What happens when you credit report information by mistake, follow the Fair Credit Reporting Act and fix it? One court finds that e-OSCAR worked and there was no liability ruling with a furnisher’s timely FCRA 30-day response.

That question was put to the test in Pulley v. Sterling Bancorp, a case involving a married couple that was approved for a COVID forbearance on their mortgage repayments. Despite being approved, the mortgage servicer creditor mistakenly reported the account as delinquent for the 3 months of the excused payments in 2020. The plaintiffs disputed the reporting with the credit bureaus. The furnisher investigated the dispute, recognized that the delinquent status was wrong and corrected the tradeline to remove the delinquency status. With the correction, the mortgage was shown as being paid as agreed.

Despite that the dispute process worked as designed, the story did not end there. Not satisfied in having their credit reports cleaned up, the Pulleys sued, alleging that the furnisher failed to conduct a “reasonable investigation” in violation of FCRA. The furnisher moved for summary judgment, arguing that the investigation into the dispute was reasonable because the inaccuracy was remedied within FCRA’s 30-day window, and the results of the investigation were timely provided to the consumers.

The good news is that the court granted the motion, recognizing that plaintiffs were trying to shoehorn a dispute about the original accuracy of the reporting from the start, for which there is no private right of action, into a claim for a failure to conduct a reasonable investigation, for which plaintiffs could seek damages.

The court then examined the actual investigation and found it reasonable as a matter of law: the investigation resulted in the removal of the delinquency status and deleted any reporting of a past due amount. Overall, there was no suggestion of a delinquency and instead that plaintiffs were “paying as agreed.” Based on these facts, the court concluded that it “is ‘beyond question’ that the defendant . . . conducted a reasonable investigation and timely provided updated results of said investigation to the credit bureaus via the e-OSCAR system.”

Though the court reached the right result, this case is just the latest of regulatory and litigation focus on all things credit reporting.

If you are worried about gaps with your furnishing tradelines, performing FCRA “reasonable investigations” for direct and indirect disputes, and using proper e-OSCAR dispute coding, we are here to help!

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