By: Alexandra M. Klemme*
Abstract
Congress passed the Fair Credit Reporting Act to protect American credit consumers from abuses in the credit reporting industry. The Act requires credit reporting agencies to adopt reasonable procedures to ensure accuracy in credit reporting. As an enforcement mechanism, the Act grants credit consumers the right to sue credit reporting agencies that inaccurately report the consumer’s credit.
A circuit split exists regarding which party bears the burden of proving the reasonableness of procedures employed in credit report production once plaintiffs submit evidence of an inaccurate credit report. Some circuits hold that plaintiffs must always prove a credit reporting agency’s procedures were unreasonable. Other circuit courts require the agency to prove the reasonableness of its procedures once a plaintiff provides proof of an inaccurate report.
Artificial intelligence now plays a key role in generating consumer credit reports. The systems can produce inaccuracies due to biased training data and scant human oversight. Courts in the circuit split have not considered who should bear the burden of proving the reasonableness of procedures used while contemplating the agencies’ artificial intelligence use. Nevertheless, widespread adoption of artificial intelligence in credit reporting makes which party bears the burden of proving the reasonableness of procedures used an even more pressing issue.
This Comment recommends resolving the circuit split in favor of credit reporting agencies bearing the burden of proving the reasonableness of procedures once a plaintiff proves a credit reporting agency produced an inaccurate report. Further, this Comment notes that artificial intelligence-driven errors in credit reporting threaten consumer rights, necessitating increased protections for American credit consumers. The recommended burden-shifting approach ensures accountability in credit reporting and remains consistent with both the legislative purpose of the Fair Credit Reporting Act and common law applications of the negligence standard.
*J.D. Candidate, The Pennsylvania State University Dickinson School of Law, 2026.