Essentially, a consumer has no rights under the Fair Credit Reporting Act (FCRA) unless he or she actually disputes an inaccurate credit report directly with the credit reporting agency.
A consumer sued a couple of creditors alleging they misreported her mortgage payments to Experian, Equifax, TransUnion, and Innovis, the four largest credit reporting agencies in the United States. Apparently, her monthly payments were due on the first of each month though she was paying her payments later in a month. Eventually, when her payments arrived at the mortgage company on the 31st of a month, the payments were already considered 30 days late. Her mortgage company reported her to the 4 credit reporting agencies as is standard practice.
After learning that her payments were deemed late, the consumer had an attorney write a dispute letter to her mortgage company claiming she was not late. She did not file the dispute directly with the credit reporting agencies. Neither the mortgage company nor its parent company addressed the negative reporting to her satisfaction.
The consumer filed a federal lawsuit in New Jersey alleging violations of the FCRA. She also wanted a temporary restraining order that sought to prevent the mortgage company from continuing to report her mortgage payments late while the court decided the overall merits of her lawsuit.
After several motions were filed, the lower court concluded that a consumer looking to sue a creditor under the FCRA must first lodge her dispute directly with the credit reporting agencies. The court ruled against her. Although the district court joined a chorus of other courts also requiring consumers to dispute directly with the credit reporting agencies, she nevertheless appealed.
The appeals court agreed with the lower court and held that the FRCA requires a reasonable investigations into disputes only when the consumer directly advises a credit reporting agency of a dispute. A creditor can only be sued if it receives a dispute directly from a credit reporting agency and not the consumer. A dispute filed only with the creditor will not allow a consumer to sue the creditor.
Simmsparris v Countrywide Financial Corp., 652 F.3d 355 (3d Cir. 2011).