CLASS ACTION DEFENSE BLOG
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As a resource for class action defense attorneys who defend against actions under the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681 et seq., we provide the text of the FCRA. This article sets forth for the procedure to be followed if a consumer disputes the accuracy of the reported debt:
§ 1681i. Procedure in case of disputed accuracy
(a) Reinvestigations of Disputed Information
(1) Reinvestigation Required
(A) In general.
Subject to subsection (f), if the completeness or accuracy of any item of information contained in a consumer’ s file at a consumer reporting agency is disputed by the consumer and the consumer notifies the agency directly, or indirectly through a reseller, of such dispute, the agency shall, free of charge, conduct a reasonable reinvestigation to determine whether the disputed information is inaccurate and record the current status of the disputed information, or delete the item from the file in accordance with paragraph (5), before the end of the 30-day period beginning on the date on which the agency receives the notice of the dispute from the consumer or reseller.
(B) Extension of period to reinvestigate.
Except as provided in subparagraph (C), the 30-day period described in subparagraph (A) may be extended for not more than 15 additional days if the consumer reporting agency receives information from the consumer during that 30-day period that is relevant to the reinvestigation.
(C) Limitations on extension of period to reinvestigate.
Subparagraph (B) shall not apply to any reinvestigation in which, during the 30-day period described in subparagraph (A), the information that is the subject of the reinvestigation is found to be inaccurate or incomplete or the consumer reporting agency determines that the information cannot be verified.
(2) Prompt Notice of Dispute to Furnisher of Information
(A) In general.
Before the expiration of the 5-business-day period beginning on the date on which a consumer reporting agency receives notice of a dispute from any consumer or a reseller in accordance with paragraph (1), the agency shall provide notification of the dispute to any person who provided any item of information in dispute, at the address and in the manner established with the person. The notice shall include all relevant information regarding the dispute that the agency has received from the consumer or reseller.
(B) Provision of other information.
The consumer reporting agency shall promptly provide to the person who provided the information in dispute all relevant information regarding the dispute that is received by the agency from the consumer or the reseller after the period referred to in subparagraph (A) and before the end of the period referred to in paragraph (1)(A).
(3) Determination That Dispute Is Frivolous or Irrelevant
(A) In general.
Notwithstanding paragraph (1), a consumer reporting agency may terminate a reinvestigation of information disputed by a consumer under that paragraph if the agency reasonably determines that the dispute by the consumer is frivolous or irrelevant, including by reason of a failure by a consumer to provide sufficient information to investigate the disputed information.
(B) Notice of determination.
Upon making any determination in accordance with subparagraph (A) that a dispute is frivolous or irrelevant, a consumer reporting agency shall notify the consumer of such determination not later than 5 business days after making such determination, by mail or, if authorized by the consumer for that purpose, by any other means available to the agency.
(C) Contents of notice.
A notice under subparagraph (B) shall include
(i) the reasons for the determination under subparagraph (A); and
(ii) identification of any information required to investigate the disputed information, which may consist of a standardized form describing the general nature of such information.
FCRA Class Actions Statutes & Rules Uncategorized
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Federal District Court Grants Defense Motion for Summary Judgment and Dismisses Putative Class Action Alleging Violations of FCRA (Fair Credit Reporting Act) Holding that Promotional Offer was a “Firm Offer of Credit” and that Failure to Provide “Clear and Conspicuous” Disclosure was not Willful
A putative class action was filed against New Cingular Wireless for alleged violations of the federal Fair Credit Reporting Act (FCRA), 15 U.S.C. §§ 1681 et seq., by accessing credit reports before sending promotional offers for wireless telephone services. Murray v. New Cingular Wireless Services, Inc., 432 F.Supp.2d 788, 789 (N.D. Ill. 2006). The class action defense argued that it obtained consumer credit reports for permissible purposes within the meaning of the FCRA. Specifically, defense attorneys maintained that Cingular used the reports pursuant to § 1681b to make a “firm offer of credit” – defined by FCRA as “any offer of credit or insurance to a consumer that will be honored if the consumer is determined, based on information in a consumer report on the consumer, to meet the specific criteria used to select the consumer for the offer,” 15 U.S.C. § 1681a(1) – and that any deficiencies with respect to the required disclosures were inadvertent.
