Skip to main content

Search

Fair Credit Reporting: 10.5.4 Negligence Claims

The development and application of negligence law to consumer reporting activities was advancing when the FCRA was enacted. A few courts had expressly held CRAs liable for negligence,239 and another implied the possibility of a claim for negligent misstatements injuring a consumer.240 Moreover, the proof required to establish malice to overcome a CRA’s conditional privilege defense was beginning to approach traditional negligence standards.

Fair Credit Reporting: 10.6.1 State Credit Reporting Statutes

Most states have laws relating to consumer reporting agencies.242 Often, these laws mirror the federal statute. However, in many instances the state laws will provide important additional protections for consumers, or contain different statutes of limitation, remedies, or scope. Consequently, it is generally best to bring an action under both the federal and state statutes. In fact, where a consumer does not want an action removed to federal court, raising only the state law claim may be preferable to bringing an FCRA action.

Fair Credit Reporting: 10.7.3.5 Provision Regarding Businesses and Identity Theft

Business entities must provide a thief’s information to an identity theft victim.408 Even though there is no private right of action to enforce this provision,409 the FCRA preempts state laws that have the same subject matter.410 Nonetheless, this provision should not preempt actions alleging that the business entity was negligent at common law in providing an identity thief with the credit, goods, or services in the victim’s name, either because s

Fair Credit Reporting: 10.7.3.6 Obligations Arising in Contracts Are Not “Imposed” Under State Law and Can Be Enforced

A number of courts have concluded that preemption does not apply to breach of contract claims based on the reporting of negative information in violation of the terms of a settlement or other contractual agreement.413 The decisions are based on the argument that contractual obligations are entered into voluntarily by the parties, not “imposed” by state law, and cite Cipollone v.

Fair Credit Reporting: 10.7.4.3 Cases Holding That Only Statutory, Not Common Law Claims, Are Preempted

FCRA section 1681t(b) begins: “No requirement or prohibition may be imposed under the laws of any State.” Thus, the preemption provision applies only to the “laws of any State.” That language, when read in conjunction with section 1681h(e) limiting furnishers’ qualified immunity from tort claims, strongly suggests that Congress did not intend to preempt state common law claims, as opposed to state statutory or regulatory claims, brought for behavior that may also violate the FCRA.

Fair Credit Reporting: 10.7.4.5 Cases Preempting Only Claims Closely Resembling an FCRA Provision

As discussed elsewhere in this chapter, the FCRA’s preemption provisions should be read narrowly.484 Courts engaging in careful analysis examine the elements of the plaintiff’s claims to determine if they really relate to subject matter regulated by one of the enumerated provisions listed in section 1681t(b)(1). This analysis focuses on the “subject matter regulated by” phrase rather than the “requirement or prohibition” phrase.485

Fair Credit Reporting: 10.7.5 Affiliate Information Sharing Preemption—§ 1681t(b)(2)

Section 1681t(b)(2) preempts state requirements and prohibitions “with respect to the exchange of information among persons affiliated by common ownership or common corporate control.”527 The preempting provision has an exception for a Vermont statute, as it existed in 1996, that requires a consumer’s consent to obtain a consumer report, unless the report is obtained pursuant to a court order.528

Fair Credit Reporting: 10.7.6 Disclosure Preemption—§ 1681t(b)(3)

Section 1681t(b)(3) preempts state requirements or prohibitions with respect to various disclosures required by sections 1681g(c), 1681g(d), 1681g(e), 1681g(f), and 1681g(g).531 Section 1681t(b)(3)’s preemption provision explicitly preserves California’s532 and Colorado’s533 preexisting disclosure statutes, as in effect on December 4, 2003.

Fair Credit Reporting: 10.7.8.2 Consumer Reporting Agency Provisions That Preempt State Law

Section 1681t(b)(5) references conduct required by a number of FCRA provisions dealing with CRA obligations, and provides that “no requirement or prohibition may be imposed under the laws of any State . . . with respect to the conduct required by” those specific provisions. One provision is section 1681c-1, relating to identity theft prevention, fraud alerts, and active duty alerts. In general, the provision requires more of nationwide CRAs than other CRAs, imposing few duties on resellers and non-nationwide CRAs.

Fair Credit Reporting: 10.7.8.3 User Provisions That Preempt State Law

Section 1681t(b)(5) refers to a number of user provisions that preempt state laws that regulate the same conduct. One provision is section 1681c-1, relating to identity theft prevention, fraud alerts, and active duty alerts, requiring specific conduct of users when they are alerted to potential identity theft.

Fair Credit Reporting: 10.7.8.4 Furnisher Provisions That Preempt State Law

Section 1681t(b)(5) refers to a number of furnisher provisions that preempt state laws that regulate the same conduct. One such provision is section 1681m(f). Where identity theft leads to an FCRA block on the reporting of information about a debt, and the CRA so notifies the furnisher, the furnisher cannot sell or collect on that debt.

Fair Credit Reporting: 10.7.8.5 Debt Collector Provisions That Preempt State Law

Section 1681t(b)(5) refers to one debt collector provision that preempts state laws that regulate the same conduct. Section 1681m(g) requires certain conduct from a debt collector collecting on a debt owed a third party, after the collector has been notified that information related to the debt may be fraudulent because of identity theft. Once so notified, the debt collector must pass this information on to the party owed the debt.

Fair Credit Reporting: 10.7.8.6 Preemption by Provision Relating to Those Accepting Credit or Debit Cards

Section 1681t(b)(5) refers to section 1681c(g), that requires conduct of those accepting credit or debit cards, and that thus preempts state laws that regulate the same conduct. The provision requires the business to print out no more than the last five digits of the account number. A number of states enacted similar legislation,581 with remedies ranging from deceptive trade practices act actions to criminal penalties.

Fair Credit Reporting: 13.1 Introduction

Although private enforcement has long been the primary method of assuring compliance with the FCRA, public enforcement also plays an important role. Public enforcement is particularly valuable where there is no private right of action, as is the case with several provisions of the FCRA,1 particularly with respect to furnishers of information.2 Additionally, several of the FCRA’s provisions may be much harder to enforce privately after the Supreme Court’s decision in TransUnion v.

Fair Credit Reporting: 10.1 Introduction

This chapter focuses on consumer claims relating to consumer reporting injury. Legal claims are, of course, available under the Fair Credit Reporting Act (FCRA). The requirements imposed on consumer reporting agencies (CRAs), users, and furnishers are examined in detail in other chapters. This chapter summarizes which FCRA requirements can be enforced directly by consumers under private rights of action and discusses circumstances when “reasonable procedures” are relevant to such claims.

Fair Credit Reporting: 10.2.1.1 Generally

Other chapters of this treatise discuss in detail the requirements imposed on CRAs, users, and furnishers by various provisions of the FCRA. Unfortunately, not all of these requirements can be enforced by consumers.

Fair Credit Reporting: 11.1.1 Litigation Goals

Once the theory of the case and the nature of the claims have been decided upon,1 the practicalities of litigation must be considered. This chapter covers everything from selection of the parties and court to remedies following a successful court challenge to consumer reporting practices.

Fair Credit Reporting: 11.1.2 Case Selection

The odds of prevailing are best if the facts strongly point to a clear injustice: where common sense indicates that there has been a violation and the result emerges without any significant weighing or balancing of other factors.