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Fair Credit Reporting Act

Introduction

The ability to obtain favorable credit and gainful employment are essential to the maintenance of a quality lifestyle. Without credit or a job, few if any people would ever own their own home or vehicle. With even a single negative notation on your credit report, it can be difficult to obtain a loan, and even if you are able to obtain a loan, the higher interest rate you pay may make your monthly payments unworkable. Similarly, if a background search reveals even a single inaccurate fact about your past, you may never obtain reasonable employment. For these reasons, Congress enacted the Fair Credit Reporting Act ("FCRA").

The FCRA governs a wide range of activities related to your consumer reports. In addition to protecting the unauthorized disclosure of your personal credit information to third parties, the FCRA also prohibits anybody from unlawfully obtaining your personal credit information, requires consumer reporting agencies to maintain accurate records and properly investigate consumer disputes and requires those reporting information to a consumer reporting agency to ensure that only accurate information is reported.

Because the word "credit" appears in the FCRA, many people mistakenly believe that the FCRA only applies to credit reports. However, the FCRA protects a wide range on consumer reports entirely unrelated to consumer credit. This is the case, because of the way the FCRA defines the word "consumer report." As can be seen in detail below under the "Fundamentals of a FCRA Claim," consumer reports cover such non-credit matters as a consumer's "character, general reputation, personal characteristics, or mode of living." Under this broad definition, the FCRA provides sweeping consumer protection against certain types of employer disclosures and even routine background checks.

Failure to comply with the FCRA carries strict civil penalties including actual damages, statutory damages and punitive damages. If you have been the victim of an inaccurate consumer report, take action immediately to avoid your claim being barred by applicable time limitations. If you are unsure whether or not you have a claim, continue reading. We have put together what we hope is a user friendly and explanative description of your rights under the FCRA.

Fundamentals of a FCRA claim

  1. The FCRA contains a series of very specific definitions that may or may not coincide with the dictionary definition of the words. Therefore, a careful analysis of the words and their impact on a FCRA claim is important.

    In order to have a claim under the FCRA, the following elements must exist:
    1. The Plaintiff (you) must be a consumer as defined by the FCRA.

      A consumer simply means any individual. Although this definition at first seems pretty straightforward and reasonable, its implication is far reaching. In essence, a corporation, limited partnership, limited liability company, etc. are not considered to be a "consumer" under the FCRA. Therefore, these entities have no standing to seek damages under the FCRA for consumer report information related to the entity.

      The Act further requires that the Plaintiff be the person specifically identified in the consumer report at issue. This requirement precludes (in almost all cases), a spouse or other relative from filing suit due to repercussions related to another person's consumer report. Consider the example of a spouse who is denied credit as the result of her husband's incorrect consumer report. Under the FCRA, the spouse is unable to seek a remedy. Only the husband may sue to correct and/or seek damages related to the incorrect report. Most courts have held that when a person's (not identified in the report) assets are the subject of the report, the person has standing to sue under the Act. For example, if the husband's consumer report lists a jointly owed (with the spouse) vehicle loan as delinquent, the spouse may have standing as it relates to the jointly owned property.
    2. The report or communication at issue must be a "consumer report" as defined by the FCRA
  2. The FCRA defines a "consumer report" as any report or communication of any information by a consumer reporting agency that bears on a consumer's credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living which is expected to be used or collected in whole or in part for the purpose of serving as a factor in establishing the consumer's eligibility for:
    1. credit or insurance to be used primarily for personal, family or household purposes;
    2. employment purposes; or
    3. any other permissible purpose as defined by the FCRA (see below for a list of permissible purposes)
  3. The following do not qualify as "consumer reports" under the FCRA:
    1. any report containing information solely as to transactions or experiences between the consumer and the person making the report. This exception allows a person to provide first hand information to a third party without violating the FCRA. For example, a former employer could tell a prospective employer that a consumer was "late to work 10 times." Since this information exclusively relates to the consumer's contact with her former employer, it is not considered a consumer report under the FCRA. If, on the other hand, the consumer's former employer furnished a prospective employer with a drug test prepared by an outside laboratory, the FCRA would apply.

