The Tenth Circuit: Consumers Must Prove Inaccuracy to Sustain an Unreasonable Investigation Claim Under the FCRA

In a world where access to credit is a cornerstone of financial stability, the need for fair and accurate credit reporting is of paramount importance. Since its inception in 1970, the Fair Credit Reporting Act (FCRA) has played a crucial role in protecting consumer privacy and upholding the integrity of the credit reporting system.

The FCRA provides consumers with specific rights when inaccurate personal credit information is shared with third parties. One key question has persisted in federal courts: whether consumers prove that the disputed information is inaccurate when bringing an unreasonable investigation claim under the FCRA.

In Ward v. National Credit Systems, Inc.¹, the Tenth Circuit clarified that consumers not only need to demonstrate inaccuracy but also must show that the disputed information is “objectively and reasonably verifiable.”² This ruling could serve as an important safeguard for furnishers and credit agencies in future cases, potentially raising the bar for consumer claims and shaping the landscape of credit reporting disputes.

In this case, plaintiff Ward’s daughter fraudulently used his personal and credit information to enter into a rental lease without his knowledge. After missed rental payments and his daughter’s eviction, a debt collection agency reported the debt to consumer reporting agencies (CRAs). Ward disputed the debt with the debt collector and claimed he was the victim of identity theft by an unknown perpetrator. After an investigation, NCS determined the report was accurate because Ward’s driver’s license matched the one included on the rental application.

Ward then sued the debt collector for failing to conduct a reasonable investigation, and a jury found in his favor, awarding him $500,000. Post-trial NCS moved for judgment as a matter of law, arguing that Ward’s dispute was not cognizable under the FCRA because it raised a legal dispute and “was not objectively and readily verifiable as inaccurate.”³ The district court denied the motion, and the debt collector appealed.

On appeal, a unanimous panel for the Tenth Circuit reversed the district court, holding not only that inaccuracy is a prima facie element of an unreasonable investigation claim, but also that the consumer must show that the disputed information is objectively and readily verifiable by the furnisher of the information. The court concluded that Ward’s claim did not meet that standard because whether the information the debt collector furnished was in fact inaccurate depended on the veracity of Ward’s assertion of identity theft.

The panel emphasized that “the entire focus of the [the Act’s] obligations on furnishers is to prevent inaccurate reporting.”⁴ The court reasoned that a furnisher’s obligation to correct disputed information only arises once information is deemed inaccurate or incomplete, which in turn requires the consumer to prove the inaccuracy or incompleteness as a “necessary predicate” for triggering this obligation.⁵ The court explained that “‘this order of proof makes sense: if there is no inaccuracy, then the reasonableness of the investigation is not in play’”.⁶

The court also discussed the standard for assessing inaccuracy under the FCRA. Relying on a contemporaneous dictionary definition of “accuracy” from when Congress enacted the FCRA, the court concluded that “determining accuracy is an objective inquiry.”⁷

Thus, the court aligned itself with the Second, Fourth, Fifth, and Eleventh Circuits when holding that, to establish inaccuracy, a consumer must demonstrate that the disputed information is “‘objectively and readily verifiable’ by the furnisher as containing a mistake or error.”⁸

Although the court declined to impose a bright-line rule defining what information is considered to be objectively and readily verifiable, it noted that unambiguous mistakes, such as factual errors, typos, or a clear application of law applied to facts, do rise to such a level. Conversely, “allegedly inaccurate information that stems from a dispute without a straightforward answer does not.”⁹

Ultimately, the court held that Ward’s claims relied on the veracity of his own assertions of identity theft. Because this information could not be objectively or readily verified by NCS, Ward’s claim failed to meet the required inaccuracy standard.

This decision strengthens the defenses available to furnishers and CRAs in FCRA-related claims. This decision underscores that the inaccuracy standard continues to serve as a fundamental threshold requirement.

Buchanan has a dedicated team of consumer defense attorneys that are closely monitoring the evolving credit reporting landscape and are actively exploring strategic ways to use these recent developments to better defend our clients’ interests in FCRA-related matters. Reach out if you have any questions about FCRA compliance or other consumer defense concerns.

This advisory was co-authored by Buchanan summer associate Francesca H. Capozzi.

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