Data furnishers do not have a legal obligation to report and investigate “frivolous or irrelevant” disputes. If you are a data furnisher, you need to know when a dispute is considered frivolous under the FCRA.
Per the FCRA, a dispute is frivolous if the consumer fails to provide “sufficient information” to aid in investigating the dispute. In Palouian v. FIA Card Services, a federal district court in Pennsylvania examined what is considered to be “sufficient information,” triggering a data furnisher’s liability to investigate a dispute.
The plaintiff in Palouian alleged that the dispute was a “bona fide legitimate dispute.” In support of the dispute, the plaintiff provided 3 letters addressed to the defendant stating that the plaintiff was disputing information on his credit report. The plaintiff also provided 2 letters from the defendant.
The defendant’s first letter asked the plaintiff to contact the defendant in order to investigate the dispute. The second letter stated that the matter was considered resolved because the plaintiff did not respond to the first letter.
The Palouian Court ruled that the dispute was not bona fide because the letters failed to support the Complaint’s “broad conclusory statements” and did not provide “sufficient information” to allow the defendant to investigate the dispute. The Court specifically noted that the letters proved the plaintiff failed to contact the defendant to address the dispute.
Are you responding to “frivolous or irrelevant” disputes? In light of cases like Palouian, data furnishers may want to review their business practices to see if they are wasting time, money, and resources on frivolous disputes.
Be careful: an incomplete investigation in response to a CDV may subject you to FCRA liability.
News and Resources
Don’t Waste Your Resources: No FCRA Claim for Frivolous Disputes
Posted on July 30, 2013
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