      Also excluded from the FCRA is communication of the above information among persons related by common ownership or affiliated by corporate control. This exception allows a person to report information within their organization, even if the organization operates under several different names.

      Any other information (information not based upon your transactions or experiences with the person) may be communicated among common ownership if it the person clearly tells the consumer that the information may be shared and, prior to communicating the information, gives the consumer an opportunity to direct the person to keep the information confidential.
    2. any authorization or approval of a specific extension of credit directly or indirectly by the issuer of a credit card or similar device. This exception relates to credit card transactions processed by merchants. Whenever a consumer purchases an item with a credit card, the vendor swipes the credit card, the information is sent off to the credit card processing service, and the processing service either accepts or rejects the credit card. Under this exception, neither the information provided by the merchant nor the information (accept or decline) provided by the credit card processing company is governed by the FCRA. Therefore, although it can be embarrassing to have a credit card declined, there is no recourse under the FCRA.
    3. any report in which a person has been requested by a third party to make a specific extension of credit directly or indirectly to the consumer. This exception occurs when a store has an agreement with an outside financial institution to extend credit to the store's customers. For example, the store may have an in store credit card offered through a local bank. In these instances, the communication by the outside financial institution to the store that credit has been declined is not a consumer report under the FCRA.
  4. The entity that issued the report must be a "consumer reporting agency" under the FCRA A consumer reporting agency includes more than just the major credit bureaus (i.e. Equifax, Experian and Transunion). Under the FCRA, a "consumer reporting agency" is any person or business entity that, for consideration (including monetary compensation or trade), regularly assembles or evaluates information on consumers for purposes of furnishing consumer reports to third parties by use of some means of interstate commerce (in either preparing or disseminating consumer reports). All three of the above requirements must be satisfied for a consumer to have a potential FCRA claim. After determining that a potential plaintiff is a consumer, the disclosure at issue is a consumer report, and the disclosure was made by a consumer reporting agency, a potential plaintiff must next decide whether any violation of the FCRA occurred and, if so, who is liable and to what degree.

Who can be held liable for violating the FCRA

Consumer Reporting Agencies

A consumer reporting agency can be held liable for violations of the FCRA in a number of ways. First, a consumer reporting agency can be held liable for violations related to wrongfully furnishing a consumer report. Such liability includes the following:

