Written By Digital Content Editor Thomas Ahearn

In August 2022, the U.S. Chamber of Commerce and several trade associations filed a coalition amicus brief that urged the U.S. Court of Appeals for the Second Circuit to reject an attempt to expand Fair Credit Reporting Act (FCRA) obligations to require consumer reporting agencies (CRAs) and furnishers to adjudicate legal disputes.

The America Bankers Association (ABA), National Association of Federally-Insured Credit Unions (NAFCU), Independent Community Bankers of America (ICBA), American Financial Services Association (AFSA), Credit Union National Association (CUNA), and Consumer Bankers Association (CBA) also took part in filing the brief.

The filing was in response to an amicus brief filed in May 2022 by the Consumer Financial Protection Bureau (CFPB) and Federal Trade Commission (FTC) that argued the Second Circuit should reject a district court’s “exceedingly narrow view” of the FCRA accuracy requirement in the class action lawsuit Sessa v. Trans Union.

The FCRA imposes various requirements that CRAs must follow when they compile and disseminate consumer reports about individual consumers. Section 1681e(b) of the FCRA requires CRAs to “follow reasonable procedures to assure maximum possible accuracy” of consumer reports. The CFPB and FTC argued:

“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.”

In Sessa v. Trans Union, the plaintiff consumer sued the defendant TransUnion – one of the three nationwide credit reporting companies – for allegedly violating the FCRA after reporting on the 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 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 agreed with TransUnion and dismissed the complaint, holding that the information in a consumer report was accurate – and therefore the 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 coalition amicus brief also agreed: “The main question in this case is whether the FCRA addresses only factual accuracy in credit reports, or also requires determinations of legal validity. As the district court correctly recognized, the FCRA requires CRAs to guard against factual inaccuracies, not to resolve legal disputes.”

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 CRAs, and to protect consumers from the willful and/or negligent inclusion of inaccurate information in their consumer reports, including credit reports.

Employment Screening Resources (ESR) – a service offering of ClearStar, a leading Human Resources technology company that provides of background, drug, and occupational health screening – offers background screening services and employment credit reports that comply with the FCRA. 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.

NOTE: Employment Screening Resources (ESR) – a service offering of ClearStar – 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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