Appeals Court Overturns Ruling Preempting State Credit Reporting Laws in Maine

The Court of Appeals for the First Circuit has overturned a lower court’s ruling that a pair of credit reporting laws in Maine governing how certain debts are reported to credit reporting agencies are preempted by the Fair Credit Reporting Act, remanding the case back to the District Court to more accurately determine the scope under which the laws might be preempted, if at all.

A copy of the ruling in the case of Consumer Data Industry Association v. Frey can be accessed by clicking here.

The CDIA filed a lawsuit against the state in 2019, after the state legislature enacted a pair of amendments to the Maine Fair Credit Reporting Act. The first law restricts furnishers from reporting a medical debt until it is at least 180 days old and requires furnishers to report payments on medical debts the same as a regular credit-based transaction, as long as the individual is making timely payments. The second law requires furnishers to investigate if a person claims a debt is a result of economic abuse, such as when an individual takes out a credit card in his or her spouse’s name. In such instances, the debt is to be removed from the victim’s credit report.

Section 1692t(b)(1)(E) of the FCRA allows for the statute to preempt state laws listed in “section 1681c of this title, relating to information contained in consumer reports, except that this subparagraph shall not apply to any State law in effect on September 30, 1996.”

The CDIA argued that the phrase “relating to information contained in consumer reports” broadly preempts all state laws, but the Court of Appeals ruled that the interpretation “is not the most natural reading of the statute’s syntax and structure.”

The Appeals Court made it clear that it was not addressing whether either of the two statutes were partially preempted by the FCRA and that it was taking “no positions” whether two subsections of the FCRA preempted the Medical Debt Reporting Act and remanded the case back to the lower court for further proceedings.

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