The Court of Appeals for the Eleventh Circuit yesterday overturned a lower court’s ruling that the Fair Credit Reporting Act and followed a number of other Appeals Courts in ruling that the Act does not require individuals demonstrate proof of actual damages in order to recover statutory damages.
The Background: Back in 2017, a collection agency began furnishing information to one of the credit reporting agencies. The CRA misadjusted a technical setting that affected how the furnished information was processed, which caused all of the agency’s accounts to display inaccurate dates of status or payment level dates on the agency’s tradelines — all 2.1 million of them. It took the CRA 18 months to detect and correct the error.
- Two consumers that had tradelines from the agency on their credit report filed a class-action lawsuit claiming that the CRA had willfully violated the FCRA by mistakenly re-aging those tradelines. Even though the credit scores of the plaintiffs weren’t affected by the mistake, they argued their creditworthiness was impacted by the error.
The Ruling: A District Court judge denied certification of the class on the grounds that consumers would have to prove they incurred actual damages as a result of willful violations by the defendant of the FCRA.
On Appeal: For the 11th Circuit, the issue boiled down to the statutory construction of how the FCRA is worded. The particular section in question — Section 1681n(a)(1)(A) was amended in 1997 to state that consumers can recover “any actual damages sustained by the consumer as a result of the failure or damages of not less than $100 and not more than $1,000.” Does the term “damages” in the second option — damages of not less than $100 and not more than $1,000 — require consumers to prove they have suffered actual damages because of a willful violation? No, the Appeals Court ruled.
The Last Words: “Properly understood, a consumer alleging a willful violation of the Act doesn’t need to prove actual damages to recover ‘damages of not less than $100 and not more than $1,000,’ ” the Court wrote.