What amounts to a reasonable investigation by a furnisher?

  • Blog
  • What amounts to a reasonable investigation by a furnisher?
Contact Us
1
2
3
22 Apr, 2024
6 min
1005
reasonable investigation

The reasonableness of the investigation depends on the circumstances of a case

See how a furnisher's investigation can be reasonable or not.

Back-and-forths in the form of disputes are not alien to the credit space. So, when a consumer disputes an alleged inaccuracy in their credit report, the relevant credit reporting agency will inform the furnisher.

The furnisher should then carry out a reasonable investigation into the dispute. This post dives into the case of Hauge v Amerihome Mortgage Company to uncover the concept of reasonable investigation.

Keep reading.

Experian Dispute Form: How to Correct Errors on Your Credit Report

If you've found errors on your Experian credit report, filling out an Experian dispute form is a crucial first step in correcting them. Our legal team can guide you through the dispute process and help you gather the evidence needed to support your claim. Don't hesitate to contact us for assistance with your Experian dispute form and any related credit report issues.

Facts of the case

In this case, the plaintiff made mortgage payments using a third-party online payment processor called Check Free. While for three consecutive months, the plaintiff entered the wrong account number, the payments still went through. However, in the fourth month, the payment was rejected due to the incorrect account number.

The payment was rejected for the same reason when the plaintiff attempted to pay by check. Consequently, the payment was recorded as a delinquent payment due to the delay.

The plaintiff, however, disputed the report of delinquent payment with the relevant credit reporting agencies, each of which proceeded to send a copy of the dispute letter and an Automated Consumer Dispute Verification to the furnisher.

The defendant’s investigator reviewed the plaintiff’s account and service notes stating the plaintiff’s calls and proceeded to verify the plaintiff’s loan transaction and mortgage history. After countless twists and turns, the plaintiff initiated an action against the defendant alleging that, amongst other things, the defendant failed to reasonably investigate his disputed information.

The verdict and lessons

The defendant moved for summary judgment on the ground that, amongst other things, its investigation was reasonable and accurate. However, the court rejected the argument.

Why so?

The Fair Credit Reporting Act creates an obligation for furnishers of information to provide accurate information to credit reporting agencies.

If a consumer notices a credit reporting error, he has the right to dispute the error with the relevant credit reporting agencies. Once the credit reporting agencies notify the furnisher of the dispute, the furnisher is obligated to investigate the disputed information.

The FCRA mandates the furnisher to conduct a reasonable investigation.

What amounts to the reasonableness of an investigation is dependent on the circumstances of the case, and attention must be paid to what the agencies’ notice of dispute revealed to the furnisher. But in essence, a reasonable investigation demands careful inquiry by the furnisher.

However, evidence indicates that the defendant only focused on the plaintiff’s payment history.

A furnisher of information, such as the defendant, should not focus only on just the consumer’s payment history. This is because other aspects of the consumer’s account can yield much-needed information about when a consumer made payments.

In fact, if the defendant had carefully inquired into other areas of the plaintiff’s account they would have instantly discovered that the plaintiff attempted to submit payments promptly as before, only for it to be rejected by the defendants.

Also, the defendant’s failure to inform the credit reporting agencies of the reason for rejecting the plaintiff’s payment further highlights the unreasonableness of the investigation.

Credit reporting errors are a menace, but they are not the only threats that consumers face. Consumers have to deal with indolent furnishers as we can see in this case. With that being said, sign up for any of our legal packages today for steady support whenever the need arises.

imageDaniel Cohen is the Founding Partner of Consumer Attorneys
About the lawyer
Daniel Cohen
See more post

Daniel Cohen is the Founder of Consumer Attorneys. Daniel manages the firm’s branding, marketing, client intake and business development efforts. Since 2017, he is a member of the National Association of Consumer Advocates and the National Consumer Law Center. Mr. Cohen is a nationally-recognized practitioner of consumer protection law. He has a we... Read more

Contact Us
INVESTIGATIVE ENGAGEMENT AGREEMENT

You, (“Client,” “you”), and Consumer Attorneys PLLC (“CA” or “we”), located at 72-47 139th street Flushing, NY 11367 (“CA”) , hereby enter into this limited scope retainer agreement whereby you agree to grant CA the exclusive authority to investigate your potential consumer law claim(s), including but not limited to potential violations of the Fair Credit Reporting Act (“FCRA”), Fair Debt Collection Practices Act (“FDCPA”), Equal Credit Opportunity Act (“ECOA”), Electronic Funds Transfer Act “EFTA”), Fair Credit Billing Act (“FCPA”), and/or the Telephone Consumer Protection Act (TCPA”) (collectively referenced as “consumer protection statutes”). 1Please read carefully before signing:

Authorization

You authorize CA to investigate your potential consumer law claim(s) under state and federal consumer protection statutes. You authorize CA to contact third parties on your behalf for the limited purpose of investigating your potential consumer law claims. “Third parties” include but are not limited to consumer reporting agencies, creditors, lenders, debt collectors, rental agencies, employers, courts, and law enforcement agencies.

