In Shap v. Capital One Financial Corp., 2012 WL 1080127 (E.D.Pa. 2012), Judge Rufe followed Saunders and Gorman to hold that a furnisher who fails, on re-investigation, to mark an account as ‘disputed’ can violate FCRA.
In Gorman v. Wolpoff & Abramson, LLP, the Ninth Circuit found the reasoning in Saunders persuasive, holding that a furnisher’s failure to report that a debt is disputed may give rise to a private cause of action under § 1681s–2(b).FN22 Gorman went a step further than Saunders, however; while Saunders “assume[d] without deciding that a furnisher incurs liability under § 1681–s2(b) only if it fails to report a meritorious dispute,” Gorman explicitly held that “[i]t is the failure to report a bona fide dispute, a dispute that could materially alter how the reported debt is understood, that gives rise to a furnisher’s liability under § 1681s–2(b).” Although the Third Circuit has not addressed when a furnisher’s failure to mark a debt as disputed subjects the furnisher to liability under § 1681s–2(b), it has adopted Saunders’s holding that “a consumer report that contains technically accurate information may be deemed ‘inaccurate’ if the statement is presented in such a way that it creates a misleading impression.” In Saunders, the consumer presented evidence at trial that CRAs do not consider the reporting of a dispute superfluous; “when a furnisher responds to a dispute verification form and relates an ongoing dispute, [the CRA] records the dispute in the credit report and does not include the derogatory information in assessing the credit score.” Applying the Third Circuit’s adoption of the Saunders definition of an inaccurate credit report to a circumstance in which a furnisher fails to report a debt as disputed, the Court finds that a furnisher’s “technically accurate” report of a delinquent debt may be misleading and negatively effect a consumer’s credit report if the furnisher fails to mark the debt as disputed. The Court qualifies this finding, however, as did the court in Gorman; the dispute submitted by the consumer to the furnisher must be bona fide to create furnisher liability under § 1681s–2(b). This holding is consistent with the holdings of those courts within this Circuit that have addressed the issue and is consistent with the purpose of the FCRA “to protect consumers from the transmission of inaccurate information about them, and to establish credit reporting practices that utilize accurate, relevant, and current information in a confidential and responsible manner.” [FN27. Van Veen v. Equifax Information, No. 10–1635, 2012 WL 556063, at *5 (E.D.Pa. Feb.14, 2012) (holding that “[A] furnisher may be held liable for failing to report a debt as disputed if the Plaintiff has lodged a bona fide dispute.”); Noel v. First Premier Bank, No. 12–50, 2012 WL 832992, at *8 (M.D.Pa. Mar.12, 2012) (“We conclude that Gorman’s determination that failing to report a meritless dispute does not give rise to a violation of § 1681 s–2(b) is consistent with the purpose of the FCRA and is supported by requirements concerning a consumer dispute in other sections of the Act.”). Moreover, this holding is consistent with other sections of the Act. Section 1681s–2(a)(3) expressly requires a furnisher to provide a CRA with notice that an account is disputed by the consumer; “[i]f the completeness or accuracy of any information furnished by any person to any consumer reporting agency is disputed to such person by a consumer.” Section 1681s–2(a)(8) provides that the duty to report disputes does not apply where the consumer’s dispute is “frivolous or irrelevant.” While a violation of this section does not give rise to private right of action by a consumer, it evidences the intent of Congress to include information that an account is disputed within the category of information that a furnisher must report to ensure completeness and accuracy in a consumer’s credit report where the dispute submitted is bona fide.