FCRA Litigation
Both federal agencies and individual consumers are eligible to bring legal action under the terms of the Fair Credit Reporting Act. FCRA litigation against end-users is most often aimed at employers and landlords, so it is vital to ensure that you are in compliance at all stages of the evaluation and approval process when credit reporting is involved.
[.blog-disclaimer-text]Disclaimer: This article is not legal advice. Legal information is not the same as legal advice, where an attorney applies the law to your specific circumstances. Consult an attorney for advice on your interpretation of this information or its accuracy. You may not rely on this article as legal advice, nor as an endorsement of any particular legal understanding.[.blog-disclaimer-text]
Who can bring an action under FCRA?
Two potential sets of plaintiffs can bring lawsuits under the FCRA including the Federal Trade Commission (FTC)/Consumer Financial Protection Bureau (CFPB) and individual consumers. The Federal Trade Commission has a big stick but uses it very infrequently. Individual plaintiffs pose a significant threat because they have competent, aggressive counsel that is profit and fee driven. In conjunction, consumers file thousands of FCRA lawsuits every year with many of them being proposed as class action lawsuits. FCRA lawsuits can be filed in both federal court and state courts.
Dispute claims are asserted when a consumer disputes the accuracy of a consumer report and the CRA fails to properly reinvestigate or fails to correct inaccurate reporting. Common FCRA claims against CRAs include individual claims where a CRA has provided an end-user with a consumer report that is “inaccurate.” In this case, the plaintiff has the burden of proof and must satisfy four legs of proof including the inaccuracy, the CRAs failure to follow reasonable procedures or failure to correct the inaccuracy, an actual injury, and evidence that the inaccuracy caused the injury.
Protect yourself and your business against FCRA litigation
Use a trusted tenant screening service like RentSpree >>
Claims against end-users include the background screening industry but mostly against employers and landlords. Furnishers have two obligations including the obligation to transmit accurate information to CRAs and to conduct disputes upon being notified of a dispute from a CRA. Furnishers can be sued civilly for failing to conduct a proper or timely reinvestigation and for failing to correct inaccurate information. Furnishers cannot be sued for violations because they are not CRAs, nor may they be sued for furnishing inaccurate information about a consumer to a CRA.
Resellers can be sued for inaccurate reporting and are a CRA for the purpose of a claim. Thus, resellers can be sued for inaccurate reporting even though they are not the entity that assembled or evaluated the information, but just passed the information along as they received it from the originating CRA. Certain courts have held that resellers cannot be liable for the transmission of inaccurate information when the inaccuracy is not “patently” obvious with respect to the data received from the originating CRA.
Most courts will allow plaintiffs to pursue claims when the reporting is “technically accurate”, but “misleading.” However, the plaintiff must prove more than just inaccuracy. The plaintiff must show that the procedures used which resulted in the inaccuracy were “unreasonable.”
Claims have statutes of limitations and must be brought earlier of two years after the consumer learns of the violation or five years after the violation occurs, with no exception. The statute of limitations begins when the consumer becomes aware of the facts that give rise to the violation, independent of whether the consumer is familiar with FCRA and knows that it is a potential legal violation. When the facts are made aware, that is the point in time when the two-year statute of limitation starts to run.
When a CRA has been found to be in violation of the law, the damages recoverable depends on the type of violation proven. Negligent violations will recover actual damages including credit-related damages, out-of-pocket cost, and emotional distress. Willful violations include both knowing, intentional violations and actions in “reckless disregard of a requirement” of the FCRA. Damages for willful violations may include actual damages and statutory damages from $100-$1,000 per violation plus punitive damages.
Take the guesswork out of consumer reporting and rental applications.
RentSpree makes this process seamless >>
The FCRA is a “free shifting” statute and plaintiffs can recover their reasonable attorneys’ fees. Plaintiffs have a right to a jury trial with the amount of damages determined by the jury. Plaintiffs must demand a jury trial and must invoke their jury trial rights. Under the FCRA, trials are not automatic.
When one or more plaintiffs bring a lawsuit on behalf of a group or “class” of people it is considered a class-action lawsuit. All cases start off as an individual case even if proposed as a class action suit. All people in the class must have the same or similar claims. Class actions are allowed in federal and state courts and classes are frequently pled on a nationwide basis, regardless of the forum. Statutory damages available range from $100-$1,000 per violation plus punitive damages and “reasonable” attorney’s fees. There is no cap, however, on damage awards.
Continue to State Versions of FCRA and FCRA California, or jump to a different article.
- Fundamentals of The Fair Credit Reporting Act (FCRA)
- Industry Players Under FCRA
- Accuracy and Reasonable Procedures
- FCRA Permissible Purpose
- Adverse Action Notification
- Reinvestigation, Disclosures, Disposal of Consumer Information
- What is a Consumer Report?
- A summary of consumer rights under FCRA
- FCRA Litigation
- State Versions of FCRA and FCRA California