The facts underlying the lawsuit were as follows. In 2004, Cingular sent plaintiff a promotional offer for a free wireless phone with the following disclosure: “You were selected to receive this special offer because you satisfied certain credit criteria for creditworthiness, which we have previously established. We used information obtained from a consumer-reporting agency…. You have the right to prohibit information contained in your credit files with this and any other consumer-reporting agency from being used with any credit transaction that is not initiated by you …” Murray, at 789-90. Plaintiff filed a putative class action in federal court alleging that the promotion violated the FCRA. First, he argued that the promotion was not an “offer of credit” but simply an offer for a free phone, and that the word “credit” was never used in the promotion. Id., at 791. The court disagreed, explaining “wireless customers pay for services after the actual use of the services. By definition, such a payment scheme puts Cingular at risk that the customer could default on payment-which is essentially what credit is all about.” Id. (citation omitted). As the court explained at page 791,
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As a resource for attorneys defending against class actions under the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681 et seq., we provide the text of the FDCPA. This article sets forth for the statutory provisions concerning the conditions and form of disclosures to consumers:
§ 1681h. Conditions and form of disclosure to consumers
(a) In General
(1) Proper identification.
A consumer reporting agency shall require, as a condition of making the disclosures required under section 1681g of this title, that the consumer furnish proper identification.
(2) Disclosure in writing.
Except as provided in subsection (b), the disclosures required to be made under section 1681g of this title shall be provided under that section in writing.
(b) Other Forms of Disclosure
(1) In general.
If authorized by a consumer, a consumer reporting agency may make the disclosures required under 1681g of this title
(A) other than in writing; and
(B) in such form as may be
(i) specified by the consumer in accordance with paragraph (2); and
(ii) available from the agency.
(2) Form.
A consumer may specify pursuant to paragraph (1) that disclosures under section 1681g of this title shall be made
(A) in person, upon the appearance of the consumer at the place of business of the consumer reporting agency where disclosures are regularly provided, during normal business hours, and on reasonable notice;
(B) by telephone, if the consumer has made a written request for disclosure by telephone;
(C) by electronic means, if available from the agency; or
(D) by any other reasonable means that is available from the agency.
FCRA Class Actions Statutes & Rules Uncategorized
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We continue today with the posting of the statutory provisions of the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681 et seq., as a resource for class action defense attorneys. The starkest contrast in Congressional treatment in the FCRA is evident from the statutory provisions concerning disclosures to governmental agencies (which consumes a single sentence) and disclosures to consumers (which consume several pages). Those provisions are contained in Sections 1681f and 1681g, respectively, set forth below:
§ 1681f. Disclosures to governmental agencies
Notwithstanding the provisions of section 1681b of this title, a consumer reporting agency may furnish identifying information respecting any consumer, limited to his name, address, former addresses, places of employment, or former places of employment, to a governmental agency.
§ 1681g. Disclosures to consumers
(a) Information on file; sources; report recipients.
Every consumer reporting agency shall, upon request, and subject to 1681h(a)(1) of this title, clearly and accurately disclose to the consumer:
(1) All information in the consumer’ s file at the time of the request except that–
(A) if the consumer to whom the file relates requests that the first 5 digits of the social security number (or similar identification number) of the consumer not be included in the disclosure and the consumer reporting agency has received appropriate proof of the identity of the requester, the consumer reporting agency shall so truncate such number in such disclosure; and
(B) nothing in this paragraph shall be construed to require a consumer reporting agency to disclose to a consumer any information concerning credit scores or any other risk scores or predictors relating to the consumer.
(2) The sources of the information; except that the sources of information acquired solely for use in preparing an investigative consumer report and actually use for no other purpose need not be disclosed: Provided, That in the event an action is brought under this title, such sources shall be available to the plaintiff under appropriate discovery procedures in the court in which the action is brought.