  1. When the agency had actual knowledge that the report was not obtained for purposes permitted under the FCRA.

    Under the FCRA, a consumer reporting agency may furnish a consumer report under the following circumstances and no other:
    1. in response to the order of a court
    2. with written consent of the consumer. A consumer reporting agency will always be relieved of liability related to a specific third party when a consumer gives permission to release information to the specific third party.
    3. to a person which it has reason to believe
      1. intends to use the information in connection with a credit transaction involving the consumer
        1. If the credit transaction was not initiated by the consumer, a consumer reporting agency may furnish a consumer report only if the consumer authorizes the report or the transaction is a firm offer of credit, and the consumer reporting agency complies with a consumer's wish to be excluded from any published lists.
        2. A consumer may elect to have his name and address excluded from any list provided by a consumer reporting agency in connection with a credit or insurance transaction not initiated by the consumer by notifying the agency to such effect. The consumer must notify the agency either through the agency's notification system (which must include a toll free number) or by submitting a signed agency notification form (provided by the agency). Upon receiving notification from a consumer, the agency must notify the consumer that the election is only good for the next five year period (without submitting a new form) and provide the consumer a new election form within five days upon request.
        NOTE: A transaction is deemed authorized by the consumer if the consumer has an existing account with the user, and the user is either reviewing the account/insurance policy or collecting on the account.
      2. intends to use the information for employment purposes
        1. Under this section, a consumer reporting agency may only furnish information if the person obtaining the report certifies that the person requesting the information has disclosed the request to the consumer, the consumer consented to the request in writing, and the report will not be used in violation of federal or state equal employment opportunity law or regulation
      3. intends to use the information for insurance underwriting
        1. For transactions not initiated by the consumer, the same rules apply as a) above.
      4. intends to use the information in determining a consumer's eligibility for a government issued license when the law requires an investigation into the applicant's financial responsibility. For example, in order to obtain a law license, an applicant must demonstrate financial responsibility. Therefore, in such a case, it is permissible for a state bar association to obtain an applicant's consumer report.
      5. intends to use the information as a potential investor, or
      6. otherwise has a legitimate business need, but only if the need relates to a transaction initiated by the consumer or to review an existing account for continuing credit eligibility
    4. in response to a request by a government child support enforcement agency. The person making the request must certify that:
      1. the consumer report is needed to establish correct child support
      2. the consumer's paternity has been established
      3. 10 days prior notice was given to the consumer via certified mail, and
      4. the report will be kept confidential and only used for child support determination NOTE: the report may not be used in other criminal, administrative or civil cases (i.e. a divorce case)
    5. to an agency administering a state plan under Section 454 of the Social Security Act for use to set an initial or modified child support award
  2. When the agency did not have reasonable grounds to believe that the report was obtained for purposes permitted under the FCRA
  3. When the agency had no knowledge of the report's purpose and did not inquire
  4. When the agency did not have in place reasonable measures designated to limit the furnishing of reports to those purposes permitted under the FCRA
  5. When the agency fails to notify any person of his responsibilities under the FCRA who regularly and in the ordinary course of business furnishes information to the agency or any person who is provided a consumer report. For example, if a debt collector regularly furnishes information to an agency, the agency must notify the debt collector of its responsibilities under the FCRA.

Second, a consumer reporting agency can be held liable for reporting inaccurate information. Like wrongfully furnishing information, there are several ways a consumer reporting agency could be liable to a consumer. They include:

  1. Failing to implement or follow reasonable procedures to assure maximum accuracy

    For the consumer reporting agency to be liable under this provision, the consumer must show that the consumer reporting agency
    1. failed to adopt or implement procedures to assure maximum possible accuracy,
    2. failed to follow procedures to assure maximum possible accuracy, or
    3. the procedures implemented and followed were not reasonable to assure maximum possible accuracy.
  2. Reporting obsolete credit information

    This provision of the Act prohibits a consumer reporting agency from reporting information that, under the FCRA, is outdated. For example, consumer reporting agencies are prohibited from reporting bankruptcies older than 10 years from the entry of the bankruptcy order. The following are also prohibited from disclosure:
    1. lawsuits and judgments older than seven years from the date of entry or until the applicable statute of limitations has expired (whichever period of time is longer)
    2. paid tax liens which, from date of payment, are older than seven years
    3. accounts placed for collection or charged off older than seven years
    4. any other adverse information, other than records of convictions of crimes, older than seven years

      NOTE: The above information can be reported for
      1. credit transactions and life insurance policies involving $150,000 or more and
      2. the employment of an individual at an annual salary of $75,000 or more when provided for employment purposes.
  3. Failure to make required disclosures to the consumer

    The FCRA requires consumer reporting agencies to make a series of disclosures to the consumer upon request by the consumer. First, the consumer reporting agencies must disclose the consumer's entire "file" to the consumer. The "file" includes everything the consumer reporting agency has collected on the consumer with the exception of credit scores, credit predictors or information acquired solely for preparing an investigative report. The consumer reporting agency must disclose the source of all information in the "file" and the identity of each person that obtained a consumer report within specified time periods (one year for all persons and two years for person obtaining the report for employment purposes). Additionally, the consumer reporting agency must disclose the dates, payees and amounts of any checks that are the basis for adverse information in the consumer report and all inquiries received for the past year related to any transaction not initiated by the consumer.

