Amicus Curiae Brief — Safeco Ins. Co. of America v. Burr

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Nos. 06-84 and 06499 OF THs CLERK

In the Supreme Court of the United States

SAFECO INSURANCE COMPANY

OF AMERICA, ET AL., PETITIONERS

CHARLES BURR, ET AL.

GEICO GENERAL INSURANCE COMPANY, ET AL.,

PETITIONERS

AJENE EDO

ON WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

BRIEF FOR THE UNITED STATES

AS AMICUS CURIAE IN SUPPORT OF VACATUR IN

NO. 06-84 AND REVERSAL IN NO. 06-100

PAUt D. CLEMENT

Solicitor General

WILLIAM BLUMENTHAL

General Counsel Counsel of Record

, THOMAS G. HUNGAR

Joun F. DALY . , Deputy Solicitor General

Deputy General Counsel for

Litigation PATRICIA A. MILLETT

LAWRENCE DEMILLE-WAGMAN Assistant to the Solicitor

Attorney General

Federal Trade Commission Depa rtment of Justice

Washington, D.C. 20530-0001

Washington, D.C. 20580

(202) 514-2217

‘ QUESTIONS PRESENTED

The Fair Credit Reporting Act, 15 U.S.C. 1681 et

seq., imposes civil liability on “[a]ny person who willfully

fails to comply with any requirement imposed under this

subchapter with respect to any consumer,” 15 U.S.C.

1681n(a). The Act further requires a person who “takes

any adverse action with respect to any consumer that is

based in whole or in part on any information contained

in a consumer report” to provide the consumer with

notice of the action. 15 U.S.C. 1681m(a). The questions

presented are:

1. Whether the phrase “willfully fails to comply”

with the FCRA’s requirements encompasses not only

knowing violations of the Act, but also reckless

disregard of the law’s obligations and, if so, whether the

court of appeals erred in articulating and applying the

reckless-disregard standard.

2. Whether charging an insurance customer a

higher rate based, in whole or in part, on his credit

report constitutes an “adverse action,” notwithstanding

the fact that the insured would have received the same

~ rate even if no consumer report had been consulted.

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TABLE OF CONTENTS

Page

Interest of the United States ............... cece ceeeeeee 1

NE ad ds kW nciech bOddd Ss edn ed Sas udeinsnededacetsas 1

CG TELE CER EE ST PETS OPP SOT eer 6

I. A “willful” failure to comply with the requirements of

the FCRA requires proof that the defendant either

knowingly or recklessly disregarded the law ......... 8

A. “Willfully” is traditionally interpreted in civil

statutes, particularly laws designed to enforce

federal rights, to mean either knowing or

reckless disregard of legal obligations ........... 9

B. The structure of the Fair Credit Reporting Act

demonstrates that “willfully” includes both

knowing and reckless disregard of the law ..... ..18

C. Reckless disregard requires indifference to

clearly established law or the disregard of an

obvious and high probability that conduct is

ED bb 5 Fig Gn is 6 Lids s eda e aks aoee c6 hha 20

II. An adverse action notice is required when the content

of a consumer's credit report prevented the consumer

from obtaining a better insurance rate ............. 24

A. Providing a higher insurance rate based, in

part, on a credit report constitutes an adverse

EE cv ated hota <4kb haene dk catanekehns ceased 24

B. GEICO’s erroneous understanding of the

adverse action provision was not willful ......... 29

RD gcd 0 dnp el oo bicandcus hc dkcauides ckpacden 30

RIE os Rab Ricec ia sebva cde h dunes deSedetuabosbesive la

(III)

TABLE OF AUTHORITIES

Page

Cases:

A.J. McNulty & Co. v. Secretary of Labor, 283 F.3d

SP IE EEE Gada. seueubbcnendduacievuess 11

Aimster Copyright Litigation, In re, 334 F.3d 643

SPEIIEE: ) 4 sce Lice deren dbs cake bene anesy ye

Armenta v. City of Casa Grande, 71 P.3d 359 (Ariz.

