FCRA

The Supreme Court released its highly anticipated decision yesterday in Spokeo, Inc. v. Robins, which addresses whether plaintiffs have standing to pursue statutory damages even in the absence of actual harm under the Fair Credit Reporting Act (“FCRA”).  As we previously reported, the case was expected to have significant down-stream implications for standing in privacy class action litigation, because numerous privacy-related federal laws have been construed to allow statutory damages even in the absence of actual injury (e.g., the Telephone Consumer Protection Act).
Continue Reading Supreme Court Issues Highly Anticipated Spokeo Decision

By Lindsay Burke and Brian Fitzpatrick

On March 10, 2014, the EEOC and the FTC issued joint guidance on how the anti-discrimination laws and the Fair Credit Reporting Act (“FCRA”) apply to background checks performed by employers for employment application purposes. This guidance is published in two documents, one directed at employers and the other directed at employees and applicants, and aims to provide high-level practical assistance and answers to commonly asked questions that arise during the application process.  The pamphlet directed to employers builds off of the EEOC’s April 25, 2012 guidance regarding employer use of criminal history information, which we summarized here, and addresses the request for, appropriate use of, and disposal of such information.

Employers are reminded of their obligation to treat all applicants and employees equally and to refrain from performing background checks in a selective manner, where that decision is or could be perceived to be based on protected characteristics, including medical history (which implicates genetic information). When using background information to make employment decisions, employers must apply the same standards to all individuals and be cautious of basing employment decisions on background problems that may be more common among people of certain protected categories. If a certain type of background check disproportionately impacts members of a protected group, it must be job-related and consistent with business necessity. The guidance does not explain, however, how employers are to discern whether these warnings apply, nor does it mandate that employers conduct any research to investigate these possibilities. Continue Reading EEOC and FTC Issue Joint Guidance on Background Checks Performed by Employers

A federal judge on Wednesday reduced a jury’s punitive damages award against Equifax from more than $18 million to $1.62 million, after finding that the jury’s award was unconstitutionally excessive despite Equifax’s “reprehensible” conduct in violating the Fair Credit Reporting Act.

Plaintiff Julie Miller sued Equifax under FCRA for failing…

Continue Reading Judge Reduces Punitive Damages Against Equifax in FCRA Suit

Yesterday, the U.S. Senate Committee on Commerce, Science, and Transportation held a hearing entitled, “What Information Do Data Brokers Have on Consumers, and How Do They Use It?”   Committee members expressed interest in bringing about greater transparency to what information is collected by data brokers and how it is used at the hearing, which consisted of a single panel of witnesses from the FTC’s Bureau of Consumer Protection, the World Privacy Forum, Experian, and the Direct Marketing Association.

In advance of the hearing, Chairman John D. Rockefeller IV (D-WV) released a majority staff report summarizing the Commerce Committee’s investigation into how data brokers collect, compile, and sell consumer information.  The staff report notes that data brokers serve a beneficial function in enabling companies to provide customers with products and services specific to their interests and needs, but that certain data brokers “operate with minimal transparency” and that consumer profiling can raise “unintended privacy issues.”  For this proposition, the staff report cited media reports that a major retailer had developed a pregnancy prediction model to enable the company to target marketing towards expectant mothers. 

According to the Committee’s staff report, a perceived lack of transparency may present further concerns when data broker information “end[s] up in the hands of predatory businesses seeking to identify vulnerable consumers, or when marketers use consumers’ data to engage in differential pricing.”

Senate Commerce Committee members generally echoed these concerns at yesterday’s hearing.  For example:Continue Reading Senate Panel Examines Data Broker Industry; Releases Staff Report

Recently, a jury in the U.S. District Court for Oregon awarded a plaintiff $18.58 million in compensatory and punitive damages for Equifax’s violations of the Fair Credit Reporting Act (FCRA).  The plaintiff was a co-signor to a loan that was denied by a bank due to the plaintiff’s credit report, which…

Continue Reading FCRA Jury Award Highlights Compliance Risk

Earlier this month, Maneesha Mithal, Associate Director of the Federal Trade Commission’s Division of Privacy and Identity Protection, testified before the U.S. Senate Subcommittee on Consumer Protection, Product Safety, and Insurance regarding consumer report accuracy and the FTC’s efforts to improve accuracy through education and enforcement.  Her testimony emphasized the…

Continue Reading FTC Official Highlights FCRA Enforcement as a High Priority

This week, the Federal Trade Commission released a study of the U.S. credit reporting industry and credit report accuracy.  The study found that five percent of consumers had errors on one of their three nationwide credit reports that could lead them to pay more for financial products.  The study is…

Continue Reading FTC Study Details Inaccuracies in Credit Reports

On January 22, 2013, the Federal Financial Institutions Examination Council proposed guidance on the applicability of consumer protection and compliance laws, regulations, and policies to activities conducted via social media by depository institutions.  The proposed guidance would not impose additional compliance obligations on institutions.  Instead, the guidance is intended to help financial institutions understand potential consumer compliance, legal, reputation, and operational risks associated with the use of social media, along with expectations for managing those risks. 

The proposed guidance defines “social media” as “a form of interactive online communication in which users can generate and share content through text, images, audio, and/or video.”  The FFIEC warns that social media can impact a depository institution’s risk profile by increasing the risk of harm to consumers, compliance and legal risk, operational risk, and reputational risk. 

Continue Reading FFIEC Proposes Social Media Guidance

Last week, the Federal Trade Commission entered into a consent order with two companies alleged to have operated as consumer reporting agencies, by providing criminal record reports through mobile applications, without complying with the Fair Credit Reporting Act (FCRA).  The consent order represents the FTC’s first FCRA case involving mobile…

Continue Reading FTC Enters into Consent Order with Mobile Application Developers for Fair Credit Reporting Act Violations

The U.S. Supreme Court ruled on Tuesday that the federal government does not always lose its sovereign immunity to damages lawsuits claiming that an agency violated the Fair and Accurate Credit Transactions Act (“FACTA”) by printing the expiration date of a credit card on a receipt issued to a consumer. In a unanimous decision, authored by Justice Antonin Scalia, the Court rejected a November 2010 ruling by the Federal Circuit that the Little Tucker Act authorized the government to be sued for money damages under the Fair Credit Reporting Act (“FCRA”), which FACTA amended.  

James Bormes, a Chicago lawyer, paid a $350 court filing fee through the federal government’s pay.gov system with his American Express card. He was sent an electronic receipt for the transaction, which contained his credit card’s expiration date. Bormes alleged that this violated FACTA’s prohibition on printing expiration dates on credit card receipts issued at the point of sale.  He sued the government, seeking class-action status on behalf of thousands of people issued receipts that displayed card expiration dates or more than the last five digits of credit and debit card numbers (which FACTA also prohibits).

The district court initially dismissed the suit, finding that the FCRA does not contain an explicit waiver of the government’s sovereign immunity and could, therefore, not allow for the plaintiff’s damages claims. Bormes appealed to the Federal Circuit, which has exclusive jurisdiction for appeals in which a lower court’s jurisdiction was based partly on the Little Tucker Act. The government moved to transfer the suit to the Seventh Circuit, arguing that the Act’s jurisdictional provision did not apply. The Federal Circuit denied the motion and vacated the lower court’s ruling. The federal government then took the sovereign immunity issue to the Supreme Court.Continue Reading Government May be Immune to Suits Alleging Violations of FACTA