Traywick's Legal Blog: Lessons from Owens v. American Express National Bank

What Happened

In the case of Owens v. American Express National Bank, the plaintiff, Ms. Owens, brought a lawsuit against American Express, alleging that the credit card company had reported inaccurate information to the three major credit bureaus—Equifax, Experian, and TransUnion—after she disputed a balance on her account. This balance, she claimed, was the result of identity theft. Ms. Owens argued that American Express failed to properly investigate her dispute, as required under the Fair Credit Reporting Act (FCRA), and that this failure caused her significant harm, including damage to her credit score and emotional distress.

The Core Facts

Ms. Owens discovered that someone had fraudulently opened an account in her name and accrued a substantial balance without her knowledge or consent. When the fraudulent charges appeared on her credit report, she promptly disputed the account with American Express and notified the credit bureaus. Under the FCRA, creditors like American Express are required to conduct a "reasonable investigation" when a consumer disputes information reported to the credit bureaus.

American Express responded to Ms. Owens's dispute by verifying the account and the balance as accurate, without providing detailed explanations or evidence to support its conclusion. Ms. Owens contended that the company did not perform an adequate investigation into her claims of identity theft. As a result, the inaccurate information continued to appear on her credit report, negatively affecting her ability to obtain credit and causing emotional distress.

The Legal Claims and Defenses

Ms. Owens filed her lawsuit under the FCRA, which provides consumers with the right to dispute inaccurate information on their credit reports and imposes a duty on creditors to investigate disputes. Specifically, she alleged violations of 15 U.S.C. § 1681s-2(b), which governs the responsibilities of furnishers of information (such as credit card companies) to investigate disputes forwarded by credit reporting agencies.

American Express, in its defense, argued that it had complied with its obligations under the FCRA. The company claimed that it had conducted a reasonable investigation and verified the accuracy of the information reported. It filed a motion for summary judgment, seeking to have the case dismissed on the grounds that no genuine issues of material fact existed and that it was entitled to judgment as a matter of law.

Procedural History

The case was heard in the United States District Court for the District of South Carolina. After reviewing the evidence presented, the court denied American Express’s motion for summary judgment. The judge found that there were genuine issues of material fact regarding whether American Express had conducted a reasonable investigation into Ms. Owens’s dispute. The court emphasized that under the FCRA, a reasonable investigation requires more than a cursory review and must be thorough enough to ensure the accuracy of the information reported.

Final Outcome and Notable Rulings

By denying summary judgment, the court allowed Ms. Owens’s case to proceed to trial. While the court did not make a final determination on whether American Express violated the FCRA, its ruling highlighted the importance of the reasonable investigation standard under the law. The decision serves as a reminder to creditors that they cannot simply rubber-stamp disputes; they must take meaningful steps to verify the accuracy of the information they report.

The case also underscores the challenges consumers face when disputing inaccurate credit information, particularly in instances of identity theft. Although the court did not issue a ruling on the merits, its decision to deny summary judgment signals that Ms. Owens presented sufficient evidence to raise questions about the adequacy of American Express’s investigation.

Our Take

The Legal Principles at Stake

The Fair Credit Reporting Act (FCRA) is a powerful tool for consumers who need to correct inaccurate information on their credit reports. Under 15 U.S.C. § 1681s-2(b), when a consumer disputes information with a credit bureau, the bureau is required to notify the creditor (or "furnisher") that provided the information. Furnishers, in turn, must conduct a reasonable investigation to determine whether the disputed information is accurate.

South Carolina courts, like the federal court in this case, have consistently held that creditors must do more than simply verify disputed information as correct. A reasonable investigation often requires reviewing underlying documentation, contacting the consumer, and taking steps to ensure the accuracy of the information. Failure to perform this investigation can result in liability under the FCRA, including damages for harm caused by the inaccurate information.

In cases of identity theft, creditors must be particularly vigilant. Identity theft often involves fraudulent activity that may not be immediately apparent from a cursory review of account records. A reasonable investigation in these cases may require the creditor to obtain additional evidence, such as police reports or identity theft affidavits, and to work closely with the consumer to resolve the dispute.

Practical Takeaways for South Carolina Residents

If you’re a South Carolina resident dealing with inaccurate credit reporting, here are some key points to keep in mind:

• Act Quickly: Dispute the inaccurate information as soon as you discover it. Notify both the credit bureaus and the creditor in writing, and keep copies of all correspondence.
• Provide Evidence: Include supporting documentation with your dispute, such as proof of identity theft, police reports, or account statements showing the error.
• Follow Up: Creditors and credit bureaus are required to investigate your dispute within specific timeframes, typically 30 to 45 days. If they fail to respond or resolve the issue, you may have grounds for legal action.
• Understand Your Rights: The FCRA provides consumers with the right to sue for damages if a creditor fails to conduct a reasonable investigation or knowingly reports inaccurate information.

Common Pitfalls and How a Lawyer Can Help

Unfortunately, many consumers face roadblocks when trying to correct inaccurate credit information. Creditors may dismiss disputes without conducting a proper investigation, or credit bureaus may fail to update reports even after errors are confirmed. In cases of identity theft, the process can be even more complicated, as fraudulent activity may involve multiple accounts and creditors.

Hiring an experienced attorney can make all the difference. A lawyer can help you:

• Draft and submit clear, compelling dispute letters to creditors and credit bureaus.
• Collect and present evidence to support your claims.
• Navigate the legal requirements of the FCRA and hold creditors accountable for failing to investigate disputes.
• File a lawsuit, if necessary, to recover damages for harm caused by inaccurate credit reporting.

South Carolina residents should also be aware of state-specific laws that may provide additional protections. For example, the South Carolina Identity Theft Protection Act imposes requirements on businesses to safeguard consumer information and respond to identity theft incidents. While these laws may not directly apply to credit reporting disputes, they can provide valuable tools for protecting your rights and resolving identity theft issues.

If you’re facing issues similar to those in Owens v. American Express National Bank, don’t wait to seek legal assistance. David Traywick at Traywick Law Offices in Charleston, SC, has extensive experience helping South Carolinians resolve credit reporting disputes, fight identity theft, and enforce their rights under the FCRA. Contact us today to discuss your case and find out how we can help.