    The consumer reporting agency must provide the consumer with a summary of the consumer's rights under the FCRA and can provide as much information as it chooses related to the FCRA, but at a minimum, must include the following:
    1. a brief description of the FCRA and all the consumer's rights under the FCRA
    2. an explanation of how the consumer can exercise his rights under the FCRA
    3. a list of all federal agencies responsible for enforcement of the FCRA (including telephone numbers and addresses)
    4. a statement that the consumer may have additional rights under state law, and the consumer may contact a state or local consumer agency or state attorney general for additional information; and
    5. a statement that the consumer reporting agency is not required to remove derogatory information that is accurate from the consumer's file, unless the information is outdated or cannot be verified
    CREDIT SCORES: Whenever a consumer requests a credit score from a consumer reporting agency, the agency must send the consumer a statement indicating that the credit scoring model may be different than the credit score used by a lender and include:
    1. the consumer's current credit score or the score used for the extension of credit
    2. the range of all possible credit scores under the model used
    3. all the key factors that adversely affected the consumer's credit score (up to four factors)
    4. the date on which the credit score was created, and
    5. the name of the person or entity that provided the credit score or credit file upon which the credit score was created
    A fair and reasonable fee may be charged for providing the above information. A nationwide consumer reporting agency, however, must provide an annual free credit report to consumers making a written request. The free report must be provided within 15 days once the request is received. For all other purposes, a reasonable charge is considered to be $8 for the report and must be disclosed to the consumer prior to making the disclosure.
  4. Failure to reinvestigate

    If a consumer discovers inaccurate or incomplete information in the consumer report, the consumer may demand that the consumer reporting agency conduct a "reinvestigation." Upon receiving a request for a reinvestigation, the consumer reporting agency must either reinvestigate or delete the disputed information within 30 days of receipt of the consumer's dispute. Courts have interpreted this provision of the FCRA to require a "reasonable" reinvestigation. Therefore, it is not enough for a consumer reporting agency to conduct a superficial review of the alleged debt, it must actively seek to determine the debt's validity.
  5. Failure to remove or correct inaccurate or incomplete information

    If a reinvestigation determines that any information is inaccurate, incomplete or cannot be verified, the consumer reporting agency must delete the information or correct the information.

    Additionally, the consumer reporting agency must notify the consumer of the reinvestigation results within five days of completing the reinvestigation. The notice must be in writing and include the following:
    1. a statement that the reinvestigation has been completed
    2. a new consumer report based upon the consumer's file as revised after the reinvestigation
    3. a statement that the consumer may request a description of the reinvestigation procedures, including the identify, address, and telephone number of furnishers that were contacted as part of the reinvestigation
    4. a statement that the consumer has a right to have a statement placed in his or her file disputing the accuracy or completeness of any information in the file, and
    5. a statement that the consumer has a right to demand that the consumer reporting agency notify previous recipients of the consumer's consumer reports that the inaccurate or incomplete information contained in the prior reports has been deleted or corrected
    If the consumer reporting agency deleted the information within three days of receiving the consumer's dispute, it does not have to follow A through E above. Instead, it must:
    1. promptly notify the consumer that the information has been deleted
    2. notify the consumer of his or her rights to demand that the consumer reporting agency notify previous recipients of the consumer's consumer reports that the inaccurate or incomplete information contained in the prior reports has been deleted or corrected, and
    3. confirm the deletion in writing within five days of the deletion
    In any event, once the reinvestigation is completed and the consumer is notified, the consumer has a right to insert a 100 word statement that the consumer disputes a particular item in the file and describe the nature of the dispute.
  6. Failure to include required information in the consumer report

    The following information, if applicable, must be disclosed:
    1. the title under which a consumer filed for bankruptcy
    2. whenever a credit score is provided in a consumer report, the consumer reporting agency must include in the report a clear and conspicuous statement that a key factor that adversely influenced such score was the number of inquiries (if the number of inquires was in fact a factor).
    3. if a credit reporting agency is notified pursuant to the FCRA that a credit account of a consumer was voluntarily closed by the consumer, the agency shall indicate that fact in any consumer report that includes information related to the account
    4. if a consumer reporting agency is notified pursuant to the FCRA that information regarding a consumer is disputed, the agency shall indicate that fact in each consumer report that includes the disputed information
    5. upon notification by the consumer (or a representative) that the consumer has a good faith belief that fraud has been or is about to be committed against the consumer (including identity theft), the consumer reporting agency shall include a fraud alert in the file of the consumer for at least 90 days (unless a shorter period is directed by the consumer)
    6. upon the direct request of an active duty military consumer (or a representative), a consumer reporting agency shall include an active duty alert
  7. Reinsertion of previously deleted information

