If I went around falsely claiming that you owed someone money, without knowing any better, you could sue me for defaming you. But under the Fair Credit Reporting Act (“FCRA”), if I was telling the whole world through credit reporting agencies like Experian, Equifax and Trans Union, you would generally be unable to sue me for defamation. However, in exchange for that immunity from defamation cases, the FCRA imposes duties on credit reporting agencies and “furnishers” – those who claim to the credit reporting agencies that someone owes money. Specifically, if a consumer disputes an entry on their credit report, the credit reporting agencies and furnishers are required to conduct a reasonable investigation into whether the information being reported is accurate. For some tips on how to dispute inaccurate information on your credit report, click here.

For furnishers, the law is clear that an “investigation” under the FCRA means “[a] detailed inquiry or systematic examination” and “clearly requires some degree of careful inquiry.” Johnson v. MBNA Am. Bank, NA, 357 F.3d 426, 430-31 (4th Cir. 2004). After this investigation, the furnisher must delete, modify, or permanently block any information that is “found to be inaccurate or incomplete or cannot be verified.” 15 U.S.C. § 1681s-2(b) (emphasis added). 

So, a furnisher has to engage in a detailed or systemic examination of a dispute and, if the investigation result is that the alleged debt cannot be verified, the information must be removed. Remember, this doesn’t mean that the furnisher get the right answer every time, but it at least has to get enough information to believe it can verify that the debt is owed. Unfortunately, many furnishers massively fail to conduct this reasonable investigation and make no efforts to confirm that a debt can be verified before rejecting a dispute letter, which can be a very expensive mistake for them.

FMS Financial Solutions, Inc. is a debt collector that specializes in debts owed to apartment complexes. Defendant FMS’s business model is to work on a contingency; its exclusive way to make money collecting debts is by taking a percentage of what it collects on behalf of its clients. When my client saw that FMS was reporting an alleged debt