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How the Credit Bureaus are Suppose to Investigate Disputes

Last Updated December 14, 2009

The credit bureaus are SUPPOSED to conduct a reasonable investigation when a consumer makes a credit dispute by actually contacting the information furnisher such as a credit card company, collection agency or mortgage company to verify information. It's a total myth. All the credit bureaus do with disputes is submit the dispute through a computerized system known as eOscar. In most cases, the information furnisher is not contacted about the dispute.

The form that Equifax uses for its electronic disputes was posted on our discussion forums by a reader. We've included this form further down in the article,

Submitting disputes via eOscar is the procedure that Equifax sends out for EVERY investigation, not just some of them. TransUnion and Experian also use eOscar for all their credit disputes, written or otherwise.

Is this legal?
Case law has borne out that this method of investigation is not sufficient. In Cushman vs. Trans Union, Stevenson v. TRW (Experian), and Richardson vs. Fleet, Equifax, et al, the courts ruled each and every time that the CRA couldn't merely "parrot" information from the creditors and collection agencies. They must conduct an independent REASONABLE investigation to ensure the validity of the debt and the honesty/integrity of the creditor/CA in question. This is not regarded by the courts as a reasonable investigation.

This is all Equifax sends to the creditor/collection agent. (Click on the image to see the full size form.)

Please note that name/address/prev/SSN all appear TWICE on this form. In the left hand versions of those, the CRA (EQ in this instance) fills in the information they have on file. The check boxes are there for the CA's/Creditors to mark if their computers match that information. If it DOESN'T match that information, they fill in what their computers have on the right hand version and then check the box.

If the information is even CLOSE, the CRA will consider it "valid" and verify the debt--yes, even social security numbers and dates of birth. Addresses do not need to match AT ALL. Equifax will simply update their files with the address the CA/creditor provides if they fill in a different address, and THAT address, valid or not, will magically become your CURRENT address on your credit file (making it insanely difficult to get correspondence going with the CRA). As for the rest of the information? If 3 portions of the form are listed as "match"...your debt has just been verified. That's ALL these CRA's do in order to "ensure" that your financial future isn't jeopardized.

One thing to note in particular is the "Consumer states" box. This will often be the key piece of evidence in a "furnisher liability" cases.

Consider a hypothetical identity theft situation where a California resident sees trade lines from Florida on their report. The consumer writes 47 letters explaining that the charges were incurred in Florida while the consumer lives in California. Utility bills and drivers license are copied and sent to prove residence. The consumer even (cleverly) points out that charges were incurred in Florida at the same time as legitimate charges were incurred in California. The CRA reduces the consumer complaint to "not mine" and asks the creditor to verify.

In the above hypothesis, it would be difficult for the CRA to argue that its reinvestigation was reasonable if it did not forward all relevant information to the creditor but simply characterized the complaint as "not mine". Furnishers may try to defend a case saying they got inadequate info from the CRA. If you read the text of S2B, you'll see what I'm talking about. That is why it is a good idea to copy the furnisher on all disputes to the CRA (and include all proof sent to the CRA).

Another poster wrote about their experience with an electronic dispute method:

For more information on this and eOscar: Click Here.