Milgram v. Chase Bank USA, N.A.: Eleventh Circuit Holds Furnisher’s Investigation Was Reasonable, Despite Evidence That Plaintiff’s Employee Had Been Convicted For Incurring The Disputed Charges – Charges, Mortgages, Indemnities

Does a furnisher always have reach the “right” answer
when it investigates a consumer’s credit reporting dispute? Or
does the furnisher just have to engage in a “reasonable”
investigation of the dispute before responding? In Milgram v.
Chase Bank USA, N.A, _F.4th_, 2023 U.S. App. LEXIS 14299 (11th
Cir. 2023), the Eleventh Circuit affirmed entry of summary judgment
in favor of credit card issuer Chase Bank USA, N.A. on a claim
under section 1681s-2(b) of the Fair Credit Reporting Act. The
Milgram Court held the Bank had conducted a reasonable
investigation, even though it had been presented with evidence that
the disputed charges were incurred by an employee of the cardholder
who had been convicted of multiple felonies.

In Milgram, plaintiff’s employee opened a credit card
with Chase using plaintiff’s name, ran up tens of thousands of
dollars of charges, and then illegally accessed plaintiff’s
bank accounts to make payments in response to the monthly
statements. See Milgram, 2023 U.S. App. LEXIS 14299, at
*2. When plaintiff discovered the fraud, she reported it to Chase,
but Chase refused to treat the charges as illegitimate, concluding
that the consistent payments made from an account owned by
plaintiff reflected that the employee had “apparent
authority” to incur the charges. Id. at *3. The
district court granted summary judgment for Chase on
plaintiff’s FCRA claims, concluding that the Bank’s
investigating had been “reasonable” and the Eleventh
Circuit affirmed. Id.

The facts in Milgram seemed to weigh heavily in favor of
the consumer. Indeed, when plaintiff submitted her dispute in
November of 2018, her former employee had already plead guilty to
“seven counts of grand theft in the second and third degree,
criminal use of personal identification information, and defrauding
a financial institution” and had been sentenced to three years
in prison. Id. at *7. Plaintiff attached to her dispute a
Florida state court order which recognized that the employee had
fraudulently opened the Chase card and had transferred money to
make the payments without plaintiff’s permission. Id.
In response to the consumer’s dispute, Chase re-verified that
plaintiff was responsible for the charges. Id.

When ruling in favor of Chase, the Eleventh Circuit noted
“that consumers cannot sue furnishers [under the FCRA] for
providing inaccurate information – only for conducting unreasonable
investigations.” Id. at *12 (citations omitted). The
reasonableness of the investigation varies based upon the
circumstances, including the identity of the furnisher, the
information it has available to it and what steps the furnisher
takes to gather more information. Id. at *12-13. If the
furnisher verifies the information it has furnished, then the
“question of whether the furnisher behaved reasonably will
turn on whether the furnisher acquired sufficient evidence to
support the conclusion that the information was true.”
Id. at *13. A consumer cannot prevail on a claim under
section 1681s-(2)(b) unless she 1) proves the furnisher provided
inaccurate or incomplete information to a consumer reporting
agency, and 2) points out “some facts the furnisher could have
uncovered that establish that the reported information was, in
fact, inaccurate or incomplete.” Id.

Ultimately, the Eleventh Circuit concluded that Chase’s
investigation was reasonable, because plaintiff could not point to
any fact that would have undercut Chase’s determination that
plaintiff had vested her employee with apparent authority to use
the card. The Court observed: “We don’t think the criminal
judgment was relevant to Chase’s apparent-authority
determination. To be sure, Williams’s criminal judgment proved
that Williams lacked actual authority. But Milgram’s automatic
payments to pay off the card each month led Chase to conclude that
Williams had authority to incur those charges. That Williams
didn’t actually have that authority doesn’t undercut that
conclusion; it doesn’t go to apparent authority at all.”
Id. at *19.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.