On July 20, the U.S. Court of Appeals for the Tenth Circuit reversed a $500,000 jury verdict against a debt collection furnisher, holding that a consumer cannot prevail on a Fair Credit Reporting Act (FCRA) unreasonable investigation claim without first demonstrating that the disputed information was “objectively and readily verifiable” as inaccurate. In Ward v. National Credit Systems, Inc., the court joined the Second, Fourth, Fifth, and Eleventh Circuits in adopting this standard, resolving a previously open question in the Tenth Circuit and delivering an important victory for furnishers facing FCRA claims rooted in identity theft allegations.

Background

Robbin Ward’s daughter, LaQuencilla Green, used his personal information — including his driver’s license and social security card, neither of which Ward reported as stolen — to secure a residential lease in Texas in his name. After Green failed to pay rent and was evicted, the landlord obtained a default judgment against Ward and assigned collection of the debt to National Credit Systems, Inc. (NCS), which reported the delinquent account to various credit reporting agencies (CRAs).

When Ward learned of the debt while attempting to refinance his Colorado home, he filed disputes with the CRAs and NCS, submitting an Identity Theft Report and ID Theft Affidavit claiming he was a victim of identity theft by an unknown perpetrator. Notably, Ward’s affidavit acknowledged that his daughter worked at the location whose pay stubs were used to secure the lease and that he had previously given her his driver’s license for other purposes, yet he maintained that an unknown third party must have stolen both his and his daughter’s information to incur the debt.

After investigating, NCS did not identify an inaccuracy and verified its reporting. Ward sued NCS under FCRA § 1681s-2(b), alleging NCS failed to conduct a reasonable investigation of his dispute. The district court allowed the claim to proceed to trial, where a jury awarded Ward $500,000 in emotional distress damages.

On appeal, a unanimous panel of judges reversed the ruling, addressing two key questions of first impression in the Tenth Circuit.

Inaccuracy as a Prima Facie Element. The court first held that a consumer must establish actual inaccuracy as a threshold prima facie element of any unreasonable-investigation claim under § 1681s-2(b). It is not simply a question of fact for the jury. Because a furnisher is never required to alter accurate information, no unreasonable investigation could cause cognizable harm if the underlying information was correct. The court further held that when a furnisher challenges the sufficiency of the consumer’s showing of inaccuracy and no material factual disputes remain, the court, not the jury, must resolve the issue as a threshold legal determination.

The “Objectively and Readily Verifiable” Standard. The court then adopted the standard that reported information is actionably inaccurate under the FCRA “only if that information is objectively and readily verifiable” by the furnisher as containing a mistake or error. Disputes requiring complex fact-gathering, credibility determinations, quasi-discovery, or resolution of unsettled legal questions do not meet this standard.

Application to Ward’s Identity Theft Claim. Applying this standard, the court held that Ward’s identity theft dispute was not objectively and readily verifiable as inaccurate. All objective evidence available to NCS pointed toward Ward’s connection to the debt: genuine copies of his unreported driver’s license and social security card were used on the rental application, his correct address appeared on the application, and his daughter’s known employer was the source of the altered pay stubs. Whether Ward had authorized his daughter’s use of his information, or had subsequently chosen to protect her and conceal her fraud, was an unsettled factual and legal question that could not be resolved without credibility determinations and subjective assessments that furnishers are neither qualified nor obligated to undertake.

Our Take

Ward v. National Credit Systems is a consequential decision for furnishers operating in the Tenth Circuit and for the broader development of FCRA law nationally. By formally adopting the “objectively and readily verifiable” standard and holding that inaccuracy is a threshold legal question for the court rather than a factual question for the jury, the Tenth Circuit has provided furnishers with a meaningful tool to seek dismissal or judgment as a matter of law in FCRA cases where the consumer’s claimed inaccuracy rests on disputed, unverified, or inherently subjective allegations.