    After a disputed item is deleted from a consumer's file, it cannot be reinserted unless the furnisher of the disputed information certifies that the information is complete and accurate. When the consumer reporting agency reinserts the information, it must notify the consumer within five days after the reinsertion. It must also provide:
    1. a statement that the disputed information has been reinserted
    2. the business name, address and telephone number, if available, of any furnisher of information that was either contacted during the reinvestigation or that contacted the consumer reporting agency in connection with the reinvestigation, and
    3. a statement that the consumer has the right to insert a statement disputing the accuracy or completeness of the disputed information in the consumer's file
    The consumer reporting agency must maintain reasonable procedures to insure that previously deleted information is not incorrectly reinserted into a consumer's report.
  8. Violations related to the FCRA restrictions on investigative consumer reports.

    For purposes of the FCRA, an investigative consumer report is a report in which information related to a consumer's character, general reputation, personal characteristics, or mode of living is obtained through personal interviews with neighbors, friends or associates of the consumer with whom the consumer is acquainted or who may have knowledge concerning any such items of information.

    A consumer reporting agency can be held liable for preparing or furnishing any person an investigative consumer report if the person requesting the report did not make a proper disclosure to the consumer (See subpoint 3) below under "Recipients or user or report"). Also, the consumer reporting agency may not make an inquiry for the purposes of preparing an investigative consumer report for employment purposes if the inquiry would violate any Federal or State equal employment opportunity law or regulation.

    A consumer reporting agency may not furnish an investigative consumer report that includes public record information related to an arrest, indictment, conviction, civil judicial action, tax lien or outstanding judgment unless the agency has verified the accuracy of the information within 30 days prior to furnishing the report to any person.

    Finally, a consumer reporting agency may not prepare or furnish an investigative consumer report that contains adverse information obtained through a personal interview with a neighbor, friend or associate of the consumer (or any person with whom the consumer is acquainted) unless:
    1. the agency has followed reasonable procedures to confirm the information from an independent source, or
    2. the person interviewed is the best possible source of the information

Recipients or user of report

A recipient or user of the report is a third party who requests access to a consumer report. There are two simple ways a recipient or user of a report can be held liable under the FCRA. First, a user can be held liable for obtaining a report for an impermissible purpose or in a way that otherwise violates the FCRA.

  1. There are restrictions on obtaining a consumer report for employment purposes A consumer report can only be obtained for employment purposes after a certification has been made by the employer to the consumer reporting agency. In addition to that requirement, however, the employer is not permitted to take an adverse action against an employee or prospective employee based upon the results of a consumer report unless it first sends the consumer a copy of the report and provides a written description of the consumer's rights under the act. The FCRA defines an adverse action as a denial of employment or any other decision for employment purposes that adversely affects any current or prospective employee. This would include demoting an employee or failing to promote an employee. There are detailed exceptions for government national security investigations.
  2. A user can be held liable for obtaining a report for any purpose not authorized by the FCRA (See above)
  3. A user can be held liable for preparing an investigative consumer report in violation of the FCRA.

    For purposes of the FCRA, an investigative consumer report is a report in which information related to a consumer's character, general reputation, personal characteristics, or mode of living is obtained through personal interviews with neighbors, friends or associates of the consumer reported on or with others with whom the consumer is acquainted or who may have knowledge concerning any such items of information.

