Eleventh Circuit Ruling Finds Consumers Can Recover Statutory Damages Under FCRA

November 20, 2023

The U.S. Court of Appeals for the Eleventh Circuit issued a ruling that concerns the Fair Credit Reporting Act (FCRA). According to the decision, consumers can recover damages for willful violations of the FCRA without proof of actual damages. This ruling now aligns the Eleventh Circuit with four other federal circuits. It will also allow a class action potentially affecting millions of consumers to continue.

In a per curium decision, the Eleventh Circuit overturned a decision by a Florida district court. This decision ruled that a group of plaintiffs must prove how the allegedly inaccurate data from a consumer reporting agency (CRA) caused actual financial harm. This group represents a class of approximately 2.1 million consumers.

The Case

This case addresses allegations by the two plaintiffs. They claimed that a major CRA misrepresented the “date of status” on their accounts held by a medical debt collector. According to the plaintiffs, the CRA automatically updated the date to the current month instead of reporting the correct date for when the account went into collection.

These date of status fields should show when a given account reaches its current status. In the case of consumer debts like the ones in question here, it should be the date it went to collections. The account should keep this date until the individual begins making payments. Otherwise, it would change if the FCRA requires the CRA to stop reporting the account.

This technical issue continued for over a year and a half until the CRA detected it. However, the problem affected over 2.1 million consumers before the CRA realized what happened. Among the affected include the two plaintiffs, though the error did not impact their credit scores. Regardless, the error could have harmed their creditworthiness due to the recent appearance of their accounts entering collections.

The Process

The plaintiffs filed a class action complaint and represented a class of individuals whose accounts contained inaccurate “date of status.” According to the plaintiffs, this willfully “violated its obligation under the Fair Credit Reporting Act to ‘follow reasonable procedures’ to ensure consumer credit reports were prepared with ‘maximum possible accuracy’ when it allowed credit reports to reflect allegedly inaccurate status dates.”

The CRA moved for summary judgment. It claimed that the FCRA required the plaintiffs to prove willful violations under Section 1681n(a)(1)(A), showing how they suffered actual damages. Though the district court denied the motion, it agreed that the plaintiffs must show actual damages. As a result, the district court later rejected the plaintiffs’ motion for class certification.

However, the Eleventh Circuit vacated this ruling upon appeal. The Circuit found that the district court failed to consider the 1996 revisions to the FCRA. In these revisions, the panel unanimously found that the law added a second recovery option for willful violations. As such, consumers could sue for statutory damages of not less than $100 and not more than $1,000 rather than actual damages. This decision returned the case to the lower court for further proceedings, which will decide whether to grant the class certification.

This case reminds all employers and CRAs of the importance of FCRA compliance. Violations of the Act often lead to penalties and can involve lengthy litigations. One way to ensure compliance is by working with a trusted background screening provider. The right partner will use their experience with FCRA and other regulations to deliver accurate and timely reports.

Keep your business compliant with federal, state, and local laws with JDP’s reliable background checks. Contact a sales rep today.