Companies that are sued for allegedly violating the Fair Credit Reporting Act have a number of strong defense strategies at their disposal, but should take care when deciding which ones to use, according to a trio of lawyers from the law firm of Troutman Sanders, who gave a webinar on the topic earlier this week.
What makes the FCRA dangerous for defendants when compared to other statutes like the Fair Debt Collection Practices Act or the Telephone Consumer Protection Act is that there is no cap on damages when a company is found liable, according to David Anthony, a partner at the firm.
“The FCRA is an attractive vehicle for plaintiffs attorneys to bring class-action lawsuits,” Anthony said.
The data definitely backs Anthony up. Through the first 11 months of 2017, there were 4,046 lawsuits filed against companies in the ARM industry which alleged violations of the FCRA, up from 3,680 during the same period a year earlier, according to data supplied by WebRecon.
Even though it was bad in the news this week when the Supreme Court decided not to hear arguments on the case a second time, the first strategy listed by the lawyers during the webinar when defending against class-action lawsuits is to leverage Spokeo v. Robins. Back in 2016, the Supreme Court ruled that a plaintiff has to have suffered “concrete” harm in order to file a lawsuit in a federal court. When it comes to errors on a credit report, it can be difficult to show that someone was actually damaged by that mistake. And, if someone was, say by losing out on a job because a background check uncovered something that was a mistake on a credit report, those errors tend to be more individualized and do not lend themselves to being the basis for a class-action suit, Anthony said.
“This is a dilemma for plaintiffs under the FCRA, “ Anthony said. “If they want to show all the actual damages, they have to show proof that each class member suffered from actual harm. That requires an individualized inquiry, which would defeat whole purpose of having a class action.”
A comprehensive and well-followed document retention policy can also help fight against FCRA class-action lawsuits, said Cindy Hanson, another partner at Troutman Sanders. By maintaining a policy of only keeping records for two years, a company can possibly narrow the scope of an FCRA lawsuit. Hanson noted that some companies can tend to hold on to documents for too long and that can cause problems when they are sued.
More information about the webinar, including access to a recording, is available here
