover,” and therefore, Chase was under no duty to repeat its investigation. Gorman, 584 F.3d at 1160. Thus, Chase complied with its investigatory duties under subparagraph (A). ¶ The most thorough investigation means nothing, however, if the results of the investigation are not put to good use. Subparagraphs (D) and (E) of § 1681s–2(b)(1) required Chase to rectify past misre-porting and prevent future misreporting of information that is “incomplete” and “inaccurate.” Drew raises a material issue of fact as to whether reporting that the fraudulent account was lost or stolen constituted “incomplete” and “inaccurate” reporting in violation of subparagraphs (D) and (E).
The Court of Appeals followed its Gorman opinion in addressing the hearsay objection to the credit report, finding that it was not offered for the truth of the matter asserted.
The district court’s dismissal of Drew’s claim appears to flow largely from its exclusion as hearsay of a key piece of evidence, the Old Republic Report, which shows that Chase reported the item as Drew’s lost or stolen account. Without this report, there was scant evidence that Chase had engaged in misreporting. However, the court’s ruling was in error. ¶ In Gorman, MBNA Bank asserted that a credit report offered in support of plaintiff Gorman’s claim regarding the bank’s failure to report a dispute was hearsay. As we explained: Gorman does not rely on the credit reports for the truth of the matter asserted therein; in fact, as he notes, he disputes the truth of their contents. Instead, Gorman offers them to prove that no statement noticing the dispute was made. ‘If the significance of an offered statement lies solely in the fact that it was made … the statement is not hearsay.’ 584 F.3d at 1164 (quoting United States v. Dorsey, 418 F.3d 1038, 1044 (9th Cir.2005) (ellipsis in original)). Similarly here, Drew offers the report only to show that the “statement … was made” rather than for its truth. Like Gorman, Drew claims the report is inaccurate. Finally, even if the report were inadmissible, like the plaintiff in Gorman, Drew represents that “he had reviewed [the] … report[ ]” and discovered the disputed information; under Gorman, Drew’s “statement [itself] is admissible evidence” of the misreporting. Id. ¶ A jury may also conclude that reporting the identity thief’s address as Drew’s violated Chase’s duty under the statute to correct inaccurate reporting. Subparagraph (E) requires Chase to modify, block or delete any inaccurate “information.
The Court of Appeals also addressed the triggering of the statute of limitations, but, in doing so, included some guidance on the standards applicable to a furnisher’s re-investigation under Gorman.
As Gorman explains, an FCRA violation is tied to the reasonableness of an investigation rather than the accuracy of its results. In Gorman, over a furnisher’s objection, we held that upon receiving notice of a dispute from a CRA, a furnisher’s investigation must be “reasonable.” 584 F.3d at 1155–57. In so concluding, we did not hold the furnisher to an impossible standard that rendered it liable anytime its investigation did not reach the correct result. We recognized that factors beyond a furnisher’s control may doom the most conscientious investigation to an erroneous result: for example, we noted that in Gorman, a CRA had provided the furnisher with “scant information,” to carry out the investigation. Id. We therefore concluded that the furnisher’s inaccurate reporting after an investigation was not dispositive proof that its investigation was unreasonable, as de-spite reasonable efforts, it may not have been given sufficient information to reach the correct conclusion despite reasonable efforts. Id. at 1157. In short, “[a]n investigation is not necessarily unreasonable because it results in a substantive conclusion unfavorable to the consumer, even if that conclusion turns out to be inaccurate.” Id. at 1161. Thus, Gorman imposes fault, not for an investigation that produces incorrect results, but for an unreasonable investigation. ¶ Gorman’s approach, which favored the furnisher in that case, cuts against FIA here. Drew notes that he had no knowledge of what TransUnion relayed to FIA, or “even if the credit agency passed on the relevant information.” Even if the CRA had “passed on the relevant information,” Drew did not know what in-formation was available to the bank for its investiga-tion, and had no basis in June 2004 to judge whether the investigation was reasonable. In fact, the record falls short of showing even that Drew knew that FIA’s investigation had concluded. . . . However, this is not Drew’s argument: his point is simply that, because he believed that an investigation was ongoing, his claim did not accrue at least until he had reason to believe the investigation was over. . . . ¶ FIA fails to meet its burden to conclusively show that Drew knew or should have known of the deficiencies in FIA’s investigation before June 3, 2004. Because material factual disputes remain, the district court erred in barring Drew’s claim under the statute of limitations.