Northern District Says Notice to Furnisher of Consumer Dispute to Credit Reporting Agency Need Not Be Given by Means of Consumer Dispute Verification

In Drew v. Equifax, 2009 WL 595459 (N.D.Cal. 2009), Judge Illston held that a furnisher was on notice of a consumer dispute when the CRA merely sent a letter to the furnisher notifying the furnisher that it had deleted the customer’s trade-line because the account was fraudulent.   Judge Illston explained:

Chase contends that it is entitled to summary judgment on plaintiff’s § 1681s-2(b)(1)(A) claim because it never received notice from a CRA that plaintiff disputed the Chase or Bank One/First USA accounts, and therefore Chase’s duties under § 1681s-2(b)(1) were never triggered. The Court disagrees. TransUnion, a CRA, notified Chase by letter on January 22, 2004 that TransUnion had deleted the Chase account because TransUnion presumed it to be fraudu-lent.FN7See Perry Decl.  11; ex. D. On the same day, TransUnion sent a second letter to Chase with a simi-lar message about the Bank One/First USA ac-count.FN8Keating Decl., ex. A at CH 121. Thus, Chase received notice of a customer dispute for the purposes of § 1681s-2(b)(1).

 

FN7. At oral argument, Chase argued that the TransUnion letter does not constitute a “customer dispute notification.” The Court disagrees. In order for a CRA’s obligations under the FCRA to be triggered, the CRA must receive notice pursuant to 15 U.S.C. § 1681i(a)(2).See15 U.S.C. § 1681s-2(b)(1).Section 1681i(a) (2)(A) provides that once a CRA is notified by a consumer of a dispute about the accuracy of information in a credit report, the CRA “shall provide noti-fication of the dispute to any person who provided any item of information in dispute, at the address and in the manner established with the person. The notice shall include all relevant information regarding the dispute that the agency has received from the con-sumer or reseller.”The Court finds that January 22 letter from TransUnion to Chase stating that TransUnion had determined that the Chase account was fraudulent constitutes notification of a dispute within the meaning of § 1681i(a)(2).

Judge Illston also found a triable issue of fact with regard to whether the furnisher properly investigated the dispute:

Chase also contends that there is no triable issue as to whether its investigation of the dispute notice was reasonable. The Court disagrees.“[S]ummary judgment is generally an inappropriate way to decide questions of reasonableness because the jury’s unique competence in applying the ‘reasonable man’ standard is thought ordinarily to preclude summary judgment.” Gorman, 552 F.3d at 1019 (citation omit-ted). Here, in light of evidence that Chase continued to report and make inquiries about the fraudulent account, and that in October of 2005 Chase sent cor-respondence to plaintiff at the fraudster’s address, a rational factfinder could determine that Chase failed to conduct a reasonable investigation.