An employee of Shelly Milgram’s interior-design business opened up three personal credit cards in Milgram’s name, without Milgram’s authorization. The employee made charges on those cards—one of which was a Chase card—and on a Chase business card in Milgram’s name, without Milgram’s permission. The employee paid the resulting bills from a bank account owned by Milgram’s business, again without permission. Once Milgram discovered the fraud, the employee pled guilty to multiple felonies.
Milgram contacted Chase and the credit reporting agencies (“CRAs”), and disputed the charges incurred by the employee. Chase refused to characterize the charges as “unauthorized” because they had been paid from an account Milgram controlled, which Chase concluded imbued the charges with apparent, if not actual, authority. Milgram sued Chase, alleging that it had failed to conduct a reasonable investigation into her dispute as required by the Fair Credit Reporting Act (“FCRA”). The district court granted Chase’s motion for summary judgment, and the Eleventh Circuit, in a per curiam opinion, affirmed. Milgram v. Chase Bank USA, N.A., 2023 WL 3874276 (11th Cir. June 8, 2023).
The court began its opinion with a review of the relevant FCRA provisions. The statute imposes a duty on furnishers of credit information—like Chase—not to furnish to CRAs information that the furnisher “knows or has reasonable cause to believe” is inaccurate. If a consumer makes a dispute to a CRA and the CRA forwards the dispute to the relevant furnisher, the furnisher must conduct a “reasonable investigation” into the accuracy of the reported information. A consumer cannot sue a furnisher just for providing inaccurate information; the cause of action is for a failure to conduct a reasonable investigation, with “reasonableness” dependent on the circumstances. To show that the furnisher’s investigation was not reasonable, a consumer must “point out ‘some facts the furnisher could have uncovered that establish that the reported information was, in fact, inaccurate or incomplete.’”
Turning to Milgram’s claim, the court first analyzed Chase’s argument that the claim was untimely under the FCRA’s statute of limitations, which is “2 years after the date of discovery by the plaintiff of the violations that is the basis for such liability” or “5 years after the date on which the violation that is the basis for such liability occurs.” Chase focused on the dates on which Milgram raised disputes, arguing that where a consumer has raised multiple disputes, only one including “new material information” can re-start the clock. But the limitations period is triggered not by a dispute, the court noted, but by “the violation”—that is, the allegedly unreasonable investigation. “So every time a furnisher fails to conduct a reasonable investigation, it can be liable for doing so.” Under that standard, Milgram’s claim was timely to the extent it was based on Chase’s investigations after April 2017.
Turning to the merits, the Court assumed without deciding that a “legal inaccuracy,” like the conclusion about the employee’s authority, could be “so clearly erroneous as to raise a claim under the FCRA.” Even so, the court held, the district court properly granted summary judgment to Chase because “Milgram cannot show that Chase’s investigation was unreasonable.” By April 2017—the earliest actionable period—Chase had determined, based on the payment of the card from a bank account controlled by Milgram, that Milgram had vested apparent authority in the employee to use the Chase cards. Milgram challenged that conclusion with evidence, including a state court order recommending that CRAs stop reporting the relevant debts, that the employee had impersonated Milgram. But that didn’t affect Chase’s determination because, the Court noted, “Chase had always known that Milgram alleged that [the employee] lacked actual authority to incur charges on Milgram’s behalf.” But Chase had concluded, based on payment of charges to the card from Milgram’s bank account, that the employee had apparent authority to make the charges. Under Florida law, a finding of apparent authority requires a representation by the purported principal; reliance on the representation; and a change in position by the party that relied. Chase determined that those factors were met, regardless of the information, submitted with Milgram’s dispute, showing that the employee lacked actual authority. “That Williams didn’t actually have that authority doesn’t undercut that conclusion,” the court held; “it doesn’t go to apparent authority at all.”
Posted By: Valerie Sanders