Fourth Circuit Rules on Furnisher’s Duty To Investigate Disputed Debt under the Fair Credit Reporting Act

On March 14, 2025, in a case of first impression, the U.S. Court of Appeals for the Fourth Circuit addressed the nature of a furnisher’s duty to investigate disputed information appearing in a consumer’s credit report under the Fair Credit Reporting Act (FCRA). The court held that a furnisher is obligated under FCRA to conduct a reasonable investigation of disputed information, whether the nature of the dispute is factual or legal in nature.

Financial institutions routinely report information on consumer credit accounts to consumer reporting agencies (CRAs). As such, they are subject to certain requirements under FCRA as “furnishers” of information. Of particular importance, a furnisher must conduct an investigation of information provided by the furnisher to CRAs upon notice from a CRA that the consumer has disputed the completeness or accuracy of such information. Under FCRA, a furnisher that willfully or negligently fails to investigate, reasonably, the accuracy or completeness of disputed information may be liable to the consumer if the information is incomplete or inaccurate.  

In Roberts v. Carter-Young, the plaintiff, Shelby Roberts, an apartment tenant, got into a dispute with her landlord over the termination of her lease. The landlord sent Roberts an invoice for damages to the apartment not covered by her security deposit. In particular, the landlord claimed the stove had to be replaced and certain repairs made to the apartment. Believing these claims to be fabricated in retaliation for issues surrounding the lease termination, Roberts refused to pay the invoice. In response, the landlord referred the invoice debt to a collection agency.

The collection agency reported the debt to CRAs, and, as a result, the debt went on Robert’s credit report. Upon discovering the debt on her credit report, Roberts disputed the debt with the CRAs. As required under FCRA, the CRAs then referred the dispute to the collection agency for investigation since the collection agency had furnished the debt information. In response, the collection agency contacted the landlord to “recertify” the validity of the debt, but did not take any other action to investigate the accuracy of the debt. The landlord recertified the debt with the collection agency and the debt remained on Robert’s credit report. Because of this negative credit report information, Roberts was unable to secure housing.

Roberts sued the collection agency in district court under FCRA, alleging the collection agency had failed to conduct a reasonable investigation of her dispute of the landlord’s charges. Roberts claimed the landlord never actually replaced the stove or made the repairs for which she was charged; rather, the landlord had imposed the charges in retaliation against Roberts for the unrelated termination dispute.

The district court dismissed Roberts’ claim, stating that the dispute was legal, not factual, and thus did not require an investigation under FCRA. However, the Fourth Circuit vacated the dismissal, ruling that both legal and factual disputes can form the basis of a claim under the FCRA, provided the alleged inaccuracy is objectively and readily verifiable. The Court remanded the case for further proceedings to determine if Roberts’ allegations met this standard. 

In establishing the standard a furnisher must meet, the Fourth Circuit ruled that a furnisher is responsible for determining inaccuracy in response to a consumer dispute under FCRA only if the information is “objectively and readily verifiable.” The court emphasized that disputes involving complex fact-gathering and in-depth legal analysis akin to those the courts would typically perform are not objectively and readily verifiable, nor are disputes involving unsettled questions of law or credibility determinations. But merely confirming an accurate transcription of a debtor’s name and the amount of the debt is insufficient, according to the court. A furnisher must investigate further when information is objectively and readily verifiable, such as by determining whether the debt has been paid or whether the debt was actually incurred.

Importantly, the court refused to rule that legal disputes categorically can never form the basis for a claim against a furnisher under FCRA for failing to conduct a reasonable investigation. Rather, the court held that both factual and legal disputes are subject to a furnisher’s obligation to reasonably investigate a dispute, and a furnisher can be liable for failing to identify an inaccuracy in either case that is objectively and readily verifiable by the furnisher. In the wake of this decision, financial institutions should ensure their procedures for handling consumer disputes of information reported to CRAs: (1) include a thorough review of information that is objectively and readily verifiable; and (2) document the actions taken in connection with such review.

Financial institutions with questions about ensuring adequate review and documentation of consumer disputes concerning information provided to CRAs are encouraged to contact a member of the Woods Rogers Financial Services Group.