Johnson v. MBNA Am.Bank, NA, 357 F.3d 426 (4th Cir. 2004)
This case involved Linda Johnson, who sued MBNA for violations of the Fair Credit Reporting Act for failing to conduct a reasonable investigation of Johnson’s dispute concerning an MBNA account appearing on her credit report.
At issue was a Mastercard account opened in 1987. It is undisputed that Johnson’s ex-husband was one of the applicants. MBNA claims that Johnson was a co-applicant with her ex-husband (“Slater”) while Johnson maintains that she was merely an authorized user. Slater filed for bankruptcy and MBNA removed his name from the account. MBNA contacted Johnson and informed her that she was responsible for the $17,000.00 balance. After being informed of this, Johnson attempted to set up a reduced payment plan. She obtained her credit report from the three credit reporting agencies and filed disputes with each one.
The credit bureaus sent automated consumer dispute verification’s (ACDV’s) to MBNA, whose agents simply reviewed the account information contained in MBNA’s computerized Customer Information System (CIS), confirming the name and address on the account and noted a code on the account that indicated she was solely responsible, and notified the bureaus that MBNA had verified the disputed information and that it was correct.
The court noted that “it would make little sense to conclude that, in creating a system intended to give consumers a means to dispute – and, ultimately, correct – inaccurate information on their credit reports, Congress used the term “investigation” to include superficial, unreasonable inquiries by creditors. We therefore hold that (the FCRA) requires creditors, after receiving notice of a consumer dispute from a credit reporting agency, to conduct a reasonable investigation of their records to determine whether the disputed information can be verified.
The court discounted the fact that her name was on the billing statements and she attempted to set up a payment plan finding that a jury could have concluded that her name was on the statements in error and that she attempted to repay the obligation though she had no legal obligation to do so.
MBNA claimed that even if it had investigated that matter further, that would have been useless as they had a five-year document retention policy. However, the FCRA provides that if disputed information “cannot be verified, the consumer reporting agency shall promptly delete that item of information from the consumer’s file or modify that item of information, as appropriate, based on the results of the reinvestigation.