Even if CFPB Trims Rulemaking, It Will Keep Eyeing Data Brokers

Consumer reporting agencies, furnishers, and end users must continuously monitor recent developments to remain compliant with their legal obligations under the Fair Credit Reporting Act.

The FCRA continues to be one of the most heavily litigated consumer protection statutes in the country, and companies should expect this to continue.

Agency Rulemaking

The Consumer Financial Protection Bureau is the primary federal agency with jurisdiction over the FCRA and remains highly active. Looking back, the CFPB issued an advisory opinion on inaccuracies in background check reports and file disclosure obligations. In June, the CFPB issued a proposed rule addressing inclusion and use medical debt information in consumer reports.

This month, the CFPB issued a proposed rule to expand the FCRA’s reach to data brokers. The CFPB also initiated a rulemaking to address coerced debt. While the CFPB may scale back on rulemaking activityunder the leadership of a Trump-appointed director, it’s likely to continue supervising the industry and pursuing enforcement actions where appropriate.

Reporting Agencies

Judicial activity in 2024 relating to consumer reporting agencies included several significant federal appellate court opinions addressing FCRA compliance.

For example, in Lloyd v. FedLoan Servicing, the US Court of Appeals for the Eighth Circuit rejected a plaintiff’s argument that a CRA should’ve found a furnisher unreliable after a consumer’s dispute because the plaintiff failed to identify any specific step in the CRA’s procedures that were deficient.

In Santos v. Healthcare Revenue Recovery Grp., the Eleventh Circuit held that consumers could recover statutory damages under the FCRA without showing any actual damages because statutory damages don’t require proof of the damages sustained by a consumer.

The Eleventh Circuit noted that its reading of the FCRA was consistent with other circuits, but companies should continue to monitor how circuits split on this issue.

Furnishers

Litigation against furnishers also continued, even at the highest judicial levels. The US Supreme Court weighed in on a FCRA furnisher case in Department of Agriculture Rural Development Rural Housing Service v. Kirtz to resolve a circuit split by holding that a “person” subject to liability under the FCRA can include a government agency.

Lower courts also grappled with FCRA issues such as whether a furnisher is required to investigate and resolve legal disputes versus merely factual disputes relating to an underlying debt in a consumer report, along with the contours of any required reinvestigation of such disputes.

In Ritz v. Nissan-Infiniti LT, the US Court of Appeals for the Third Circuit is considering whether to hold a furnisher liable when it reported that plaintiffs had failed to make payments under their auto lease agreement. The plaintiffs, CFPB, and Federal Trade Commission all contend that the furnisher should have an obligation to resolve the legal issue as to whether the underlying agreement permitted the reported charges.

The same issue is pending before the US Court of Appeals for the Fourth Circuit in Roberts v. Carter-Young, Inc., which turns on whether a furnisher must respond to a plaintiff’s dispute by making a legal determination on whether they were improperly charged for certain repair damages under their lease agreement.

In Holden v. Holiday Inn Club Vacations Inc., the Eleventh Circuit held that whether the alleged inaccuracy is factual or legal isn’t the issue, but rather whether the alleged inaccuracy was objectively and readily verifiable, holding that a contractual dispute without a straightforward answer can’t be readily verified.

Regarding the sufficiency of furnisher reinvestigations, in Lloyd v. FedLoan Servicing, the Eighth Circuit held that the mere fact that a plaintiff was required to file multiple disputes before removal of the negative information from their credit report didn’t demonstrate willful or negligent violations by the furnisher conducting a reinvestigation.

Similarly, in Harris v. Broker Solutions, Inc., the Ninth Circuit held that updating the payment history profile to report a loan as current for the disputed months proved that the furnisher’s investigation into the plaintiffs’ disputes was reasonable.

Companies that furnish information to CRAs should continue to evaluate their dispute reinvestigation processes to align with these judicial interpretations in 2025.

End Users

The CFPB has proposed sweeping new rules under the FCRA that would have major impacts on end users, such as requiring a permissible purpose to obtain “credit header” data, imposing new requirements on obtaining a consumer’s written instructions, and restricting the availability of companies to assert a legitimate business need as a permissible purpose.

While these CFPB rules may never be finalized, companies may begin seeing similar concepts asserted in policy proposals by the states and plaintiffs’ arguments in the courts.

Courts also grappled with FCRA permissible purpose issues. For example, a pair of cases highlight the uncertain nature of “permissible purpose” litigation. A federal district court dismissed a case because the defendant’s status as a debt collector raised “the distinct possibility” that a consumer report was obtained “in an effort to collect on a debt,” which the court considered to be a FCRA permissible purpose.

However, in Marion v. Mercantile Adjustment Bureau, decided just six days later, the same court denied a motion to dismiss finding that the defendant’s status as a debt collector wasn’t dispositive as to whether the defendant was actually involved in any collection activities pertaining to the plaintiff.

End users must also be mindful of their adverse action notice obligations under the FCRA. For example, in Helwig v. Concentrix Corp., a federal district court certified a class of job applicants who received communications from an employer notifying them that they were no longer being considered for a position on the same day that those same class members received their FCRA pre-adverse action notices.

The court concluded that the class members had adequately alleged that they had no meaningful opportunity to respond and/or dispute the information prior to adverse action being taken.

End users should keep these potential FCRA claims in mind.

Looking Ahead

In 2025, we expect that CFPB proposed rules to draw a great deal of attention, but in light of the imminent change in CFPB leadership under a Trump administration, the prospects for these proposals to move toward becoming final rules seem unlikely.

However, we can expect that FCRA litigation will continue at a steady pace for all the various entities in the consumer reporting ecosystem.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

Author Information

Kim Phan is partner at Troutman Pepper working in privacy, data security, and regulatory compliance, providing strategic guidance to companies.

David Anthony is partner at Troutman Pepper and handles litigation against consumer financial services businesses.

Kathleen Hutchenreuther contributed to this article.

Write for Us: Author Guidelines