FCRA Class Action Review – 2025

FCRA, FDCPA, And FACTA Class Actions I. Executive Summary

The Congressional purpose in enacting the Fair Credit Reporting Act (FCRA) is “to insure that consumer reporting agencies exercise their grave responsibilities with fairness, impartiality, and a respect for the consumer ’ s right to privacy.” See 15 U.S.C. § 1681. The Act purports to accomplish this purpose by requiring consumer reporting agencies and entities obtaining consumer reports to “follow reasonable procedures to assure maximum possible accuracy of consumer reports; to notify providers and users of consumer information of their responsibilities under the Act; to limit the circumstances in which such agencies provide consumer reports for employment purposes; and to post toll-free numbers for consumers to request reports.” Spokeo, Inc. v. Robins, et al. , 578 U.S. 330, 335 (2016). The limitations periods for bringing an action under the FCRA is the earlier of “2 years after the date of discovery by the plaintiff of the violation that is the basis for such liability; or 5 years after the date on which the violation that is the basis for such liability occurs.” 15 U.S.C. § 1681(p). Damages for individual FCRA violations range from $100 to $1,000. Additionally, a court may decide to award punitive damages of up to $2,500 per violation depending on the severity of the “willful” violation. In determining the amount, courts consider the degree of culpability, any history of prior such conduct, ability to pay, effect on ability to continue to do business, and such other matters as justice may require. 15 U.S.C. § 1681(s)(a)(2)(B). Courts have often noted that FCRA violations lend themselves to resolution through class action litigation, and FCRA class actions have increased partially because of the Fair and Accurate Credit Transactions Act (FACTA) amendments, passed in 2003. The FACTA requires that credit reporting agencies improve the clarity of consumer credit reports. Specifically, it mandates that consumers have a clearer understanding of the credit reporting process and any negative information reported, so they can dispute any inaccuracies. The information also must be presented in a way that’s understandable to consumers, with a notice of rights included to explain how to dispute errors and seek remedies. The FACTA amendments were meant to improve the accuracy and security of consumer credit information and to help protect consumers from identity theft. The FACTA amendments require that a consumer who is accorded less favorable treatment in reliance on their credit report be provided an adverse action notice (similar to the FCRA’s requirements). This notice must be provided to the consumer if they are treated less favorably based on information in their consumer report. For example, if a credit report is used to deny someone a loan or to offer them higher rates, the consumer must be informed of this decision. The civil penalties for willfully failing to comply with the FACTA’s provisions align with those of the FCRA, with fines for violations of up to $2,500 per willful violation, while negligent violations can result in fines of up to $1,000 per violation. Within the employment context, the plaintiff ’ s bar often targets employers for improper disclosures and authorizations on employee applicant background check forms. The FCRA ’ s authorization and disclosure requirements apply whenever a potential employer obtains a “consumer report” or “investigatory consumer report” on an employee applicant. A “consumer report” is any written, oral, or other communication of any information by a consumer reporting agency bearing on a consumer’s credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living which is used or expected to be used or collected in whole or in part for the purpose of serving as a factor in establishing the consumer’s eligibility for – (a) credit or insurance to be used primarily for personal, family, or household purposes; (b) employment purposes; or (c) any other purpose authorized under § 1681b. See 15 USC § 1681a(d)(1). An “investigatory consumer report” is a background check into an individual ’ s character, general reputation, personal characteristics, or mode of living based on interviews with the person ’ s neighbors, friends, associates, acquaintances, or others who may know about such information. See 15 U.S.C. § 1681(d)(a)(1). Whenever an employer wishes to obtain a consumer report on an applicant for a job, the employer must first obtain the applicant ’ s written authorization to obtain such a report. See 15 U.S.C. § 1681(b)(2)(A). This authorization form must inform the applicant that the employer will obtain a consumer report, identify the third-

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