CA’s Exclusive Investigative Period

CA agrees to investigate your potential consumer law claims in good faith. By signing this agreement, you agree to give CA the exclusive right to investigate your potential consumer law claim(s) for the next 180 days (“Exclusive Investigative Period”). For the duration of the Exclusive Investigative Period, you agree that you will not communicate with any other law firm or legal representative about your potential consumer law claim(s). You agree to forgo any previously scheduled consultation or case review until CA’s Exclusive Investigative Period concludes.

Termination of Exclusive Investigation Period

CA agrees that the Exclusive Investigative Period may not extend beyond 180 days without your prior written consent.

At any time between the date of this agreement and the expiration of CA’s Exclusive Investigative Period, CA may inform you of the outcome of its investigation. If CA’s investigation reveals that you have an actional consumer law claim, CA may ask you to sign a formal retainer agreement. If CA’s investigation does not reveal an actionable consumer law claim, you will receive an e-mail that states CA will not represent you in any further pursuit of your potential claim(s).

The relationship between you and CA automatically terminates at 5pm on the 180th day of the Exclusive Investigative Period or your receipt of CA’s written notice to decline representation, whichever comes sooner. At the conclusion of the Exclusive Investigative Period or upon receipt of CA’s written declination of representation, you are permitted to seek alternative legal counsel without penalty.

Nothing in this agreement should be construed as a promise or guarantee that CA will represent you in a consumer lawsuit at any point in time. CA reserves the right to decline to represent you for any reason permitted by relevant laws and ethical rules.

Your Involvement and Promises to us

You agree to meaningfully participate and cooperate in CA’s investigation of your potential consumer law claim(s). You agree to immediately inform CA if your mailing address, e-mail address, or phone number changes at any point during the Exclusive Investigative Period.
You agree to provide all relevant information, communications, documents, materials, and all other similar instruments to CA and its representatives during the Exclusive Investigative Period. You understand that your failure to provide all relevant information, communications, documents, and materials to CA during the Exclusive Investigative Period may hinder, delay or otherwise frustrate CA’s investigation of your potential consumer law claim(s).

You agree, under penalty of perjury, to provide complete, accurate, and truthful information to CA. All documents and communications, oral or written, past or future, provided to CA during the Exclusive Investigative Period and anytime thereafter are presumed by CA to be true, complete, and accurate.

Fees and Costs Incurred During Exclusive Investigative Period

CA agrees that you will not incur any out-of-pocket fees or costs during CA’s Exclusive Investigative Period. However, if CA agrees to represent you in a consumer lawsuit, CA may recover the fees and costs incurred during the Exclusive Investigative Period from the Defendant pursuant to a future settlement or judgment.

You agree that CA has a right to place a lien on any future monetary recovery obtained by client related to the claims identified during CA’s Exclusive Investigative Period or as a result of CA’s investigative efforts. If you refuse to cooperate with CA in the formal pursuit of the consumer law claim(s) it identifies during or after the Exclusive Investigative Period, you agree that CA has the right to recover the fees and costs it incurred while investigating your potential consumer law claim(s).

Authorization to Use Your Electronic Signature

CA will send you any and all documents that require your signature. You authorize CA to affix your electronic signature to requests, disclosures, or other forms that CA deems reasonably necessary to the investigation of your potential consumer law claim(s) upon receipt of your approval or after the 7th day after the document was sent to you, whichever comes first. Your electronic signature will be used on any and all other subsequent documents that will need signature, affirmation, acknowledgment, or any other forms of authentication in reference to this matter under the above referenced procedure.

1You also agree to give CA the exclusive authority to investigate potential violations of state-specific consumer protection statutes.

All Rights Reserved. Without Prejudice. CONSUMER ATTORNEYS

FORM # INV2024CA119

I have read and agree to the Privacy Policy, Investigative Retainer
Supported file formats:
Free Case Review
Zero Costs and Fees to You.
You pay nothing. The law makes them pay.
Get started
Contact Us
Head Office NY
68-29 Main Street, Flushing NY 11367
Our social media
Our rating services
TrustpilotGoogle Business