Written By ESR News Blog Editor Thomas Ahearn
On May 5, 2022, the Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC) – two U.S. government agencies that enforce the federal Fair Credit Reporting Act (FCRA) – filed an amicus brief in a class action lawsuit that argued the FCRA does not distinguish between “factual” and “legal” accuracy.
In the case of Sessa v. Trans Union, LLC, a consumer sued TransUnion, one of three nationwide credit reporting companies, for allegedly violating the FCRA after reporting on a consumer’s credit report that she owed nearly $20,000 on a car lease that she actually did not owe under the plain terms of her lease.
The FCRA imposes various requirements that consumer reporting agencies (CRAs) must follow when they compile and disseminate consumer reports about individuals. Section 1681e(b) of the FCRA requires CRAs to “follow reasonable procedures to assure maximum possible accuracy” of consumer reports.
The plaintiff consumer claimed that defendant TransUnion violated the FCRA by failing to have reasonable procedures to assure the information on her report was accurate. However, TransUnion argued that it could not be responsible for failing to do its duty under the FCRA because the error was “legal” rather than “factual.”
A U.S. district court dismissed the complaint. “The district court held that the information in a consumer report is accurate (and therefore plaintiff did not show this element of section 1681e(b) liability) so long as any inaccuracies can be characterized as ‘legal’ rather than ‘factual’ in nature,” the amicus brief noted.
“The district court adopted an exceedingly narrow view of what constitutes an inaccuracy for purposes of the FCRA. Specifically, it held ‘that accuracy with respect to FCRA claims applies to factual but not legal accuracy.’ The factual/legal distinction undergirding the district court’s holding finds no support in the text of the statute.”
The brief filed by the CFPB and FTC pointed out that the “FCRA does not contain an exception for ‘legal’ inaccuracies. Rather, the FCRA commands credit reporting companies to ‘follow reasonable procedures to assure maximum possible accuracy,’” according to a CFPB blog about accuracy obligations in consumer reports.
“While TransUnion argues that the inaccuracy on the consumer’s credit report was based on a legal dispute, the error was simple and straightforward: TransUnion reported that the consumer owed money that she clearly did not,” the blog stated. The case is currently pending before the U.S. Court of Appeals for the Second Circuit.
The FCRA 15 U.S.C § 1681 was enacted by Congress in 1970 to promote the accuracy, fairness, and privacy of consumer information contained in the files of consumer reporting agencies, and to protect consumers from the willful and/or negligent inclusion of inaccurate information in their consumer reports.
Employment Screening Resources (ESR) – a service offering of ClearStar, a leading provider of background, drug, and medical screening – offers background screening services that comply with federal FCRA, state, and local laws that regulate background checks in the United States. To learn more, contact ESR today.
NOTE: Employment Screening Resources (ESR) – a service offering of ClearStar – reminds readers that allegations made in class action lawsuits are not proof a business or individual violated any law, rule, or regulation since they are in the pleading stage with no factual adjudications yet.
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