CFPB and FTC File Amicus Brief with Appeals Court to Overturn FCRA Case

Fair Credit Reporting Act (FCRA)

Written By ESR News Blog Editor Thomas Ahearn

On October 14, 2021, the Consumer Financial Protection Bureau CFPB), Federal Trade Commission (FTC), and North Carolina Department of Justice filed an amicus brief with the U.S. 4th Circuit Court of Appeals to overturn a district court decision in a case involving the Fair Credit Reporting Act (FCRA), according to CFPB news release.

In Henderson v. The Source for Public Data, L.P., plaintiff alleged defendant was a Consumer Reporting Agency (CRA) that used the internet to obtain public records for consumer background check reports for customers and violated the FCRA by disseminating consumer reports with false, incorrect, or misleading consumer information.

The district court ruled the defendant could not be held liable for violating the FCRA’s procedural requirements because the plaintiffs’ FCRA claims treated the defendant as a publisher and speaker of third-party information and were therefore barred under Section 230 of the Communications Decency Act of 1996 (CDA).

Section 230(c)(1) provides immunity from liability for providers and users of an “interactive computer service” who publish information provided by third-party users: “No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.”

The amicus brief addressed the district court’s erroneous application of Section 230 to find defendant immune from FCRA violation claims and argued Section 230 did not provide immunity since plaintiffs’ FCRA claims did not seek to impose liability on defendant as publisher or speaker of third-party content, as Section 230 requires.

The amicus brief also argued the district court incorrectly applied Section 230 when it found defendant was not an “information content provider” with consumer reports because plaintiffs sufficiently alleged the company was responsible for creating the reports. The case is on appeal before the U.S. 4th Circuit Court of Appeals.

“Companies like these have long been considered consumer reporting agencies governed by the FCRA, and the fact that a company offers its products through a website or delivers data online does not change that,”
CFPB Director Rohit Chopra and FTC Chair Lina M. Khan said in a joint statement about the amicus brief.

“The CFPB and FTC will be closely scrutinizing tech companies’ efforts to use Section 230 to sidestep applicable laws and will seek to ensure that this legal shield is not being used or abused to gain an undue competitive advantage over law-abiding businesses,” CFPB Director Chopra and FTC Chair Khan said in the statement.

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. The FCRA is enforced by the CFPB and FTC.

Employment Screening Resources® (ESR) – a global background check provider ranked the #1 screening firm by HRO Today – offers FCRA compliant background checks and white papers on ways employees sue employers under the FCRA and ways CRAs are sued under the FCRA. To learn more about ESR, visit www.esrcheck.com.

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