SEE ckcdkenkccendinckbanaadaetnyécoses 18

Asbury v. Brougham, 866 F.2d 1276 (10th Cir. 1989) ... 19

Barbour v. Merrill, 48 F 3d 1270 (D.C. Cir. 1995),

cert. dismissed, 516 U.S. 1155 (1996) ............... 19

Barry v. Edmunds, 116 U.S. 550 (1886) .............. 21

Baystate Alternative Staffing, Inc. v. Herman,

168 F.3d 668 (ist Cir. 1908) ........ccccceccecccess 10

Bevolo v. Carter, 447 F.3d 979 (7th Cir. 2006) .......... 19

Brock v. Morello Bros. Constr., Inc., 809 F.2d 161

EE i ctuu ha &4cnh oaewak oockd Gas ane scomeeis 11, 22

Bryan v. United States, 317 U.S. 184 (1998) ....... 8,9, 15

Casella v. Equifax Credit Info. Servs., 56 F.3d 469

(2d Cir. 1995), cert. denied, 517 U.S. 1150 (1996) ..... 19

Cooper v. Rosston, 756 P.2d 1125 (Mont. 1988) ......... 18

Cornist v. B.J.T. Auto Sales, Inc., 272 F.3d 322

PRINS od iu dcanns bs caberedweGessetesi TS.

Cushman v. Trans Union Corp., 115 F.3d 220

RE OTT eT, POP re Pe 6, 19

Dixon v. United States, 126 8. Ct. 2437 (2006) ......... 12

Doe v. Chao, 540 U.S. 614 (2004) ..............2.0055- 13

Dun & Bradstreet, Inc. v. Greenmoss Builders, Inc.,

ee ees n tpi vs bacbeewse tee in Oe

Cases—Continued: Page

Farmer v. Brennan, 511 U.S. 825 (1994) ..... 17, 20, 21, 22

Fischl v. General Motors Acceptance Corp.,

FeO DETAR GR BIND is cccidcsccuiesedscvncss 19

Gertz v. Robert Welch, Inc., 418 U.S. 323 (1974) ........ 19

Hanger v. Lake County, 390 F.3d 579 (8th Cir. 2004) ... 11

Harlow v. Fitzgerald, 457 U.S. 800 (1982) ............. 23

Harte-Hanks Comme'ns, Inc. v. Connaughton,

gS Fi PP eee re rer er re mre 21

Hazen Paper Co. v. Biggins, 507 U.S. 604 (1993) .... 10, 16

Hillstrom v. Best Western TLC Hotel, 354 F.3d 27

SE Sica uiebabiouds sacewetwadieeeianne 11

Island Software & Computer Serv., Inc. v. Microsoft

Corp., 413 F.3d 257 (2d Cir. 2005) ...............-- 11

Kolstad v. American Dental Ass’n, 527 U.S. 526

EEE AERUED 4 cdaeddava checked Lees avaseeeN 11,18

McKennon v. Nashville Banner Pub. Co., 513 U.S.

352 (1995) ........: ali be hve whaeaaken he ese ute 27

McLaughlin v. Richland Shoe Co., 486 U.S. 128

SEE ctakidsedvenckbeakaine eevee 9, 10, 13, 16, 20, 22

Morissette v. United States, 342 U.S. 246 (1952) ........ 10

Murphy v. Waterfront Comm’n, 378 U.S. 52 (1964) .... 15

Philbin v. Trans Union Corp., 101 F.3d 957 (3d Cir.

SED cdcGiains sds ads ica hoe sede kda hacen es cies 28

Porter v. New York Univ. Sch. of Law, 392 F.3d 530

SE bide kabetns banded diedsebenieia 11

Professional Real Estate Investors, Inc. v. Columbia

Pictures Indus., Inc., 108 U.S. 49 (1993) ........... 23

Ragin v. Harry Macklowe Real Estate Co., 6 F.3d 898

SEE, GHEE cdc cb cecctsaccadignewesseseerekctns 19

Cases—Continued: Page

Ratzlaf v. United States, 510 U.S. 135 (1994)... 2.2.0... 8

Reeves v. Carlson, 969 P.2d 252 (Kan. 1998) ........... 18

RSM, Inc. v. Herbert, No. 06-1393, 2006 WL 3026344

ND tii.oot Siac cyanakeasuconesses 11

Russello v. United States, 464 U.S. 16 (1983) .......... 15

Saba v Compagnie Nationale Air France, 78 F.3d

664 (1996) . Sette eee eee eeeeeeeeeeee eee scene eeees 22

Screws v. United States, 325 U.S. 91 (1945) ............ 8

Shrader-Miller v. Miller, 855 A.2d 1139 (Me. 2004) .... 18

Simms v. Royal Thrift & Loan Co., No. E028659,

2002 WL 32576 (Cal. Ct. App. Jan. 11, 2002) ........ 17

Smith v. Wade, 461 U.S. 30 (1983) .............. 12, 17, 23

Spies v. United States, 317 U.S. 492 (1943) ............. 8

St. Amant v. Thompson, 390 U.S. 727 (1968) .......... 21

Stephens v. South Atl. Canners, Inc., 848 F.2d 484

_ (4th Cir,), cert. denied, 488 U.S. 996 (1988) ......... 19

Stuart v. United States, 337 F 3d 31 (1st Cir. 2008) ..... 19

TRW Ince. v. Andrews, 534 U.S. 19 (2001) ........... 1,27

TWA, Inc. v. Thurston, 469 U.S. 111 (1985) ....... passim

United States v. Balistrieri, 981 F.2d 916 (7th Cir.

