Trade Organizations File Amicus Brief Asking Second Circuit to Reject CFPB’s Interpretation of FCRA’s Maximum Accuracy Requirement

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Trade Organizations File Amicus Brief Asking Second Circuit to Reject CFPB’s Interpretation of FCRA’s Maximum Accuracy Requirement
September 15, 2022

In a case before the Second Circuit, the Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB) filed an amicus brief earlier in the year. This brief argued that the Fair Credit Reporting Act (FCRA) does not distinguish between “legal” and “factual” inaccuracies to maintain reasonable procedures when ensuring maximum accuracy. As a result, consumer reporting agencies (CRA) and furnishers of credit information could be held responsible for failing to adjudicate legal questions regarding disputed information on consumer reports. In response, seven organizations representing hundreds of companies in the business community have filed a coalition amicus brief. These organizations call for the Second Circuit to reject the CFPB’s position.

In the case in question, the Plaintiff-Appellant brought a putative class action before the District Court for the Southern District of New York. Here, she accused a major CRA of inaccurately reporting a debt for a “balloon payment” on a vehicle that she did not owe. According to the complaint, this was an optional amount payable to purchase the vehicle at the end of the lease, not an amount that she owed.

The District Court granted the CRA summary judgment, finding that the plaintiff failed to make a “threshold showing” of inaccuracy for the consumer report in question. In its decision, the court distinguished between “legal” and “factual” inaccuracies and debated the legal question of whether she owed the balloon payment. As a result, the court found that the CRA was not responsible for adjudicating the details of the allegedly owed debt. Instead, the court determined the report factually accurate because the CRA reported the information it received from the furnisher.

The plaintiff appealed this decision to the Second Circuit, upon which the FTC and CFPB filed their joint amicus brief. The FTC and CFPB argued that the FCRA makes no distinction between “factual” and “legal” inaccuracies; that making such a distinction results in a nearly unworkable system. The amicus brief claimed that virtually any inaccuracy could be considered legal, which would make an exception that effectively nullifies the rule.

However, in the trade groups’ coalition amicus brief, they have argued in favor of the District Court’s decision. The brief claims that it follows the FCRA’s intent, text, and years of case history built in courts across the country. It argues that the FCRA intends to guard against irresponsible and factually inaccurate reporting, not to force CRAs to judge legal disputes.

The brief further supports the distinction between “factual” and “legal” questions. The trade groups further emphasize that distinguishing between these two questions is a regular task for courts of appeals. Eliminating such a distinction would not only create significant economic harm to consumers, CRAs, and data furnishers, but prove unworkable in practice.

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