The 10th Circuit Court of Appeals has ruled in favor of a debt collection company and overturned a lower court’s jury verdict in Ward v. National Credit Systems, Inc. No. 25-1078 (D.C. No. 1:21-CV-02597-NYW-JPO) (D. Colo.). In the case, the daughter of Plaintiff-Appellee Ward used his personal information to secure a residential lease for herself in his name. Ward claimed she did so without his knowledge or permission. After Ward’s daughter failed to timely pay rent, the landlord evicted her and transferred collection of the outstanding debt to National Credit Systems, Inc. (NCS). As part of its collection process, NCS reported the delinquent debt—under Ward’s name—to various credit reporting agencies (CRAs) that in turn documented the debt on his credit report.
When he learned of this, Ward disputed the debt and claimed he was a victim of identity fraud by an unknown perpetrator. But after investigating Ward’s dispute, NCS determined it could not confirm his protestations, so it concluded the information was accurate and declined to correct its reporting. Ward then sued NCS under the Fair Credit Reporting Act (FCRA) alleging NCS failed to conduct a reasonable investigation of his dispute. The district court permitted Ward’s claim to proceed to trial, after which a jury found NCS liable and awarded Ward $500,000 for his emotional distress. NCS appealed from the district court’s denial of its post-trial motion challenging the judgment.
The appeal required the Court to determine whether a consumer must prove the disputed information was in fact inaccurate to succeed on an unreasonable investigation claim under the FCRA, and if so, what qualifies as an actionable inaccuracy.
The Court concluded that inaccuracy is a prima facie element of such a claim. And to establish that element, a consumer must demonstrate the disputed information was objectively and readily verifiable by the furnisher of the information, here NCS, as containing a mistake or error. Ward’s claim did not meet that standard because whether the information NCS furnished was in fact inaccurate depended on the veracity of Ward’s assertion of identity theft, which was not objectively verifiable, while the objective evidence that was readily available to NCS suggested that he was indeed connected to the debt.
Decision: The court reversed and vacated the district court’s judgment against NCS and remanded the case with direction to enter judgment for NCS on Ward’s unreasonable-investigation claim. Read the opinion.