A US district court rejected a plaintiff’s lawsuit under the Fair Credit Reporting Act (FCRA). The plaintiff made claims against the Chief Executive Officers (CEOs) of the Credit Reporting Agencies (CRAs) and the CRAs themselves. The plaintiff claims the CRAs neither replied to communications nor removed an incorrect account from their credit report. The decision made by this court is consistent with others. Had it moved forward with this case, it may have caused a significant expansion of the scope of the FCRA and the right of private action.
The FCRA requires CRAs to have procedures that ensure consumers’ information is kept confidential and presented accurately for employment, insurance, credit decisions, and more. Further, under 15 USC § 1681(b), the FCRA provides a private right of action about violations and statutory liquidated damages. As a result, this section frequently focuses on data privacy litigation.
Under the FCRA, a “consumer reporting agency” is regarded as any “person who, for monetary fees, dues, or on a cooperative nonprofit basis, regularly engages in whole or in part in the practice of assembling or evaluating consumer credit information on consumers for the purpose of furnishing consumer reports to third parties.” Though “person” is the term used in the context of this law, the term encompasses “any partnership, corporation, trust, estate, cooperative, association, government, or governmental subdivision or agency, or other entity.”
In this case, the plaintiff sought to hold the CEOs of certain CRAs responsible for alleged violations of the FCRA. The plaintiff claims the CRAs violated the requirement of providing “reasonable procedures to assure maximum possible accuracy.” However, it has been well established in previous litigation under both the FCRA and in more general litigation that the CEOs of corporate defendants are not personally liable. Only when significant evidence shows that the corporate officer was the guiding or central force behind the misconduct can personal liability be imposed.
In this case, the court found that the plaintiff had not met this burden and rejected creating a radical extension of liability. Further, in this case, the court found that CEOs are not the same as the CRAs under the FCRA, nor did the plaintiff allege that the CEOs took individual actions leading to the alleged violations. As a result, the court granted the defendant’s motion to dismiss with prejudice.
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