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Fair Credit Reporting Act

Posted by attorney Edward Hanratty
Filed under: Credit score

The Fair Credit Reporting Act 15 U.S.C. 1681 is a federal law. The Act is designed to prevent the inaccurate reporting of credit information and thereby avoid damage to the public at large and individuals.

The Fair Credit Reporting Act at 15 U.S.C. 1681e(b) requires that a CRA (credit reporting agency) use reasonable procedures to assure the maximum possible accuracy of any credit report. This section of the statute sets a high standard for the CRA, it must assure the maximum accuracy possible in any report. The Federal Trade Commission has construed the statute to require that a CRA do whatever is reasonable, under the circumstances, to avoid liability. FTC, Compliance with the Fair Credit Reporting Act, at 26 (1977). Proof of actual damages is not a component of a claim under this section of the statute.

The statute also requires that the CRA perform a reinvestigation of any disputed items on the credit report, 15 USC 1681i (a)(4). A reinvestigation must be a good faith effort to determine the accuracy of the disputed item (FTC Official Staff Commentary ss 611 item 2). The investigation must be reasonable under the circumstances ((15 USC 1681i (a)).

Furnishers of information to the CRA have a duty to not submit information that the furnisher knows or has reasonable cause to believe is inaccurate (15 U.S.C. 1681 s-2(a)(1)(D)). The furnisher also has a duty to not submit information that it has been told is inaccurate and where the information is in fact inaccurate (15 U.S.C. 1681s-2(a)(1)(B)(i) and (ii)). In general, furnishers are required to provide accurate, complete and updated information ((FTC Informal Staff Opinion Letter (Feb. 15, 2000)).

Any person who negligently fails to comply with the statute is liable to the consumer for actual damages sustained, costs and attorney fees. For willful violations, a consumer is entitled to actual damages or statutory damages of $1,000 (15 U.S.C. 1681n(a)). Willfulness in this context has been generally defined as knowingly and intentionally committing an act in conscious disregard for the rights of another, but no malice or intent need be shown (Philbin v. Trans Union Corp., 101 F.3d 957, 960 (3d Cir. 1996)).

Actual damages in FCRA cases have been awarded for loss of sleep, frustration, mental anguish, injury to sense of well being or reputation.

In order to receive punitive damages under the act, plaintiff need not show any actual damages in a case of willful non-compliance (TRW Inc. v. Andrews, 122 S.Ct. 441, 451 (2001)).

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