(3) (A) Identification of each person (including each end-user identified under section 1681e(e)(1) of this title) that procured a consumer report
(i) for employment purposes, during the 2-year period preceding the date on which the request is made; or
(ii) for any other purpose, during the 1-year period preceding the date on which the request is made.
(B) An identification of a person under subparagraph (A) shall include
(i) the name of the person or, if applicable, the trade name (written in full) under which such person conducts business; and
(ii) upon request of the consumer, the address and telephone number of the person.
(C) Subparagraph (A) does not apply if–
(i) the end user is an agency or department of the United States Government that procures the report from the person for purposes of determining the eligibility of the consumer to whom the report relates to receive access or continued access to classified information (as defined in section 1681b(b)(4)(E)(i) of this title); and
(ii) the head of the agency or department makes a written finding as prescribed under section 1681b(b)(4)(A) of this title.
(4) The dates, original payees, and amounts of any checks upon which is based any adverse characterization of the consumer, included in the file at the time of the disclosure.
(5) A record of all inquiries received by the agency during the 1-year period preceding the request that identified the consumer in connection with a credit or insurance transaction that was not initiated by the consumer.
(6) If the consumer requests the credit file and not the credit score, a statement that the consumer may request and obtain a credit score.
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Federal District Court Adopts “Statutory” Approach to Determining FCRA Preemption and Denies Defense Motion to Dismiss Consumer’s Common Law Defamation Claim on Grounds of FCRA Preemption
In Beuster v. Equifax Information Serv., 435 F.Supp.2d 471, 2006 WL 1669790 (D. Md. 2006), a Maryland federal court rejected a defense motion to dismiss a defamation claim against a lender on the grounds that it was preempted by the federal Fair Credit Reporting Act (FCRA), 15 U.S.C. §§ 1681 et seq. A consumer, Hans Beuster, failed to qualify for a loan to refinance his home because of a derogatory report in his credit history concerning a credit card account with Bank One. The report stated that Beuster’s owed more than $10,000 on his Bank One account and that it had been sent to collection; Beuster disputed the item, insisting that he never applied for or received the credit card in question. In January 2005, in response to his inquiry, Bank One told Beuster that it was unable to find his credit card application. Nonetheless, when Beuster contacted consumer reporting agency Experian to dispute the derogatory report, Experian responded in February 2005 that the information had been verified by Bank One. In March, Beuster sent letters to consumer reporting agencies Experian, Equifax and Trans Union – enclosing an affidavit and a police report – disputing the derogatory information. This time, Experian agreed to remove the account information from Beuster’s credit report; Equifax and Trans Union, however, responded that Bank One had verified the derogatory item and so they would continue to reflect it in their reports. Slip Opn., at 1-3.
Beuster filed suit in federal court against Bank One, Equifax and Trans Union: as to Bank One, Beuster alleged an FCRA violation and a claim for common law defamation. Slip Opn., at 3. The defense moved to dismiss the defamation claim on the grounds that section 1681t(b)(1)(F) “is a total bar to any state statutory or common law causes of action.” Id., at 6-7. The district court disagreed.
Class Action Court Decisions FCRA Class Actions Uncategorized
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As a resource for class action defense attorneys defending against class actions under the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681 et seq., we provide the text of the FDCPA. This article sets forth for the compliance procedures of the FCRA:
§ 1681e. Compliance procedures
(a) Identity and purposes of credit users.
Every consumer reporting agency shall maintain reasonable procedures designed to avoid violations of section 1681c of this title and to limit the furnishing of consumer reports to the purposes listed under section 1681b of this title. These procedures shall require that prospective users of the information identify themselves, certify the purposes for which the information is sought, and certify that the information will be used for no other purpose. Every consumer reporting agency shall make a reasonable effort to verify the identity of a new prospective user and the uses certified by such prospective user prior to furnishing such user a consumer report. No consumer reporting agency may furnish a consumer report to any person if it has reasonable grounds for believing that the consumer report will not be used for a purpose listed in section 1681b of this title.
(b) Accuracy of report.
