AFSA Supports FCRA Liability Harmonization Act

On Tuesday, AFSA, in conjunction with several other trade associations, submitted a comment letter to Reps. Jeb Hensarling (R-TX) and Blaine Luetkemeyer (R-MO), chairs of the House Financial Services Committee (HFSC) and subcommittee on Financial Institutions and Consumer Credit, respectively, voicing its support for the FCRA Liability Harmonization Act.

The legislation seeks to modernize the Fair Credit Reporting Act (FCRA) and align it with other financial consumer laws by capping the amount of damages allowed in class action lawsuits, while eliminating punitive damages.

Under current law, plaintiffs in a FCRA class action lawsuit may pursue unlimited damages including punitive damages and attorneys’ fees. The Electronic Fund Transfer Act (EFTA), Fair Debt Collection Practices Act (FDCPA), Equal Credit Opportunity Act (ECOA), and Truth in Lending Act (TILA) establish parameters of economic liability in class action litigation.

The letter highlights that this imbalance invites class action lawsuits, which allege technical violations, the purpose of which is only to generate millions of dollars for attorneys. The risk of uncapped liability forces many businesses, particularly small businesses, into settling claims, even if the claims have very little merit.

The bill would continue to permit consumers who are harmed to bring class action lawsuits and allow them to be appropriately compensated for their injury. Luetkemeyer noted that markup on the legislation may take place this fall.