Auto loans are a major part of the consumer credit market, accounting for about 25% of nonmortgage consumer credit; the Federal Reserve reported auto loan delinquencies had risen above pre-pandemic levels by the end of 2023, and more recently, the Federal Reserve Bank of New York reported auto loan balances increased by $18 billion in the first quarter of 2026, reaching $1.69 trillion. As more consumers dispute adverse auto loan credit reporting, courts are increasingly focused on whether “furnishers” have reasonably investigated those disputes as required by the Fair Credit Reporting Act, 15. U.S.C. § 1681 et seq. (the “FCRA”). Automotive lenders fall squarely within the meaning of the term “furnisher”—defined by the Consumer Financial Protection Bureau (CFPB) as any “entity that furnishes information relating to consumers to one or more consumer reporting agencies for inclusion in a consumer report”—and one of the fastest growing sources of potential litigation exposure for these lenders are claims arising from their investigation of borrower credit disputes.

FCRA Requires Furnishers to Investigate Disputed Credit Information

Pursuant to 15 U.S.C. § 1681s-2(a), a furnisher has a duty to provide accurate information to credit reporting agencies (“CRA”). If a furnisher determines that previously furnished information is incomplete or inaccurate, it must promptly notify the CRA and provide any corrections or additional information necessary to make the reporting complete and accurate. A furnisher also may not continue reporting information it knows is incomplete or inaccurate.

If a consumer disputes an item on their credit report to a CRA, that CRA is required to conduct a reinvestigation to either confirm the reporting is accurate or remove it within 30 days. As part of the reinvestigation, the CRA is required to provide notice to the furnisher. Upon receiving notice, the furnisher must investigate, review the materials provided by the CRA, and report the results. If the furnisher cannot verify the information is correct, it must correct or delete the reporting.

Liability may arise when the investigation consists of merely confirming that the disputed information matches the furnisher’s records, rather than reviewing the substance of a consumer dispute. Even when a reporting error triggers the dispute, liability and damages often hinge on the adequacy of a furnisher’s investigation. If a furnisher is found to have negligently violated the FCRA, it may be liable for actual damages, costs, and attorneys’ fees. If the violation is willful, the FCRA also contemplates recovery of punitive damages.

Recent Developments In Furnisher Liability

Automotive lenders may find instructive two recent examples of how juries have translated violations in the dispute investigation process into significant damages awards against furnishers. In Ramones v. AR Resources, No. 19-62949-CIV, 2022 WL 1062042, at *12 (S.D. Fla. Apr. 8, 2022), the plaintiff alleged a debt collector continued reporting 19 medical debts as his, even though they really belonged to his father. After the plaintiff disputed the accounts repeatedly through the CRAs, the furnisher continued verifying the information as accurate. The case turned not on the incorrect reporting, but on the failure of the furnisher to review the consumer message fields tied to the disputes, instead continuing to verify the debts even though the plaintiff and his father had different identifying information. The jury awarded $80,000 in actual damages and $700,000 in punitive damages; the court granted a post-trial motion to reduce the punitive damages award to $475,000, finding the original award exceeded due process limits, but refused to reduce the actual damages award.

Daugherty v. Ocwen Loan Servicing, 701 F. App'x 246, 248 (4th Cir. 2017),reflects a similar risk in a repeated dispute case. There, the plaintiff’s mortgage account was at one point past due and in foreclosure but was later brought current. Because of a duplicate tradeline issue, one tradeline continued to report the account as past due and in foreclosure for more than 120 days, while another reported the account as current. Over a 17-month period, the CRA sent the furnisher 23 dispute verification requests concerning the same account. The furnisher repeatedly verified the inaccurate information as correct or corrected only part of the error. In some responses, the furnisher changed the account status to current but left other inaccurate statements that the account was five or more payments past due or that foreclosure proceedings had started.

A jury awarded $6,128.39 in compensatory damages and $2.5 million in punitive damages against the furnisher. On appeal, the Fourth Circuit found the evidence supported the jury’s willfulness finding but reduced the punitive damages award to $600,000. The court noted that the furnisher had information in its own records that could have corrected the disputed reporting, but its process failed to identify or resolve the inconsistency. The court also looked at evidence that the furnisher continually responded as though the issue concerned ownership of the account even when the dispute code challenged the account’s status and payment history. The furnisher also processed each dispute separately, without considering prior correspondence from the consumer, CFPB inquiries, or other dispute requests involving the same account.

Conclusion

These cases do not suggest that every credit-reporting error will support punitive damages, but they do suggest exposure increases when a furnisher fails to conduct a reasonable investigation after receiving a dispute. This is especially true when the same issue is disputed many times, the furnisher’s own records contain information relevant to the issue that could resolve it, or the furnisher corrects only part of the problem. For furnishers, reasonable investigations should account for information submitted with the dispute, the account history, and whether repeated disputes are raising the same issue. When a furnisher treats each dispute in isolation, or verifies information without reviewing all relevant data, it increases the risk that inaccurate reporting will persist and that the investigation will later be viewed as unreasonable.