Eleventh Circuit Confirms Investigation into Dispute Involving Identity Theft Was Reasonable and Affirms Summary Judgment on FCRA Claim

In Milgram v. Chase Bank USA, N.A., --- F.4th ---, 2023 WL 3874276 (11th Cir. June 8, 2023), the Eleventh Circuit affirmed the district court’s dismissal of plaintiff’s FCRA claim based on the bank’s alleged failure to conduct a reasonable investigation into a consumer’s dispute after the consumer provided proof of a criminal judgment in an identity theft matter.

Plaintiff filed suit asserting a FCRA claim based on the bank’s allegedly unreasonable investigation into her credit dispute. One of plaintiff’s employees had opened a few credit cards in plaintiff’s name without plaintiff’s knowledge or permission. The employee incurred substantial charges on the card and paid them using plaintiff’s business checking accounts. When plaintiff found out, she reported the fraudulent card and charges to Chase. She also filed a police report, and a state attorney initiated identity theft charges against the employee. Chase determined, however, that plaintiff was liable for the charges because bank accounts in plaintiff’s name had been used to make payments. Thus, Chase concluded that the employee had apparent authority to use the cards. Although Chase considered the fact that the employee was being prosecuted for identity theft, that did not overcome its determination of apparent authority.

Plaintiff then filed multiple disputes with credit reporting agencies. Each time, Chase confirmed its reporting was accurate because plaintiff’s personal information with Chase matched the credit reporting agencies’ data. After a Florida state court determined that the employee had fraudulently opened the cards and used plaintiff’s accounts to pay them off without her permission, plaintiff filed another dispute attaching the court’s order and criminal judgment. Again, Chase verified that plaintiff was responsible for the charges. Plaintiff then filed suit against Chase under the FCRA, alleging that Chase had conducted an unreasonable investigation of her disputes. Both parties moved for summary judgment. The district court granted Chase’s motion and denied plaintiff’s.

The Eleventh Circuit agreed with the district court that no genuine issue of material fact existed as to whether Chase’s investigation was unreasonable as a matter of law. Plaintiff argued that because she provided Chase the criminal judgment, which proved that the employee impersonated her, that judgment should have impacted Chase’s conclusion that she was liable for the outstanding charges. Because Chase concluded that she was liable nonetheless, she argued that Chase’s investigation was unreasonable.

The court reasoned that while the criminal judgment showed the employee lacked actual authority to incur charges on plaintiff’s behalf, it had no impact on Chase’s conclusion that the employee had apparent authority. Chase determined that the employee had apparent authority to incur the charges because the monthly automatic payments that paid off the card came from plaintiff’s account. In fact, during its initial fraud investigation, Chase considered the fact that the employee did not have actual authority to incur the charges, but it still determined that plaintiff would be liable under apparent authority. As such, the court explained, the criminal judgment was irrelevant to whether Chase conducted a reasonable investigation. Additionally, plaintiff had not pointed to anything that Chase could have done differently to affect its determination of apparent authority, so she could not have shown the investigation was unreasonable. Based on this reasoning, the Eleventh Circuit concluded that plaintiff failed to show a genuine dispute of fact whether Chase’s investigation was unreasonable as a matter of law and affirmed the district court’s dismissal of plaintiff’s FCRA claim.

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