This past May, Rep. Barry Loudermilk (R-Ga.) introduced H.R. 2359, the FCRA Liability Harmonization Act, which would cap class action damages in Fair Credit Reporting Act claims at $500,000 or one percent of the defendant’s net worth, whichever is less, and eliminate punitive damages. Such changes would align the Fair Credit Reporting Act with numerous other consumer protection laws already in place, such as the Truth in Lending Act, the Fair Debt Collection Practices Act, the Equal Credit Opportunity Act, and the Electronic Funds Transfer Act.
Specifically, the bill amends Section 616 of the FCRA (15 U.S.C. §1681n) and Section 617 of the FCRA (15 U.S.C. §1681o7):
- Willful Noncompliance.—Section 616 of the Fair Credit Reporting Act (15 U.S.C. 1681n) is amended—(1) in subsection (a)—(A) by striking paragraph (2); (B) by redesignating paragraph (3) as paragraph (2); and (C) in paragraph (1)(B), by inserting “and” after the semicolon; (2) by redesignating subsection (d) as subsection (e); and (3) by inserting after subsection (c) the following new subsection: “(d) Class Action Lawsuits.—With respect to a class action (as such term is defined in section 1711 of title 28, United States Code), or series of class actions arising out of the same failure to comply of a person, brought by consumers against a person who willfully fails to comply with any requirement imposed under this title, such person is liable to such consumers in such an amount as a court may determine, except that—“(1) the court may not apply a minimum amount of damages for each member of the class; and “(2) the total recovery (excluding reasonable attorney’s fees as determined by the court) of the class shall not exceed the lesser of—“(A) $500,000; or “(B) 1 percent of the net worth of such person.”
- (b) Negligent Noncompliance.—Section 617 of the Fair Credit Reporting Act (15 U.S.C. 1681o7) is amended by adding at the end the following new subsection: “(c) Class Action Lawsuits.—With respect to a class action (as such term is defined in section 1711 of title 28, United States Code), or series of class actions arising out of the same failure to comply of a person, brought by consumers against a person who negligently fails to comply with any requirement imposed under this title, such person is liable to such consumers in an amount equal to the sum of any actual damages sustained by the consumers as a result of the failure, except that the total recovery (excluding reasonable attorney’s fees as determined by the court) of the class shall not exceed the lesser of— “(1) $500,000; or “(2) 1 percent of the net worth of such person.”
Groups in support of this legislation include U.S. Chamber Institute for Legal Reform, U.S. Chamber of Commerce, American Bankers Association, Consumer Bankers Association, Financial Services Roundtable, Credit Union National Association, Retail Industry Leaders Association, International Franchise Association, Electronic Transactions Association, American Financial Services Association, National Association of Professional Background Screeners, Software and Information Industry Association, National Automobile Dealers Association, and Consumer Data Industry Association.
The bill has been opposed by many other associations, including the National Association for Consumer Advocates.
The bill is currently before a subcommittee in the House of Representatives, and a hearing was held on the bill earlier this month. Troutman Sanders LLP will continue to monitor its progress and any associated legislative developments.