Enforcing FCRA: State Agencies Can Do it Too

The Fair Credit Reporting Act (FCRA), a U.S. Federal Government legislation that ensures the accuracy and fairness of credit reporting, is often mentioned in conjunction with the entities enforcing it such as the Consumer Financial Protection Bureau (CFPB) and Federal Trade Commission (FTC). In a recent court case, In the Matter of Encore Capital Group, Inc., Midland Funding, LLC, and Midland Credit Management, Inc., state agencies were brought to the fore when a debt buyer faced a multi-million dollar enforcement action from over 40 states.

The states alleged violations of both the FCRA and the Fair Debt Collection Practices Act (FDCPA), a federal law which limits the actions of third-party debt collectors attempting to collect debts on behalf of another person or entity. According to the National Law Review, this is not the first time state authority enforced consumer statutes have arisen. 15 U.S.C. § 1681s(c), “provides state agencies with the authority to investigate and bring enforcement actions against credit reporting agencies, furnishers, and other regulated persons under FCRA.” All of this includes a broad range of relief and fees.

While states do have authority under FCRA, it is not unlimited. In any suit filed by a state agency, they must both confer with the CFPB and FTC, as well as allow the federal agencies to participate. States must also first file for injunctive relief, a court order for the defendant to stop the specified behavior, before filing for monetary relief. A further restriction, state agencies’ monetary relief is limited to any infraction committed after the injunctive relief.

State agencies rarely file to enforce the FCRA because of these steep limitations. However, a company that falls out of FCRA compliance, particularly while settling with state regulators, can and most likely will be held accountable.