Duane Morris Class Action Review - 2023 - Report - Page 209
CHAPTER 12
FCRA Class Actions
I.
Executive Summary
The Congressional purpose in enacting the Fair Credit Reporting Act (FCRA) is “to
insure that consumer reporting agencies exercise their grave responsibilities with
fairness, impartiality, and a respect for the consumer’s right to privacy.” See 15 U.S.C. §
1681. The Act purports to accomplish this purpose by requiring consumer reporting
agencies and entities obtaining consumer reports to “follow reasonable procedures to
assure maximum possible accuracy of” consumer reports; to notify providers and users
of consumer information of their responsibilities under the Act; to limit the circumstances
in which such agencies provide consumer reports for employment purposes; and to post
toll-free numbers for consumers to request reports.” Spokeo, Inc. v. Robins, et al., 578
U.S. 330, 335 (2016). The limitations periods for bringing an action under the FCRA is
the earlier of “2 years after the date of discovery by the plaintiff of the violation that is
the basis for such liability; or 5 years after the date on which the violation that is the
basis for such liability occurs.” 15 U.S.C. § 1681(p). Damages for individual FCRA
violations may range from $100 to $1,000.
Courts have often noted that FCRA violations lend themselves to resolution through
class action litigation, and FCRA class actions have increased partially as a result of the
Fair and Accurate Credit Transactions Act (FACTA) amendments. The FACTA
amendments require that a consumer who is accorded less favorable treatment in
reliance on her credit report be provided an adverse action’ notice.
Within the employment context, the plaintiff’s bar often targets employers for improper
disclosures and authorizations on employee applicant background check forms. The
FCRA’s authorization and disclosure requirements apply whenever a potential employer
obtains a “consumer report” or “investigatory consumer report” on an employee
applicant. An “investigatory consumer report” is a background check into an individual's
character, general reputation, personal characteristics, or mode of living based on
interviews with the person's neighbors, friends, associates, acquaintances, or others
who may know about such information. 15 U.S.C. § 1681(d)(a)(1).
Whenever an employer wishes to obtain a consumer report on an employee applicant,
the employer must first obtain the applicant’s written authorization to obtain such a
report. 15 U.S.C. § 1681(b)(2)(A). This authorization form must inform the applicant that
the employer will obtain a consumer report, identify the third party entity issuing the
report (if third party is used), and state that the consumer report obtained may be used
in employment decisions. 15 U.S.C. § 1681(b). The authorization form must also inform
the applicant of his or her rights, should the employer choose to take an adverse action
against the applicant, i.e., not hire him or her, due to the results obtained consumer
report. U.S.C. § 1681(b)(1)(B). These “adverse action” rights include the right to be
informed if the employer is contemplating an adverse action, to view a copy of the
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Duane Morris Class Action Review – 2023
