Fifth Circuit Affirms FCRA Limits: Credit Reporting Agencies Are Not Required To Resolve Fraud Claims

In a case of first impression, the Fifth Circuit in Reyes v. Equifax Information Systems, L.L.C., joined the First, Seventh, Ninth, and Tenth Circuits in affirming the District Court for the Eastern District of Texas’s decision that a consumer may not use the Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq. (FCRA) to “collaterally attack” the legal validity of a debt through an FCRA reinvestigation claim when the reported information was factually accurate. This decision highlights the high bar consumers face in challenging credit reporting agencies under the FCRA when a consumer’s dispute centers on legal liability rather than factual inaccuracy.

Background

In August 2019, plaintiff claimed she received “suspicious activity alerts” on her bank-issued credit card. She contacted the bank, which canceled the card and issued a replacement. The bank then transferred the outstanding balance, including more than $2,500 in separately disputed charges, to the new account. Plaintiff contended that her credit card was “skimmed,” in that unauthorized charges were made to her account despite her having possession of the card. She contested the charges; however, the bank maintained their validity. Plaintiff then filed a complaint with the Consumer Protection Bureau (CFPB) and ceased making any new payments toward her disputed credit card account.

In response, plaintiff’s bank reported an outstanding balance on her card to all of the major credit bureaus, including Equifax. Despite numerous dispute letters sent on behalf of plaintiff via her attorney, both Equifax and her bank maintained the validity of the charges. As a result, the notation on plaintiff’s credit report remained, and she alleged that she was denied a separate loan due to the “inaccuracies” on her credit report.

District Court Decision

Subsequently, plaintiff sued Equifax under, inter alia, 15 U.S.C. § 1681i and alleged that the credit reporting agency failed to conduct a reasonable reinvestigation of her dispute. The District Court for the Eastern District of Texas granted summary judgment in favor of Equifax, finding plaintiff had failed to present evidence of any factual inaccuracy in her credit file­—a threshold requirement for an FCRA claim under § 1681i. The district court further concluded that plaintiff’s decision to sue Equifax under FCRA was improper because Equifax’s obligations to plaintiff, a consumer, centered around its investigation of her consumer complaint and not as to the validity of her credit card debt. Plaintiff appealed the decision to the Fifth Circuit.

Fifth Circuit’s Analysis

The FCRA requires consumer reporting agencies to ensure accurate reporting and to reinvestigate consumer disputes regarding information in their files. Per circuit precedent, information is inaccurate if it is “patently incorrect” or “misleading in such a way and to such an extent that it can be expected to adversely affect credit decisions.”

Plaintiff argued the reported information was inaccurate because she did not incur the charges and, thus, was not legally liable for the debt. However, the court rejected this argument and aligned with the First, Seventh, and Tenth Circuits in holding that consumers cannot use § 1681i to dispute the legal validity of a debt. The courts reasoned that credit reporting agencies are not tribunals and are not equipped to adjudicate fraud claims or contract defenses. Their role is simply to report data provided by furnishers, not to resolve legal disputes between consumers and creditors. Accordingly, even if plaintiff’s claims had merit, the appropriate forum for resolution was with the bank or court, not through Equifax under FCRA.

The court also rejected plaintiff’s argument that Equifax should have deleted the tradeline because the account “could not be verified.” The court reasoned that “cannot be verified” under § 1681i(a)(5)(A) refers to factual disputes that defy objective confirmation, not legal questions. Accordingly, the court held that argumentative legal issues are not “objectively verifiable” within the meaning of FCRA. Further, the court found that the reported information on plaintiff’s credit report was factually accurate, as plaintiff neither disputed that the charges appeared on her account nor disputed the fact that she had failed to pay them. As such, the court held that Equifax had no obligation under FCRA to delete or amend its report.

Key Takeaway

This decision establishes Fifth Circuit precedent that the FCRA’s reinvestigation obligation applies only to factual inaccuracies, not to legal disputes over whether a consumer owes a debt. The ruling draws a bright line between legal and factual issues and reinforces the principle that furnishers, not credit bureaus, are responsible for resolving legal claims of fraud or contract breach. As more courts adopt this approach, the FCRA is increasingly viewed not as a vehicle to challenge debt enforceability, but exclusively as a tool to correct objectively false or misleading credit file information.

McGlinchey Summer Associate Carly Morris assisted with the writing of this article.