Seventh Circuit Rules Data Furnisher Not Liable for CRA’s Inaccurate Interpretations

Seventh Circuit Rules Data Furnisher Not Liable for CRA’s Inaccurate Interpretations

July 31, 2023

The U.S. Court of Appeals for the Seventh Circuit recently issued a ruling that affirmed summary judgment. This affirmation affects a defending data furnisher in a lawsuit for allegedly violating the Fair Credit Reporting Act (FCRA). According to the Court, the data furnisher owed no liability due to the consumer reporting agency’s (CRA’s) misinterpretation of the allegedly “misleading data.”

The issues involve a mortgage the plaintiff obtained in 2007. According to the case, the plaintiff failed to make monthly payments starting in 2015. By 2016, her reports showed 90 days delinquent. The plaintiff attempted to resolve the delinquency by negotiating a short sale. This sale closed on January 14, 2016, settling the debt.

In 2019, the plaintiff realized the delinquency still appeared on her credit report and filed a dispute with a CRA. The agency forwarded the claim to the data furnisher via four automated consumer dispute verification (ACDV) forms. The data furnisher returned multiple ACDV responses while amending and verifying several contested points.

However, the CRA interpreted the modified data to mean the plaintiff had missed several mortgage payments. As such, the plaintiff’s subsequent application for a mortgage loan ended in a denial. This rejection resulted in the plaintiff filing separate lawsuits against the data furnisher and CRA.

The plaintiff claimed the data furnisher violated § 1681s-2(b) of the FCRA. Upon notice of a dispute, furnishers must run a reasonable investigation of the disputed data. They must then report the results to the CRA that forwarded the dispute. Should the information prove inaccurate, the furnishers must inform all the CRAs who received the incorrect information.

However, the district court granted summary judgment to the defending data furnisher. The court found that the furnished information did not materially mislead. According to the decision, the plaintiff failed to make a threshold that proved the information inaccurate or misleading. Furthermore, the court argued that the CRA could have interpreted the ACDV-furnished data correctly.

The plaintiff appealed this decision, and now the appeals court has affirmed the ruling for summary judgment. In its decision, the Seventh Circuit has joined multiple other circuits in finding that claims under § 1681s-2(b) require plaintiffs to establish as a threshold element that a furnisher of data provided inaccurate or incomplete information that was materially misleading or incorrect. 

According to the court, the accuracy or completeness of a furnisher’s ACDV response does not consider the accuracy of the CRA’s report. Instead, judgment concerns objective review. As a result, the Seventh Circuit held the district court’s decision as correct, affirming the ruling for summary judgment.

This case acts as a reminder of the importance of maintaining accuracy and providing due diligence. This reminder also applies to the accuracy of consumer reports related to employment. As such, employers should work with a trusted screening provider to ensure they receive accurate and complete information.

Remain up to date with the latest developments with JDP’s background checking expertise. Contact a sales rep today.


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