Appeals Court Examines Willfulness Standard of Fair Credit Reporting Act (FCRA)

Fair Credit Reporting Act (FCRA)

Written By ESR News Blog Editor Thomas Ahearn

On June 19, 2020, the United States Court of Appeals for the Eleventh Circuit vacated a jury’s finding that a major nationwide credit reporting agency (CRA) willfully violated the federal Fair Credit Reporting Act (FCRA) that regulates background checks in the United States by failing to investigate a dispute from a consumer.

In the case of Shaun J. Younger v. Experian Information Solutions, Inc., Plaintiff Younger claimed Defendant Experian “negligently and willfully violated” FCRA 15 U.S.C § 1681i(a)(1)(A) when it failed to reinvestigate an item on his credit report, a debt that he asserted was resolved by a dismissal with prejudice in January 2015.

After Younger obtained a copy of his Experian credit report in March 2015 and discovered the debt was still reported by Experian, he and his lawyer sent a letter to Experian with a copy of the dismissal with prejudice attached requesting that Experian reinvestigate the debt listing and remove it from the credit report.

In April 2015, an employee in the Experian mail room determined the letter qualified as “suspicious” and diverted the correspondence based on Experian’s “suspicious mail policy.” Instead of investigating the dispute, Experian told Younger it received a suspicious mailing and had determined the letter in question was not sent by him.

In June 2015, Younger filed a lawsuit against Experian, which deleted the debt listing. Prior to trial, a magistrate court granted Younger’s motion for summary judgment in September 2017, concluding the letter triggered Experian’s duty to conduct a reinvestigation and Experian was negligent in determining the letter was suspicious.

During the two day trial, Experian’s corporate representative testified the suspicious mail policy was created to protect a consumer’s privacy since a copy of a credit report for investigations can be stolen by fraudsters and to ensure Experian did not violate the FCRA by furnishing a credit report for an impermissible purpose.

The jury returned a verdict finding Experian’s negligent failure to reinvestigate caused $5,000 in compensatory damages and awarded $3 million in punitive damages (later lowered to $490,000) after concluding Experian’s violation of FCRA was willful. Experian appealed, arguing evidence did not support the jury’s finding of willfulness.

Under the Supreme Court ruling in Safeco Insurance Company vs. Burr (2007), the “willfulness” standard set forth in the FCRA encompasses not only “knowing” violations of the statute but also those committed in “reckless disregard” of the statute’s requirements, so a reckless disregard of the FCRA qualifies as a willful violation.

The Eleventh Circuit concluded the verdict of willfulness “cannot stand” since the Plaintiff failed to establish clear and convincing evidence that “Experian ran an unjustifiably high risk of violating its duties under the FCRA.” The jury’s award of punitive damages was eliminated since such damages are only available for willful violations.

Enacted by Congress in 1970, the FCRA promotes the accuracy, fairness, and privacy of consumer information contained in the files of CRAs, protects consumers from the willful and/or negligent inclusion of inaccurate information in their credit reports, and regulates the collection, dissemination, and use of consumer information.

Employment Screening Resources® (ESR) – a leading global background check provider – offers FCRA-compliant background screening solutions as well as 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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