Obtaining consumer reports in violation of the federal Fair Credit Reporting Act (15 U.S.C. §§ 1681 et seq.) continues to blossom as a new malpractice risk for lawyers. The FCRA carries both criminal penalties and civil damages. Damages include actual damages sustained by the consumer, punitive damages, and costs and reasonable attorney’s fees for the successful plaintiff. The law has a two year statute of limitations.
Like the Fair Debt Collection Practices Act, the statutory scheme for the FCRA is demanding in application. It requires a thorough understanding of terminology, persons protected, and permitted uses of consumer reports. The FCRA is designed to assure that consumer reporting agencies act with fairness, impartiality, and consideration for consumer privacy. It fosters responsible dissemination of accurate and relevant information on a confidential basis by limiting access to reports to those with a legitimate need to know.
The Problem For Lawyers
Lawyers have tripped over the FCRA in these situations:
A recent development is the potential application of the FCRA to sexual harassment investigations. An April 5, 1999 Federal Trade Commission advisory letter, Sexual Harassment Investigations and The Fair Credit Reporting Act…, provided that under certain circumstances outside organizations who investigate harassment claims for an employer become a consumer reporting agency under the FCRA. This result triggers several requirements designed to assure fairness to the employee. Lawyers often perform these investigations for employers and must be sensitive to any FCRA implications . For a detailed discussion of this development see Employers, Lawyers Who Investigate Harassment Liable Under Credit Act?, Lawyers Weekly USA, 99 LWUSA 481, 5/31/99.
Risk Managing The Hazard
Before seeking a credit report in your practice for any purpose some of the details you need to know about the FCRA are:
Although not a case involving lawyers, one of the best cases for learning about the FCRA is Yang v. Government Employees Insurance Co. (GEICO), 146 F.3d 1320 (11th Cir. 1998). In Yang a GEICO claims adjuster was suspicious of the claimant’s car accident claim. To evaluate the claim an Inquiry Activity Report (IAR) was obtained from Equifax Credit Information Services, Inc. The Yangs sued claiming this was an FCRA violation. The Court agreed. It found that IAR’s were covered consumer reports regardless of their ultimate use for a purpose not contemplated by the FCRA – in this case to evaluate an insurance claim. In Yang the Court covers many of the questions posed in this article.
Read the statute, Yang, and the other cases cited in this article before you request your next consumer report.