Whenever a consumer reporting agency prepares a consumer report it shall follow reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the report relates.
(c) Disclosure of consumer reports by users allowed.
A consumer reporting agency may not prohibit a user of a consumer report furnished by the agency on a consumer from disclosing the contents of the report to the consumer, if adverse action against the consumer has been taken by the user based in whole or in part on the report.
(d) Notice to Users and Furnishers of Information
(1) Notice requirement.
A consumer reporting agency shall provide to any person
(A) who regularly and in the ordinary course of business furnishes information to the agency with respect to any consumer; or
(B) to whom a consumer report is provided by the agency;
a notice of such person’ s responsibilities under this title.
(2) Content of notice.
The Federal Trade Commission shall prescribe the content of notices under paragraph (1), and a consumer reporting agency shall be in compliance with this subsection if it provides a notice under paragraph (1) that is substantially similar to the Federal Trade Commission prescription under this paragraph.
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Class action defense lawyers defending against claims under the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681 et seq., may benefit from ready access to the text of the FCRA, as we provide the statutory provisions as a benefit to class action counsel.
§ 1681d. Disclosure of investigative consumer reports
(a) Disclosure of fact of preparation.
A person may not procure or cause to be prepared an investigative consumer report on any consumer unless
(1) it is clearly and accurately disclosed to the consumer that an investigative consumer report including information as to his character, general reputation, personal characteristics and mode of living, whichever are applicable, may be made, and such disclosure
(A) is made in a writing mailed, or otherwise delivered, to the consumer, not later than three days after the date on which the report was first requested, and
(B) includes a statement informing the consumer of his right to request the additional disclosures provided for under subsection (b) of this section and the written summary of the rights of the consumer prepared pursuant to section 1681g(c) of this title; and
(2) the person certifies or has certified to the consumer reporting agency that
(A) the person has made the disclosures to the consumer required by paragraph (1); and
(B) the person will comply with subsection (b).
(b) Disclosure on request of nature and scope of investigation.
Any person who procures or causes to be prepared an investigative consumer report on any consumer shall, upon written request made by the consumer within a reasonable period of time after the receipt by him of the disclosure required by subsection (a)(1) of this section, make a complete and accurate disclosure of the nature and scope of the investigation requested. This disclosure shall be made in a writing mailed, or otherwise delivered, to the consumer not later than five days after the date on which the request for such disclosure was received from the consumer or such report was first requested, whichever is the later.
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Federal District Court Holds Use of Word “Section” Instead of “Subsection” in FCRA (Fair Credit Reporting Act) § 1681m(h)(8) was a Drafting Error and Denies Defense Motion for Judgment on the Pleadings
The federal Fair Credit Reporting Act (FCRA), 15 U.S.C. §§ 1681 et seq., enacted in 1970, has been described by courts as both “comprehensive” and “complex.” In part, it sets forth statutory requirements governing the use of consumer reports. See 15 U.S.C. § 1681m. In 2003, Congress amended the FCRA by enacting the Fair and Accurate Credit Transactions Act (FACTA). The amendments included adding subsection (h) to § 1681m, which provides: Section 1681m(h)(8) states that no civil actions may be filed for “any failure by any person to comply with this section” (italics added); rather, such violations “shall be enforced exclusively under section 1681s” (italics added), which provides for administrative enforcement of FCRA violations.
Following a so-called “yo-yo” car sale, the consumer/purchaser filed suit in federal court against Brook Road, Inc. alleging violations of various state and federal laws, as well as common law causes of action. Barnette v. Brook Road, Inc., 429 F.Supp.2d 741 (D. Va. 2006). The complaint included an FCRA claim under § 1681m(a) and (b), based on the allegation that the lender had obtained and relied on her credit report, and had engaged in an “adverse action” in reliance on the report, but had failed to provide her with the required notice of the adverse action. Id., at 745. The defense moved for judgment on the pleadings on the grounds that FACTA eliminated private rights of action for all violations of § 1681m; the consumer argued that the use of the word “section” in § 1681m(h)(8) was a typographical error, and that Congress intended to bar private rights of action only for alleged violations of **sub**section (h). Id., at 746.
