FCRA Case May Decide if U.S. Government is a Liable Data Furnisher

July 12, 2023

The U.S. Supreme Court has agreed to hear a case concerning the United States government. This suit determines whether the Fair Credit Reporting Act (FCRA) considers the government liable as a data furnisher. According to the suit, the Supreme Court must answer whether Congress can waive the government’s sovereign immunity against FCRA violation lawsuits.

This question is the result of an individual contending owed money. According to the individual, he no longer owed a loan issued by the Department of Agriculture (USDA). He alleged that the USDA reported the account as 120 days overdue, damaging his credit score. 

The individual filed a dispute with one of the major credit reporting agencies that reported the account as overdue. He notified the agency of the incorrect information, but the USDA did not make corrections. As a result, the plaintiff filed a federal court case alleging that the USDA committed willful and negligent violations of §1681s-2(b). 

This regulation governs the responsibilities of furnishers of data to consumer reporting agencies and specifically provides that:

“A person shall not furnish information relating to a consumer to any consumer reporting agency if-

  1. The person has been notified by the consumer, at the address specified by the person for such notices, that specific information is inaccurate; and
  2. The information is, in fact, inaccurate.”

This passage means that any “person” must investigate disputes upon notification of an inaccuracy. Should they discover one, they must modify, delete, or otherwise suppress the information. In most cases, the question of liability settles upon the reasonableness of the furnisher’s investigation upon receiving a dispute.

Once filed in the federal district court, the USDA claimed it held sovereign immunity against civil suits. According to the court, the FCRA did not unambiguously waive this immunity. The plaintiff appealed this ruling to the Court of Appeals for the Third Circuit. 

In this appeal, the plaintiff argued that the FCRA’s definition of a “person” includes “any individual, partnership, corporation, trust, estate, cooperative, association, government or governmental subdivision or agency, or other entity.” As such, it would waive this right.

Agreeing with this interpretation, the Third Circuit reversed the district court’s ruling. However, the Supreme Court has petitioned for a writ of certiorari from the USDA. This action leaves the decision concerning whether to hold the government liable for violating the FCRA to the court. This decision could significantly impact the definition of “person” in the FCRA.

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