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Fair Credit Reporting: 12.4.3.2 Was the Agreement Properly Formed?

An arbitration requirement is a matter of contract, and like any contract, it is not binding on the parties unless the contract is properly formed. This requires assent from both parties, usually by valid signatures.519 Clearly a consumer has not assented to an arbitration agreement where a thief who stole the consumer’s identity, and not the consumer themselves, entered into the agreement.520

Fair Credit Reporting: 12.4.3.3 Has the Company Waived the Arbitration Requirement?

A company cannot participate in court litigation on a matter and then suddenly change its mind and require the case to be sent to arbitration.524 The Supreme Court has ruled that the consumer need not show prejudice from the company’s actions for the court to find waiver.525 Similarly, the company may have waived the arbitration requirement where the consumer initiates arbitration and the company refuses to pay its share of the filin

Fair Credit Reporting: 12.4.3.5 Where Designated Arbitration Provider Is Unavailable

Arbitration agreements typically specify one or more arbitration providers that will administer the arbitration. There could be various reasons that a provider is unavailable. For example, the American Arbitration Association (AAA) will only act as a provider if the company registers its arbitration agreements with AAA and AAA finds that the agreement meets its consumer arbitration standards.

Fair Credit Reporting: 12.4.3.6 Arbitration When Consumer Files Bankruptcy

When a consumer, as part of the consumer’s bankruptcy proceeding, litigates core bankruptcy matters, the bankruptcy court has discretion not to remove the matter to arbitration, but to hear the matter itself.541 On the other hand, a bankruptcy discharge eliminates personal liability on a debt, but may not cancel the original credit agreement or other obligations concerning that agreement.

Fair Credit Reporting: 12.4.4 Does the Court or Arbitrator Determine Arbitrability?

A preliminary matter in any challenge to the enforceability of an arbitration clause is whether the enforceability determination is to be made by a court or by the arbitrator. In Rent-A-Center, West, Inc. v. Jackson,545 the Supreme Court held that “ordinarily” issues about whether parties have agreed to a valid arbitration clause are for a court—not an arbitrator—to decide.

Fair Credit Reporting: 12.4.5.1 Class Arbitration

Where an arbitration clause prohibits class-wide arbitration, an arbitrator is unlikely to allow such relief, and a court would almost certainly overturn a class-wide arbitration award. Most, but not all arbitration clauses prohibit class-wide relief—some are silent on the issue. Where an arbitration clause does not prohibit class arbitration, a determination must be made (by the arbitrator or a court) as to whether, consistent with the parties’ intent, the silent arbitration clause should be construed as allowing class arbitration.552

Fair Credit Reporting: 12.4.5.2 Punitive Damages

While an arbitrator may be less likely to award punitive damages than a jury, this is partially offset by the fact that there is must less court review of an arbitrator’s punitive damages award.558 Instead of a judge remitting the jury award and appellate courts reviewing the resulting award, an arbitrator’s award is only subject to very narrow judicial review.559 In fact, the defendant may not even have a due process claim concerning the size of the award, since the arbitration is a non-gov

Fair Credit Reporting: 12.4.5.3 Tips on Conducting an Individual Arbitration When Court Litigation Unavailable

Where an enforceable arbitration agreement forecloses class arbitration, class action litigation in court, and individual court litigation, adequate client representation may require raising the consumer’s claims in an individual arbitration proceeding. Another reason to conduct an individual arbitration is that, even if an arbitration agreement is not enforceable, it may take years to resolve this issue before reaching the merits.

Fair Credit Reporting: 12.5.1 Damages Generally

For most FCRA requirements, any person who negligently fails to comply with the requirement is liable to the consumer for actual damages sustained as a result of the failure and court costs, together with reasonable attorney fees.566 For willful violations, a consumer is entitled to actual damages or statutory damages ranging from $100 to $1000 and such punitive damages as the court may allow, plus court costs and reasonable attorney fees.567 Each failure to comply with the FCRA is

Fair Credit Reporting: 12.5.2.1 Generally

For a consumer to recover for a defendant’s negligent failure to comply with the FCRA, the consumer will have to prove that actual damages579 resulted from the defendant’s failure to comply with an FCRA requirement.580 These damages can be pecuniary or intangible in nature (such as emotional distress, pain and suffering or humiliation).581

Fair Credit Reporting: 12.5.2.2.1 Introduction

Pecuniary loss proximately caused by FCRA violations is one type of actual damages that may be recompensed by a damage award. When an inaccurate consumer report causes credit to be denied, a job opportunity to be lost, or an insurance policy to be refused, financial loss to the consumer is likely to result which, if proved, entitles the consumer to an actual damage award.

Fair Credit Reporting: 12.5.2.2.2 Causal relationship

The consumer must show a causal relation between the violation of the statute and the loss of credit or other harm.591 Most courts hold that the plaintiff need not show that the erroneous negative information is the only cause of the loss, but only that it was a substantial factor.592 Although testimony from the prospective credit grantor who denied an application for credit is desirable,593 reasonable inferences from circumstantial evidence

Fair Credit Reporting: 12.5.2.2.5 Damages for business losses

A report on a business, or even on an individual in a business capacity, is not a consumer report635 and would not give rise to claims under the FCRA.636 However, a report which meets the definition of “consumer report” in section 1681a(d), but which is used for a business purpose is still a consumer report,637 and if the consumer suffers damages because some requirement of the FCRA was not met, then the business or investment damages should

Fair Credit Reporting: 12.5.2.2.6 Mitigation of damages

It is unsettled whether mitigation of damages applies when a claim is based on a violation of a federal statutory requirement, but at least one court has explicitly held that the doctrine is inapplicable.643 Arguably, mitigation does not apply because requiring mitigation would interfere with fulfillment of the statutory purpose behind the provision. Where lost wages are sought as part of a damages award, an attempt at mitigation is likely to be required.644

Fair Credit Reporting: 12.5.2.3.2 Is publication required?

One area in which there is a dispute regarding whether intangible damages are available, or whether a claim is even viable, under the FCRA is with respect to a CRA’s failure to follow reasonable procedures when the inaccurate information has not been transmitted to a third party. One argument in favor of permitting damages without publication is that the mere knowledge that a CRA’s file likely contains false derogatory information may cause distress and anguish and even deter a consumer from applying for credit.

Fair Credit Reporting: 12.5.2.3.4 Proving intangible damages

The general rule in cases outside the FCRA is that non-pecuniary damages must be based on competent evidence, but evidence of the actual monetary value of the mental injury or suffering is not required.664 Courts in FCRA cases have similarly held that, while damages must be more than speculative, the dollar amount of intangible damages need not be proved.665