The unanimous opinion shows federal agencies are subject to lawsuits under the FCRA and liability for credit reporting violations.
02/13/2024 2:30 P.M.
2 minute read
The U.S. Supreme Court reached a 9-0 unanimous decision this month that federal agencies issuing loans are required to follow the Fair Credit Reporting Act when it comes to data furnishing practices—just like private lenders.
In U.S. Department of Agriculture (USDA) Rural Development Rural Housing Service v. Kirtz, the USDA issued a loan to the plaintiff as part of its program to foster development of safe and affordable housing in rural areas, according to Scotusblog.com.
Kirtz also had a loan from the Pennsylvania Higher Education Assistance Agency and closed that and the USDA account after paying the balances in full.
“However, both agencies reported to TransUnion that he was more than 120 days past due, resulting in a lower credit score,” according to a case summary from Brownstein Hyatt Farber Schreck LLP. “Kirtz filed suit against TransUnion and the USDA, alleging both negligent and willful violations of the FCRA. The USDA sought dismissal of the case, citing sovereign immunity.”
The district court approved the motion to dismiss, finding that the FCRA did not clearly show Congress’s intent that the law didn’t apply to the government, “despite the FCRA’s language stating that it applies to ‘any person,’ including government agencies,” according to the summary.
Kirtz appealed, and the U.S. Court of Appeals for the 3rd Circuit reversed the motion to dismiss, finding federal agencies are not immune to FCRA violations. The USDA took its arguments to the U.S. Supreme Court, which unanimously affirmed the 3rd Circuit’s decision.
In the opinion (PDF) from Justice Neil Gorsuch, the Supreme Court noted Section 1681s-2 of the FCRA requires “persons” who furnish information to credit reporting agencies to investigate consumer complaints and make corrections. The court also noted that in Sections 1681n and 1681o, the FCRA permits consumer suits against “any person” who willfully or negligently fails to make corrections, according to the summary from Brownstein.
The court stated: “Congress has explicitly permitted consumer claims for damages against the government. Dismissing suits like Mr. Kirtz’s would effectively negate suits Congress has clearly authorized.”
The Supreme Court’s opinion affirms that federal agencies are not protected from lawsuits under the FCRA and may now be subject to liability for credit reporting violations.
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