Congress Considers FCRA Liability Harmonization Act to Amend Fair Credit Reporting Act to Limit Damages in Class Action Lawsuits

FCRA-graphic

Written By ESR News Blog Editor Thomas Ahearn

On September 7, 2017 – ironically the same day nationwide credit reporting agency Equifax announced it had suffered a massive data breach – Congress held a hearing entitled “Legislative Proposals for a More Efficient Federal Financial Regulatory Regime” to consider six proposals including one called “The FCRA Liability Harmonization Act” (H.R. 2359) that would amend the Fair Credit Reporting Act (FCRA) to limit damages related to class action lawsuits filed under the FCRA.

Introduced by U.S. Representative Barry Loudermilk (R-Georgia), the “The FCRA Liability Harmonization Act”  amends the FCRA to establish certain limits – the lesser of $500,000 or one percent of the net worth of the defendant – on potential liability for statutory damages. The Act also eliminates punitive damages that can awarded under the FCRA. Specifically, it amends Section 616 of the FCRA (15 U.S.C. 1681n) and Section 617 of the FCRA (15 U.S.C. 1681o7).

  • (a) Willful Noncompliance.—Section 616 of the Fair Credit Reporting Act (15 U.S.C. 1681n) is amended—(1) in subsection (a)—(A) by striking paragraph (2); (B) by redesignating paragraph (3) as paragraph (2); and (C) in paragraph (1)(B), by inserting “and” after the semicolon; (2) by redesignating subsection (d) as subsection (e); and (3) by inserting after subsection (c) the following new subsection: “(d) Class Action Lawsuits.—With respect to a class action (as such term is defined in section 1711 of title 28, United States Code), or series of class actions arising out of the same failure to comply of a person, brought by consumers against a person who willfully fails to comply with any requirement imposed under this title, such person is liable to such consumers in such an amount as a court may determine, except that—“(1) the court may not apply a minimum amount of damages for each member of the class; and “(2) the total recovery (excluding reasonable attorney’s fees as determined by the court) of the class shall not exceed the lesser of—“(A) $500,000; or “(B) 1 percent of the net worth of such person.”.
  • (b) Negligent Noncompliance.—Section 617 of the Fair Credit Reporting Act (15 U.S.C. 1681o7) is amended by adding at the end the following new subsection: “(c) Class Action Lawsuits.—With respect to a class action (as such term is defined in section 1711 of title 28, United States Code), or series of class actions arising out of the same failure to comply of a person, brought by consumers against a person who negligently fails to comply with any requirement imposed under this title, such person is liable to such consumers in an amount equal to the sum of any actual damages sustained by the consumers as a result of the failure, except that the total recovery (excluding reasonable attorney’s fees as determined by the court) of the class shall not exceed the lesser of— “(1) $500,000; or “(2) 1 percent of the net worth of such person.”.

“I have seen how a small technical error, turned into a lawsuit, can affect everyone in a business, including employees, customers, and vendors. Unfortunately, suits under the FCRA have skyrocketed in recent years while leaving consumers inappropriately compensated. My bill protects both consumers and businesses by bringing liability under the FCRA in line with other consumer financial protection laws,” Representative Loudermilk stated in a press release.

Besides Representative Loudermilk, other Republican members of Congress listed on the webpage for the hearing include U.S. Representative Dave Trott (R-MI 11th District), U.S. Representative Blaine Luetkemeyer (R-MO 3rd District), U.S. Representative Ed Royce (R-CA 39th District), U.S. Representative Claudia Tenney (R-NY 22nd District), and U.S. Representative French Hill (R-AR 2nd District). An archived webcast of the hearing is available here.

Enacted in 1970, the FCRA (15 U.S.C. § 1681) is federal legislation that promotes the accuracy, fairness, and privacy of consumer information contained in the files of consumer reporting agencies (CRAs) and protects consumers from the willful or negligent inclusion of inaccurate information in credit reports. To that end, the FCRA also regulates the collection, dissemination, and use of consumer information, including consumer credit information.

Two ESR Whitepapers on FCRA Lawsuits

Employment Screening Resources® (ESR) founder and CEO Attorney Lester Rosen – author of “The Safe Hiring Manual” – has written two complimentary whitepapers entitled “Common Ways Prospective or Current Employees Sue Employers Under the FCRA” and “Common Ways Consumer Reporting Agencies are Sued Under the FCRA” that deal with the most common reasons why both employers and CRAs can face legal trouble for alleged FCRA violations.

Related ESR News Blog: Massive Equifax Data Breach Should Not Affect Credit Reports Ordered by Employers for Background Checks

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