## Facts

- An MBNA MasterCard account was opened in November 1987; the parties disputed whether Linda Johnson was a co-applicant/co-obligor or only an authorized user.
- One undisputed applicant was Edward N. Slater, whom Johnson married in 1991.
- After Slater filed bankruptcy in December 2000, MBNA removed Slater from the account and told Johnson she was responsible for an approximate $17,000 balance.
- Johnson disputed the MBNA tradeline with Experian, Equifax, and Trans Union.
- The CRAs sent MBNA Automated Consumer Dispute Verification (ACDV) forms; Experian and Trans Union relayed that Johnson claimed the account belonged only to her husband and that she was never a signer but an authorized user.
- MBNA employees responded by checking only MBNA’s Customer Information System (CIS) summary data and reporting the account information “verified” as accurate.
- The CRAs continued reporting the account, and Johnson sued MBNA under the Fair Credit Reporting Act (FCRA), alleging MBNA failed to conduct a reasonable investigation after receiving CRA notice of the dispute.
- A jury found MBNA negligently failed to comply with FCRA duties and awarded Johnson $90,300 in actual damages; the district court denied MBNA’s renewed motion for judgment as a matter of law and rejected MBNA’s challenges to the jury instructions.

## Issues

1. Whether “conduct an investigation” under 15 U.S.C. § 1681s-2(b)(1) requires a reasonable investigation by a furnisher after receiving dispute notice from a CRA.
2. Whether the evidence permitted a reasonable jury to find MBNA’s investigation unreasonable and negligent under the FCRA.
3. Whether the district court’s jury instructions misstated the law governing a furnisher’s duties under § 1681s-2(b)(1).

## Decision

- The Fourth Circuit affirmed the judgment for Johnson.
- The court held that § 1681s-2(b)(1) imposes a reasonableness requirement; an “investigation” must be more than a perfunctory confirmation of existing internal data.
- The court held the trial evidence supported the jury’s finding that MBNA’s investigation was unreasonable because MBNA relied only on CIS screens despite dispute notices indicating Johnson challenged her legal obligation on the account.
- The court upheld the challenged jury instructions as consistent with the statutory duties and not misleading or prejudicial.

## Legal Principles

- Upon receiving notice of a consumer dispute from a CRA, a furnisher must (1) conduct an investigation, (2) review all relevant information provided by the CRA, and (3) report the results; the required “investigation” is measured by a reasonableness standard.
- Reasonableness depends on the nature of the dispute and the information conveyed by the CRA; a furnisher may be required to do more than check internal summary records when those records may not resolve the contested point.
- When a furnisher lacks adequate documentation to confirm the disputed information, a reasonable response may be to report that the information cannot be verified rather than to verify it as accurate.
- Whether a furnisher’s investigation was reasonable is typically a fact question for the jury on the record presented.
- A plaintiff may establish actual damages and causation where evidence supports that a reasonable investigation could have led to correction, suppression, or non-verification of the tradeline and thereby avoided credit-related harms.

## Conclusion

The Fourth Circuit held that FCRA § 1681s-2(b)(1) requires furnishers to conduct a reasonable investigation after receiving dispute notice from a CRA and affirmed a jury verdict finding MBNA negligent where it verified disputed information based only on internal computer records despite dispute notices contesting Johnson’s responsibility for the account.


Johnson v. MBNA Am. Bank, N.A., 357 F.3d 426 (4th Cir. 2004)