In Mack v. Equable Ascent Financial, L.L.C., the Fifth Circuit ruled the consumer’s suit was barred under the Fair Credit Reporting Act’s two-year statute of limitations.  Rejecting the plaintiff’s claim that the statute does not begin to run when the consumer discovers the facts that constitute the legal violation, the Court of Appeals held that the limitations period begins to run when a claimant discovers facts that give rise to the claim.

Plaintiff claimed that defendant obtained his credit reporting without a permissible purpose in violation of section 1681b of the FCRA.  In discovery, plaintiff admitted that his claims were based on a credit report he received in 2009 – more than two years before filing suit.  Nonetheless, he argued that “he did not become aware of the actual violation” of 1681b until April 2011, when he researched the FCRA, examined his credit report again, and as a result “discovered the violation.”

A claim under the FCRA must be brought in federal district court not later than “2 years after the date of discovery by the plaintiff of the violation that is the basis for such liability or 5 years from the date on which the cause of action arose, whichever is earlier.”  15 U.S.C. § 1681p (emphasis added).  The Fifth Circuit considered the 2003 amendment to section 1681p in rejecting the plaintiff’s claim that he could not have “discovered the violation until he researched the statute.”  According to the Court of Appeals, the “material difference” between the current and pre-2003 version of 1681p “is that the prior version did not contain a discovery rule for claims that did not involve misrepresentations whereas the current version contains a discovery rule for all claims.  Moreover, the plain language of the current version states that the relevant discovery is that of the violation that is the basis for liability.”

Based on its interpretation of the 2003 amendment to 1681p, the Fifth Circuit held that the limitations period began to run when the consumer “discovered” the defendant had obtained his credit reporting because these facts gave rise to his claim.  Moreover, the Court noted a ruling adopting the consumer’s interpretation of the FCRA’s statute of limitations “would indefinitely extend the limitations period.”  While the Court of Appeals claimed this interpretation was compatible with its previous decisions involving the FCRA’s statute of limitations, this is difficult to reconcile with its decision analogizing a FCRA violation to a claim for defamation where each re-publication of wrongful information constitutes a new tort.

Presently, there is a split among courts as to when the FCRA statute of limitations begins to run, in particular whether the submission of a new dispute to a credit bureau on the same issue can restart the two-year limitations period.  For example, some courts hold that each time a furnisher responds to an indirect dispute (i.e., submits an ACDV response), the statute starts to run from the time that the consumer discovers that the response is not correct – these courts interpret the language “the violation” in 1681p to mean each failure to conduct a reasonable investigation in response to a dispute, thus each re-report of inaccurate information is a separate violation.  Other courts have held that “the violation” means including something in the consumer’s credit file that is erroneous, so the statute cannot be triggered again and again over time.  These courts also adopt the equitable view, now the law in the Fifth Circuit, that allowing each response to an ACDV to start a new limitations period would indefinitely extend the limitations period and render it meaningless.  Going forward, consumer reporting agencies, furnishers, and users should be aware of this split over the application of the FCRA’s statute of limitations and pursue this affirmative defense where applicable.