Fair Credit Reporting Act (FCRA)

Written By ESR News Blog Editor Thomas Ahearn

In April 2021, the U.S. Court of Appeals for the Second Circuit affirmed a trial court’s judgment in favor of a Consumer Reporting Agency (CRA) in the case of SHIMON v. EQUIFAX INFORMATION SERVICES LLC that claimed the Defendant CRA violated several provisions of the federal Fair Credit Reporting Act (FCRA).

According to the ruling, a debt collection action was brought against Plaintiff Jacob Shimon in a New York State Court and a $21,692.09 default judgment was entered against him in March 2013. On the strength of the default judgment, Shimon had his wages garnished and he signed a stipulation of settlement in December 2013.

In 2014, Shimon learned Defendant Equifax included the 2013 default judgment on his credit report. He objected and Equifax updated its report to describe the default judgment as “satisfied” but he sued Equifax for willfully and negligently violating the source-disclosure, accurate reporting, and reinvestigation provisions of the FCRA.

The Appeals Court concluded the district court correctly determined Equifax’s credit report was accurate, that Shimon could not establish damages, and Equifax need not prove it actually interpreted the FCRA in line with the reasonable-interpretation defense established by Safeco Insurance Company of America v. Burr (2007).

“Shimon chose to expend considerable time and energy contesting an accurate credit report: when Equifax advised its customers that the judgment against Shimon was ‘satisfied,’ it gave an accurate report,” United States Circuit Judge Susan L. Carney wrote in the ruling, a copy of which is available here.

Enacted by Congress in 1970, the FCRA 15 U.S.C § 1681 promotes the accuracy, fairness, and privacy of consumer information contained in the files of CRAs and protects consumers from the willful and/or negligent inclusion of inaccurate information in their consumer reports, including consumer credit information.

FCRA lawsuits will continue to serve as legal compliance signposts for employers conducting background checks on job applicants, according to leading global background check provider Employment Screening Resources® (ESR), which compiled the 14th annual “ESR Top Ten Background Check Trends” for 2021.

Employment Screening Resources® (ESR) – which was named the number one background screening firm by HRO Today in 2020 – offers complimentary white papers on how employers may avoid FCRA lawsuits and how CRAs may avoid FCRA lawsuits. To learn more about ESR, visit www.esrcheck.com.

NOTE: Employment Screening Resources® (ESR) does not provide or offer legal services or legal advice of any kind or nature. Any information on this website is for educational purposes only.

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