A Gordon Rees Scully Mansukhani multi-office team led by Philadelphia partner Andrew Schwartz secured a significant win with the court setting a standard for reasonable investigations in instances of alleged identity theft under the Fair Credit Reporting Act ("FCRA") in Shipley v. Equifax Info. Servs., LLC, No. 1:20-cv-4295-JPB (N.D. Ga. Jan. 25, 2022).
A thief stole Ms. Shipley’s identity and rented an apartment in Georgia. Fair Collections & Outsourcing (“FCO”) was tasked with collecting the unpaid rent. The collection odyssey began in 2018, with a call to Ms. Shipley. During this call, Ms. Shipley claimed that she was a victim of identity theft and that she possessed proof that the subject debt arose from identity theft. She agreed to send this proof to FCO, but she did not follow through. The pattern continued over the years, FCO contacting Ms. Shipley, Ms. Shipley claiming she was a victim of identity theft and that she had proof. Ms. Shipley deciding not to follow through.
In 2020, Ms. Shipley sent a dispute letter to Equifax claiming she was a victim of identity theft. FCO received notice of the dispute from Equifax, triggering an obligation on FCO, the furnisher, to conduct a reasonable investigation of the alleged identity theft.
What did FCO do? It reviewed the dispute letter Ms. Shipley provided to Equifax. It reviewed the dispute information from Equifax – in the form of an Automated Credit Dispute Verification (“ACDV”), an automated dispute form that is initiated by a credit reporting agency ("CRA") on behalf of a consumer and routed to the appropriate furnisher for review and update or verification. It reviewed the records from the creditor – the lease, the ledger, and the move out statement and it contacted the creditor.
At each stage in FCO’s investigation, the personal identifying information matched (this being true identity theft, such a match is not surprising). FCO contacted Ms. Shipley and provided her with a fraud affidavit. Ms. Shipley elected not to respond to the fraud affidavit. Thereafter, FCO completed its investigation and verified the debt to Equifax as belonging to Ms. Shipley. Ms. Shipley finally responded by suing FCO for alleged violations of the FCRA.
After wrapping up discovery, FCO filed a motion for summary judgment, asserting that no reasonable finder-of-fact could find that FCO’s investigation was anything other than reasonable and in compliance with the FCRA. As most plaintiffs are wont to do, Ms. Shipley strenuously opposed the motion, claiming that FCO could have done more in its investigation (handwriting analysis, driver’s license verification, and the like).
On October 29, 2021, the Magistrate Judge issued a Report and Recommendation in favor of FCO. Ms. Shipley objected, but the District Judge overruled the objections, holding that it is not what additional investigation could have been done by FCO, but whether the investigation FCO undertook was reasonable. And it was. And FCO won.
In so ruling, the court set a standard for reasonable investigations in instances of alleged identity theft under the FCRA. If a furnisher received an identity theft dispute, and it reviews the dispute and documents accompanying the dispute, if it reviews its records and the records of the creditor, if it confirms the personal identifying information with the creditor and, also issues a fraud affidavit, the investigation is a reasonable investigation under Section 1681s-2(b) of the FCRA.
This was a rock solid win on a significant and hotly contested issue in consumer law. With the invaluable assistance of Jasmine Peele and Leslie Eason, in our Atlanta office and Matt Johnson, in our Philadelphia office, and the support of FCO and its insurance carrier, Great American, the firm was able to score a significant victory for FCO and for the collection industry.