    First, under the FCRA, an investigative report may not be obtained or prepared unless
    1. it is clearly and accurately disclosed to the consumer that an investigative report may be made. This disclosure must be written and delivered to the consumer within three days of the report being requested. The person requesting the report must also notify the consumer of her rights under the FCRA.
    2. the person requesting the report must also certify to the consumer reporting agency that the person has made the required consumer disclosure and will notify the consumer of her rights under the FCRA.
    Second, whenever a person obtains or requests the preparation of an investigative consumer report, a consumer may send the person a written request (within a reasonable amount of time) for a complete and accurate disclosure of the nature and scope of the investigation. The disclosure must be made in writing, delivered to the consumer (the mail will work) within five days after the date the consumer requested the disclosure or the date the report was first requested, whichever is later. NOTE: No person may be held liable for obtaining or having prepared an investigative report if he shows that, at the time of the violation, he maintained reasonable procedures to assure compliance with this provision of the FCRA.
  1. A person may not obtain a consumer report for the purposes of reselling the reporting unless the person discloses to the original consumer reporting agency the identity of the end user of the report (or information) and every permissible purpose under the FCRA for obtaining the information. NOTE: Any such person could also be held liable as a consumer reporting agency.

    Any such person must also establish reasonable procedures to ensure that the information is being sold for a permissible purpose by requiring any person purchasing the report to identify the end user of the report, identify all purposes for obtaining the report and certify that the report will be used for no other purpose.
  2. Users who take an adverse action against a consumer based upon information contained in the consumer report must meet the requirements of the FCRA. The FCRA requires a user to:
    1. provide oral, written or electronic notice of the adverse action to the consumer
    2. provide to the consumer orally, in writing or electronically,
      1. the name, address and telephone number of the consumer reporting agency
      2. a statement that the consumer reporting agency did not make the decision to take the adverse action and is unable to provide the consumer the specific reasons why the adverse action was taken.
    3. C) provide to the consumer an oral, written or electronic notice of the consumer's right
      1. to obtain a free copy of a consumer report
      2. to dispute the accuracy or completeness of any information in the consumer report
    No person can be held liable under this provision if he shows that, at the time of the violation, he maintained reasonable procedures to ensure compliance.
  3. Users who take adverse action based on information obtained from third parties other than consumer reporting agencies must comply with certain procedures of the FCRA.

    Whenever personal credit is denied or adversely affected either wholly or partly because of information obtained from a third party bearing upon the consumer's credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics or mode of living, the user must, within a reasonable amount of time, (upon written request within 60 days after the consumer learned of the adverse action) disclose the nature of the information to the consumer.

    No person can be held liable under this provision if he shows that, at the time of the violation, he maintained reasonable procedures to ensure compliance.
  4. Users making written credit or insurance solicitations based upon information contained in consumer files.

    Whenever a solicitation, not initiated by the consumer, is sent to a consumer, the person using the consumer report must provide a clear and conspicuous statement that:
    1. information contained in the consumer report was used in connection with the transaction
    2. the consumer received the offer of credit or insurance because the consumer satisfied the criteria for credit worthiness or insurability under which the consumer was selected for the offer
    3. if applicable, the credit or insurance may not be extended if, after the consumer responds to the offer, the consumer no longer meets the original criteria
    4. the consumer has the right to prohibit use of information in her file for such purposes and can exercise such right by contacting the consumer reporting agency's notification system
    The person making a solicitation as described above must maintain on file the criteria used to select the consumer for a period of three years from the date on which the offer is made.
  5. Selling or transferring a debt caused by identify theft

    No person shall sell, transfer or place for collection any debt when the person has been properly notified that the debt is the result of identity theft.
  6. Whenever a debt collector is notified that information placed for collection may be fraudulent or the result of identity theft, the debt collector must notify the underlying creditor that the information may be fraudulent
  7. A user can be held liable for obtaining a consumer report under false pretenses. For example, if a user claims to be accessing a consumer report for insurance underwriting on a transaction initiated by the consumer but actually obtained the information to sue the consumer, the user may be held liable under the FCRA.

