Tag: Consumer Reports

Third Circuit Creates New Standard for Judging the Accuracy of Consumer Reports Under the FCRA October 20, 2022 In a key decision early last month, the U.S. Court of Appeals for the Third Circuit addressed a consolidated set of consumer appeals against a consumer reporting agency (CRA). The court's ruling provided a new standard for how courts determine whether the information in a consumer report is misleading under the standards of the Fair Credit Reporting Act (FCRA). This consolidated FCRA case of appeals arose from three claims brought by different consumers. These consumers allegedly failed to make payments on student loans. According to the allegations, each loan transferred to another lender, and the original accounts closed after falling more than 120 days overdue. The CRA reported the accounts as closed with a $0 balance; however, in a "pay status" notation included on each credit report, the CRA reported the accounts as "Account 120 Days Past Due Date." The consumers filed complaints separately, each alleging violations of the FCRA's requirements. They specifically cited that CRAs must "assure maximum possible accuracy" in their reports. However, the consumers claimed the CRA reported inaccurate pay status notations. Because of this misinformation, readers may believe the consumers fell over four months behind on payments despite owing no balance to the former lenders. In countering this allegation, the CRA stated that these notations accurately represented the historical status of the accounts. In addition, the CRA moved for summary judgment, which the district court granted. According to the district court, a "reasonable creditor" would understand that the notations represented a historical status and that the plaintiffs do not currently owe anything on the accounts. This interpretation has long been the standard district courts use when judging whether a report is inaccurate. The Third Circuit affirmed this ruling on appeal; however, it provided a different interpretation of the standard for judging whether a credit report is misleading. Examining the text of the FCRA, the Third Circuit noted that the FCRA permits people other than creditors to request a consumer report. Therefore, a standard accounting upon a "reasonable creditor" with more sophisticated knowledge than the average person could not have been Congress's intent in creating the FCRA. Instead, the Third Circuit adopted a different "reasonable reader" standard. This standard evaluates the accuracy of a report when read in its entirety from the reader's point of view. Furthermore, the view is not only of sophisticated readers such as banks but also employers, landlords, and other users. Using this standard, the Third Circuit found that, when read in the context of the report, the notations in question in the case were not misleading. Instead, numerous other conspicuous statements made clear that the plaintiffs' accounts were closed, and a reasonable reader could conclude that they owed no money to the former lenders. This new clarification should prove beneficial for defendants in future FCRA cases. In addition, this means that CRAs will have the opportunity to point to any information within the report that disambiguates allegedly inaccurate information. Keep your business up to date on new laws and regulations with Pre-employ’s free news resources. Contact a sales rep today. Source

Tag: Consumer Reports

Third Circuit Creates New Standard for Judging the Accuracy of Consumer Reports Under the FCRA

CFPB Issues Advisory Opinion Regarding Individual’s Privacy Rights and Consumer Reports

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