The U.S. Court of Appeals for the Ninth Circuit held that where a company sent dispute letters to a credit reporting agency on behalf of a consumer, but the consumer did not identify the items to be disputed, review the letters, or otherwise play any role in preparing the letters, the letters did not come “directly” from the consumer, and the CRA was not required to conduct a reinvestigation under section 1681i of the federal Fair Credit Reporting Act (FCRA).

As a result, the Ninth Circuit held that the CRA did not violate section 1681i, and also did not act unreasonably and therefore did not violate section 1681e(b).

Accordingly, the Ninth Circuit affirmed the trial court’s order granting summary judgment in favor of the defendant CRA.

A copy of the opinion in Warner v. Experian Information Solutions, Inc. is available at: Link to Opinion.

A consumer hired a credit repair organization (“company”) to perform “credit repair services.” The company thereafter sent a letter to a credit reporting agency asserting that several items in the consumer’s credit file were inaccurate, and asking the CRA to conduct a reinvestigation to verify the items’ accuracy.

The consumer had no input on the preparation of the letter, and did not review the letter before it was sent.

After receiving the letter, the CRA sent a letter to the consumer stating that it had “received a suspicious request in the mail” and “determined that it was not sent by [the consumer].” The CRA further informed the consumer that it would “not be initiating any disputes based on the suspicious correspondence.” Finally, the CRA explained that the consumer could call the CRA or visit its website if he believed the information in his credit file was inaccurate or incomplete.

The consumer did neither. Instead, the company sent several more letters to the CRA on the consumer’s behalf. However, the consumer again had no input on the drafting of the letters, and did not review them before they were sent. The CRA did not initiate a reinvestigation after receiving the letters.

The consumer thereafter filed a complaint alleging that by failing to take action in response to the letters, the CRA supposedly violated two provisions of FCRA. Specifically, section 1681i, which requires consumer reporting agencies to reinvestigate disputed items, and section 1681e(b), which requires CRAs to use reasonable care in preparing consumer reports.

The CRA moved for summary judgment, and the trial court granted the motion ruling that section 1681i only required the CRA to reinvestigate disputes that came from the consumer directly. The trial court also determined that the agency did not violate section 1681e(b) because, in its view, that statute did not apply to reinvestigation procedures at all.

The matter was then appealed.

On appeal, the Ninth Circuit first analyzed the application of section 1681i, which provides in relevant part that CRAs must “conduct a reasonable reinvestigation” when an item in the consumer’s file “is disputed by the consumer and the consumer notifies the agency directly . . . of such dispute.”

The Ninth Circuit observed that the question therefore was “whether those letters came ‘directly’ from [the consumer].”

In concluding that they did not, the Court considered the “unambiguous meaning of the word ‘directly,’” which it noted is defined by Merriam-Webster’s Third New International Dictionary as “without any intervening agency or instrumentality or determining influence.”

Thus, the Ninth Circuit determined that “to notify a consumer reporting agency of a dispute ‘directly,’ a letter must come from the consumer and be sent to the agency.”

However, in this case the consumer “played almost no part in submitting the dispute letter to [the CRA].” Specifically, he “did not identify the items to be disputed,” and “did not review the letter [the company] drafted before it sent it to [the CRA].” Moreover, he testified that he had “absolutely no input” into the contents of the letter at all.

Under those facts, the Ninth Circuit held that “the letters did not come directly from [the consumer].” However, the Court cautioned that its “holding is limited to the facts before us,” and “[w]e only hold that, in this case, where [the consumer] played no role in preparing the letters and did not review them before they were sent, the letters sent by [the company] did not come directly from [the consumer].”

The Ninth Circuit therefore affirmed the ruling of the district court granting the CRA’s motion for summary judgment on the section 1681i claim.

The Court next reviewed the claim under section 1681e(b), which provides in relevant part that CRAs must “follow reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom [a consumer report] relates.”

The appellant argued that even if section 1681i did not require the agency to conduct a reinvestigation, its refusal to reinvestigate nevertheless violated section 1681e(b) because it was unreasonable.

The Ninth Circuit disagreed, stating that “it would make little sense to use Section 1681e(b) to impose liability on [the CRA] for conduct that satisfied Section 1681i,” because “Section 1681i represents Congress’s determination that a consumer reporting agency is only required to initiate a reinvestigation if a consumer notifies the agency of a dispute directly.”

Thus, “[i]t cannot be unreasonable for agencies to follow that guidance.” The Ninth Circuit therefore held that the agency “did not act unreasonably and, as a result, did not violate Section 1681e(b).”

Accordingly, the Ninth Circuit affirmed the trial court’s order granting summary judgment in favor of the CRA.