Plaintiffs pursuing claims under the Fair Credit Reporting Act (“FCRA”) (15 U.S.C. § 1681, et seq.) commonly sue “furnishers” along with the consumer reporting agencies. With some exceptions, a “furnisher” is defined as “an entity that furnishes information relating to consumers to one or more consumer reporting agencies for inclusion in a consumer report”. A frequent scenario involves a plaintiff who alleges that he was the victim of identity theft such that a defaulted account has been inaccurately reported as belonging to him on credit reports. The plaintiff typically alleges that he notified the CRAs as well as the furnisher of the identity theft via a dispute letter demanding removal of the inaccurate reporting.
Counts are brought against furnishers under 15 U.S.C. § 1681s-2(b). That section provides, in part, that after receiving notice of a dispute, the furnisher is required to: conduct an investigation with respect to the disputed information; review all relevant information provided by CRA; report the results of the investigation to the CRA; and “if the investigation finds that the information is incomplete or inaccurate”, report those results to all other nationwide CRAs.
A furnisher must either modify, delete, or permanently block reporting of information that it finds upon investigation to be inaccurate or incomplete, or that cannot be verified after any reinvestigation. § 1681s-2(b)(1)(E). Additionally, 15 U.S.C. § 1681s-2(a)(6) provides that, upon notice of identity theft-related information, the furnisher may not furnish that disputed information to any consumer reporting agency, unless the furnisher “subsequently knows or is informed by the consumer that the information is correct.”
In short, the plaintiff will often allege that the furnisher violated the FCRA by reporting a debt arising from a theft with knowledge of the plaintiff’s dispute of that debt. Alternatively, the plaintiff will allege that the furnisher should have known about the dispute had it conducted a reasonable investigation. The plaintiff will certainly allege that the inaccurate reporting resulted in financial harm caused by an inaccurate credit rating. The plaintiff is also likely to contend that the subsequent continued reporting is sufficiently “reckless” to constitute willful conduct. There are obvious incentives for plaintiffs to allege willful violations when comparing remedies available under the Act for willful noncompliance (15 U.S.C. § 1681n) to those available for negligent noncompliance (15 U.S.C. § 1681o).
What to watch for:
Plaintiffs might be inclined to conflate the remedies available under willful versus negligent violations within the complaint or even in a settlement demand’s breakdown of alleged damages. In doing so, a plaintiff might implicitly overstate the bounds of a given remedy. Obviously, punitive damages are only recoverable for willful violations of the FCRA. However, other differences, especially concerning statutory damages, are more subtle. Furnishers who are entertaining settlement possibilities should be ready to respond to overreaching demands with the following points:
- Statutory damages are recoverable only in the case of willful violations of the FCRA. This is especially important when the facts do not necessarily support a clearly willful violation. Compare 15 USC § 1681n (damages for willful violations) to 15 USC § 1681o (damages for negligent violations). See Jackson v. Experian Info. Sols., Inc., 236 F. Supp. 3d 1058, 1065 (N.D. Ill. 2017).
- Plaintiffs cannot recover both actual and statutory damages. Statutory damages are in lieu of actual damages. See In re Trans Union Corp. Privacy Litig., 211 F.R.D. 328, 342 (N.D. Ill. 2002); Harris v. Mexican Specialty Foods, Inc., 564 F.3d 1301, 1313 (11th Cir. 2009).
- The statutory award is not necessarily $1,000. An award may be made in a range of not less than $100 nor more than $1,000. See Murray v. New Cingular Wireless Servs., 523 F.3d 719, 725 (7th Cir. 2008); 15 USC § 1681n.