Furnishers of Information

A "furnisher of information" is any person who reports information to a consumer reporting agency. Not surprisingly, furnishers of information have several duties and prohibitions under the FCRA. They include a:

  1. prohibition against reporting information with actual knowledge of errors.
  2. prohibition against reporting information after receiving notice of errors. This prohibition applies when a consumer notifies a person that information is inaccurate, and the information is, in fact, inaccurate.
  3. duty to correct and update information. This duty applies to any person who regularly and in the ordinary course of business furnishes information regarding any consumer to a consumer reporting agency and has furnished information that is known to be inaccurate. In such a case, the person has a duty to notify the consumer reporting agency that the information previously furnished is inaccurate.
  4. duty to provide a notice of dispute to any consumer reporting agency being furnished disputed information.
  5. duty to provide consumer reporting agencies notice that an account has been closed.
  6. duty to provide notice of delinquency of accounts. Whenever a person furnishes information to a consumer reporting agency regarding a delinquent account being placed for collection or charged off, the person must notify the agency of the date of delinquency on the account within 90 days after furnishing the information.
  7. duty to provide a consumer reporting agency certain information in the case of identity theft. The furnisher must have reasonable procedures to respond to a consumer reporting agency regarding an identity theft allegation. When a consumer provides an identity theft report to a furnisher related to the furnisher's information, the furnisher may not submit the information to a consumer reporting agency until the information is confirmed as correct.
  8. duty for a financial institution that extends credit and regularly furnishes information to a consumer reporting agency to notify in writing any consumer that the financial institution has provided negative information to a consumer reporting agency regarding the consumer's account. The notice must be provided no later than 30 days after the information is furnished to the consumer reporting agency.

Civil Liability

The most important component of the FCRA is its provisions allowing injured consumers to seek civil damages from those who violate the FCRA. Without this provision, a consumer would have no recourse for FCRA violations. Under the FCRA, there are two categories of civil liability, and they are based upon the degree of culpability of the defendant. The categories are willful noncompliance and negligent noncompliance.

Willful noncompliance

Whenever any person willfully fails to comply with any FRCA requirement, the person is liable for:

  1. actual damages and statutory damages between $100 and $1,000. In the event of liability for obtaining a consumer report under false pretenses or knowingly without a permissible purpose, the person is liable for actual damage sustained by the consumer or $1,000, whichever is greater
  2. punitive damages
  3. attorneys' fees and costs in the event the plaintiff wins. The recovery of reasonable attorneys' fees is significant. When attorneys' fees are awarded, that means you get to keep all actual and statutory damages awarded to you. Without the award of attorneys' fees, you would have to pay your attorneys' contingency fee (typically 33-40%) out of your award. If you are successful in your claim against a person under the FCRA, the court must award attorneys' fees. Recovering costs allows you to recover costs associated with the prosecution of your case such as expert witness fees, deposition costs and court filing fees.

There is a separate provision in the FCRA for obtaining a consumer report under false pretenses or knowingly without a permissible purpose. Such persons are liable to the consumer for actual damages or $1,000 (whichever is greater), punitive damages, costs and attorneys' fees.

Negligent noncompliance

Whenever a person negligently fails to comply with any FCRA requirement, the person is liable for:

  1. any actual damages sustained by the consumer as a result of the failure
  2. attorneys' fees in the event the plaintiff wins

Note: The major difference between damages in a willful noncompliance verses a negligent noncompliance case is punitive damages. Under a negligent noncompliance case, a plaintiff may not recover punitive damages.

Jurisdiction

A plaintiff may file a lawsuit in either federal or state court. Keep in mind, however, that a defendant may choose to remove a case from state court to federal court.

STATUTE OF LIMITATIONS

How long do I have to file a claim?

A plaintiff must file a lawsuit against a person who allegedly violated the FCRA within the earlier of two years after the date the plaintiff discovers the violation or five years after the date the violation occurs. What this means is that, in no event, can a person file a lawsuit against a person under the FCRA more than five years after the violation occurred. In most cases, a person will be required to file a lawsuit within two years of the violation(s).

Because of the strict statute of limitations under the FCRA, do not hesitate to call The Law Office of Carl M. Ward now if you believe your rights have been violated.

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