Class Action Court Decisions FCRA Class Actions Uncategorized
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As a resource for attorneys defending against class actions under the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681 et seq., we provide the text of the FCRA. This article sets forth additional provisions concerning identity theft:
§ 1681c-2. Block of information resulting from identity theft
(a) Block.
Except as otherwise provided in this section, a consumer reporting agency shall block the reporting of any information in the file of a consumer that the consumer identifies as information that resulted from an alleged identity theft, not later than 4 business days after the date of receipt by such agency of–
(1) appropriate proof of the identity of the consumer;
(2) a copy of an identity theft report;
(3) the identification of such information by the consumer; and
(4) a statement by the consumer that the information is not information relating to any transaction by the consumer.
(b) Notification.
A consumer reporting agency shall promptly notify the furnisher of information identified by the consumer under subsection (a) –
(1) that the information may be a result of identity theft;
(2) that an identity theft report has been filed;
(3) that a block has been requested under this section; and
(4) of the effective dates of the block.
(c) Authority to Decline or Rescind
(1) In general.
A consumer reporting agency may decline to block, or may rescind any block, of information relating to a consumer under this section, if the consumer reporting agency reasonably determines that–
(A) the information was blocked in error or a block was requested by the consumer in error;
(B) the information was blocked, or a block was requested by the consumer, on the basis of a material misrepresentation of fact by the consumer relevant to the request to block; or
(C) the consumer obtained possession of goods, services, or money as a result of the blocked transaction or transactions.
(2) Notification to consumer.
If a block of information is declined or rescinded under this subsection, the affected consumer shall be notified promptly, in the same manner as consumers are notified of the reinsertion of information under section 1681i(a)(5)(B) of this title.
(3) Significance of block.
For purposes of this subsection, if a consumer reporting agency rescinds a block, the presence of information in the file of a consumer prior to the blocking of such information is not evidence of whether the consumer knew or should have known that the consumer obtained possession of any goods, services, or money as a result of the block.
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Federal District Court Denies Defense Motion to Dismiss FCRA Claims Against Consumer Reporting Agency Because a Jury Could Find that it Acted Recklessly in Allowing Public Defender’s Investigator to Access Consumer’s Credit Report Even Though Reasons Given were Facially Valid
A consumer filed suit against credit reporting agencies for violating the federal Fair Credit Reporting Act (FCRA), 15 U.S.C. §§ 1681 et seq., after a public defender’s office twice requested and received a credit report for the consumer, an alleged eyewitness to a crime, “in an attempt to impeach his credibility on the theory that his poor credit history created a financial motive to testify against the criminal defendant.” Centuori v. Experian Information Solutions, Inc., 431 F.Supp.2d 1002 (D. Ariz. 2006). The investigator from the public defender’s office gained access to the credit report through a written agreement with Merchants Information Solutions (MIS), which in turn had access to Experian’s consumer records through an agreement whereby MIS promised to ensure that MIS’s customers utilized Experian’s records only for lawful purposes and in compliance with all state and federal laws. In 1998, the public defender’s office had executed a “Permissible Purpose Certificate” for MIS “which listed the permissible and impermissible purposes of access a credit history under the FCRA.” Id., at 1004-05 (footnote omitted).
In 2001, Experian allowed MIS customers direct access to its database via the Internet, thereby saving Experian’s millions of dollars. Experian’s internal policies required that access requests be “properly validated and authorized before access is provided.” Centuori, at 1005. Experian’s policies also generally disallowed access to records by private investigators and attorneys (save for attorneys involved in debt collection) “because of a ‘high risk’ that they would access credit reports for impermissible purposes”; nonetheless, Experian accepted an application from the “Chief Criminal Investigator” of the “Pima County Public Defender,” and provided him with a user ID and password. Id. The access underlying the lawsuit consisted of two requests by the investigator for “collection purposes” and “government fee for service” – both of which are “facially proper purposes under the FCRA,” id., at 1006, though the true purpose is noted above, id., at 1007-08.
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