The Consumer Data Industry Association (“CDIA”), a trade association whose members include the three largest consumer reporting agencies (“CRAs”), recently filed a lawsuit in Maine seeking a declaratory judgment that two recently passed credit reporting laws are preempted by the Fair Credit Reporting Act.
Earlier this year, the Maine legislature passed the two bills in question, L.D. 110 and L.D. 748, and the laws took effect in Maine on September 19, amending 10 M.R.S. § 1310-H in Section (4) and (2-A), respectively. Specifically, L.D. 110 prohibits a consumer reporting agency from reporting medical debt on a consumer’s credit report until 180 days have passed since the date of first delinquency. L.D. 110 further prohibits reporting of medical debt if the consumer and creditor have settled or paid the account, and requires the CRA to remove the report of that medical debt on a consumer report. Under the law, if the consumer makes regular payments pursuant to an agreement with the medical provider, the CRA must report the debt in the same manner as debt from a consumer credit transaction. These provisions, the CDIA argues, prohibit CRAs from reporting accounts unless certain conditions exist and, by doing so, they would require the CRAs to review the status of every account, including payment history, or not report the account at all.
The second state law, L.D. 748, requires CRAs to reinvestigate any debt in which a consumer provides documentation to a CRA of “economic abuse.” If the CRA finds that the debt is the result of economic abuse, it then must remove any reference to the debt. “Economic abuse” means causing an individual to be financially dependent by maintaining control over the individual’s financial resources, including unauthorized or coerced use of credit or property. Me. Rev. Stat. tit. 19-A, § 4002(3-B). CRAs already have to investigate whether the information provided by furnishers is accurate under the FCRA. The CDIA argues that the new Maine statute goes a step further in also requiring CRAs to decide whether the account was the result of economic abuse of the consumer. The CDIA notes that “[w]hile prevention of economic abuse is a laudable goal,” CRAs are not in a position to adjudicate these claims and that they lack both the knowledge and the expertise to be able to do so.
The CDIA seeks a declaratory judgment that L.D. 110 and L.D. 748 are both preempted by the FCRA. It argues that compliance with the two laws will require CRAs to reject accurate credit information, impede their ability to report accurate data, and lead to increased cost, and decreased availability, of consumer credit. The CDIA asserts that the FCRA specifically prohibits states from attempting to regulate the contents of consumer credit reports and that the Maine statutes attempt to exclude information from being included in consumer reports where the FCRA expressly contemplates the inclusion of that information. The CDIA argues that this means that pursuant to § 1681(t) of the FCRA, the Maine statutes are preempted.
This case has the potential to inform whether and how other states may regulate content that is contained in consumer credit reports. Troutman Sanders will closely monitor its progress along with similar litigation challenging state laws as preempted under the FCRA.