DOES THE FCRA PReEMPT STATE LAWS?

CREDIT LAWYERS: FCRA LAWSUITS, STATE LAWS & PREEMPTION OF COMMON LAW CLAIMS

The FCRA preempts some state laws regarding credit reporting lawsuits. See, e.g., 15 U.S.C. 1681t(b). 

However, under an interpretive rule by the CFPB, 87 FR 41042, state laws that are not “inconsistent” with the Fair Credit Reporting Act (FCRA) are generally not preempted by the FCRA. This might seem encouraging to plaintiffs at first glance, but whether a state law (e.g., state common law cause of action or state consumer protection causes of action) is consistent or inconsistent with the FCRA can cause considerable confusion/litigation when state law claims are asserted along with FCRA claims. 

However, in the context of credit reporting, one area that seems somewhat settled is where a consumer sues a furnisher under the FCRA and then also tries to assert state law causes of action (e.g., breach of contract, defamation) based on underlying conduct involving the furnisher’s reporting obligations.  The Sixth Circuit has held that the FCRA preempts state law claims regarding furnisher reporting obligations. Therefore, common law claims like breach of contract, defamation, etc. are typically dismissed.

• The FCRA “preempts all state law[] . . . causes of action concerning a furnisher's reporting of consumer credit information to consumer reporting agencies.” 

See Scott v. First Southern Nat. Bank, 936 F.3d 509, 521-22 (6th Cir. 2019) (dismissing the plaintiff's state claims for breach of the duty of good faith and fair dealing and tortious interference with contractual relationships).  See also Petronykoriak v. Equifax Info. Servs., 19-cv-10784, 10 (E.D. Mich. Aug. 13, 2021) (same). 

Litigants may therefore wish to focus their causes of action against furnishers under the FCRA (i.e., unreasonable investigation claims) where lawsuits concern inaccurate reporting of consumer information (e.g., credit reports, background check reports, or other reports containing consumer information as defined by the FCRA). 

Note: furnishers like banks and credit card companies are distinct from the consumer reporting agencies (CRAs) like Equifax/Experian/TransUnion to whom furnishers report consumer information. CRAs have broader duties under the FCRA and more types of claims are available against CRAs under the FCRA. However,  one might expect similar outcomes where claims concern a CRA's credit reporting procedures or its reinvestigation of disputes which are among the main types of claims in credit litigation.