A district court in the Western District of Washington held that the Fair Credit Reporting Act (FCRA) does not require a consumer reporting agency (CRA), as part of its investigative duties, to issue an opinion on the legal validity of a consumer’s debt. Through its holding, the court denied the plaintiff’s motion for reconsideration and motion to amend her complaint ruling that its previous decision, granting judgment on the pleadings for the CRA, did not conflict with the Ninth Circuit’s decision in Gross v. CitiMortgage, Inc.
In Riser v. Central Portfolio Control, Inc., the plaintiff disputed the legal validity of a debt she incurred while insured by Medicaid. The plaintiff relied primarily on Gross, which generally addressed furnishers’ reporting duties and applied its reasoning to the reporting of a “past due” junior mortgage that was abolished by Arizona state law. The Ninth Circuit panel in Gross held that the reasonableness of the furnisher’s investigation was a genuine factual dispute and that furnishers could be required to address and resolve an issue of legal significance, like the legality of debt abolished by state law, in a consumer credit dispute because furnishers have familiarity and closer relationships with consumers.
In Riser, the plaintiff argued that the Gross decision supported her theory that a CRA can be held liable for failing to conduct a reasonable investigation of a consumer’s dispute even when the dispute involves documents of legal significance and resolving the issue would require the equivalent of a legal opinion or legal determination from the CRA. The district court found two flaws in the plaintiff’s argument. First, the court distinguished the plaintiff’s claims because Gross pertained to furnishers while the plaintiff’s case involved a CRA. Second, the court found that nothing in Gross superseded the Ninth Circuit’s decision in Carvalho v. Equifax Information Services, LLC, holding that CRAs are not required in their reinvestigation duties to provide legal opinions on the validity of debts.
In addressing the first flaw, the court explained that furnishers and CRAs have different investigatory obligations. Furnishers may be required to investigate, highlight, or resolve more extensive issues than CRAs because furnishers often are more directly involved with consumers. CRAs, on the other hand, often “are third parties that ‘lack[ ] any direct relationship with the consumer,’ so they must rely on the representations of the furnishers who usually own the debt.”
The court also found that even if CRAs were not categorically exempt from conducting investigations into legal disputes, for the reasonableness of an investigation to be evaluated, the plaintiff must first make a prima facie showing of an inaccuracy in the consumer report. The court reiterated that this requires the consumer to show that her report is “patently incorrect or materially misleading” so that a CRA would not need to undertake an unduly burdensome inquiry into the consumer’s legal defenses to identify the inaccuracy. Here, because the plaintiff’s dispute involved an ambiguous legal and factual area and the plaintiff argued she was not legally obligated to pay the debt, she failed to make the required showing. Therefore, the court was not obligated to consider the reasonableness of the CRA’s investigation.
The district court also denied the plaintiff’s motion to amend the complaint to reconcile it with Gross, holding that even with the sought-after amendment, the plaintiff failed to make the necessary prima facie showing of an inaccuracy.