When you dispute an item on your credit report, the bureau forwards your dispute to the company that supplied the information — the "furnisher." What must the furnisher do then? In Johnson v. MBNA America Bank, N.A., 357 F.3d 426 (4th Cir. 2004), the Fourth Circuit gave the answer that still governs Maryland cases: conduct a reasonable investigation.
The facts
Linda Johnson disputed an MBNA credit-card debt, maintaining she had never been a co-obligor on the account — at most an authorized user on her ex-husband's card. When her dispute arrived, MBNA's agents did little more than glance at the name and address in their computer system and confirm the tradeline. No one pulled the original account application to check whether she had actually signed on as jointly liable.
The holding
MBNA argued § 1681s-2(b) required only a minimal review. The Fourth Circuit rejected that reading:
"Thus, the plain meaning of 'investigation' clearly requires some degree of careful inquiry by creditors."
And it announced the standard:
"We therefore hold that § 1681s-2(b)(1) 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 jury's $90,300 verdict for Ms. Johnson was affirmed.
Why it matters
Most furnishers process disputes through the automated e-OSCAR system in seconds — comparing the disputed data against the same file that generated the error, then reporting it "verified." Johnson is the reason that doesn't fly in this circuit. An investigation that ignores the underlying documents, the consumer's evidence, and the substance of the dispute is a jury question — and, under Safeco, potentially a willful violation carrying statutory and punitive damages.
If you disputed an account that isn't yours and got a form letter saying "verified," that letter may be the most valuable document in your case. Keep it, and have a Maryland FCRA lawyer review what the furnisher actually did.