1992), cert. denied, 510 U.S. 812 (1998) ............. 19

United States v. Bishop, 412 U.S. 346 (1973) ........... 8

United States v. Gonsalves, 435 F.3d 64 (1st Cir.

BEE dd ct idinhecdesdbe vabenegtabds beedhinns sane 19

United States v. Illinois Cent. R.R., 303 U.S. 239

SD ca pdetnthnoeddcdubssucedaleeeenawebeuse 9, 22

United States v. Murdock, 290 U.S. 389 (1933),

overruled in other part, Murphy v. Waterfront

AE UIE. onccdudadeancdecce cuss 15

Vil

Cases—Continued: Page

Welch v. Mr. Christmas Inc., 440 N.E.2d 1317

PR eee eee abi iivadeebistbencets 18

Williams Constr. Co. v. Garrison, 400 A.2d 22

(Be. Ct. Spee. App. IVT)... nce cccccccccccnccess 18

Williamson v. Handy Button Mach. Co., 817 F.2d

SG EEE: nc h dc dncddbcendwtbbbaccacd suse 19

Wilson v. Layne, 526 U.S. 603 (1999) ................. 29

Constitution, treaty, statutes and regulations:

A EE oar cic ben detied beesastVnenaawaes 19

Convention for the Unification of Certain Rules

Relating to International Transportation by Air,

opened for signature Oct. 12, 1929, art. 25(1),

Ge SE SIN EE Se cacdsdevnudencs cece 11

Age Discrimination in Employment Act of 1967,

Pub. L. No. 90-202, 81 Stat. 602, 29 U.S.C. 601

aS a ey Pee Pee yee Pee 9, 10, 12, 18

aE wo bs Fac cob cot ecedaweks dicudiees 10

Americans with Disabilities Act of 1990, 42 U.S.C.

OUI, hcnvdcvnctecccecs steeeneccecesess 11, 18

Equal Credit Opportunity Act, 15 U.S.C. 169le(b) ..... 19

Fair Credit Reporting Act, 15 U.S.C. 1681 :

OE, occdcsvesivacessccocececoesscécucces passim

PE ccd ec cencdedavencténan eonebaie 2

SP ED: on nc caguuneac.deucsotenes 2, 20

Be ees MED - 5 dt@ncn cctadéevcbiscchousan 1

ED icvdeeeds cousesenscuahnt 2, 20

I ME din on i uns en cae cbmenashcotune 2, 20

: 25

ee Ie

Vul

Statutes and regulations—Continued: Page

15 U.S.C. 168la(k\1X(BXi) .............. 5, 7, 25, 27

15 U.S.C. 1681b(a) (Supp. IV 2004) .............. 26

15 U.S.C. 1681b(a)(3)(A)-(C) (Supp. IV 2004) ...... 2

NE acccthcctksgucuheiesesess 13, 14

15 U.S.C. 1681g (2000 & Supp. IV 2004) ........... 2

15 U.S.C. 1681i (2000 & Supp. IV 2004) ........... 2

SEE; ducaddiecashonsnsdondbeteeena 3

ee GED nn bows cee cnccnscdecevess 2,27

15 U.S.C. 1681m(h)(8) (Supp. IV 2004) ......... 1,3

SR EE innedecce cocdcasusetnce sets 14,15

ee, ME iaiks enencccadcepsvety secre 10, 13

15 US.C. 16BimfaXIMA) .........-2-. eee eeenes 14

15 U.S.C. 1681n(aX(1WA)-(3) ..... 2.2.6.2 2 eee eee 3

15 U.S.C. 16BlnlaMI MB) .... 2.20.2. e ec eeee. 3, 13

ED is. w ccsdsapeumoccentabets 13, 14

15 U.S.C. 16810 (2000 & Supp. IV 2004) ..... 3, 15, 16

15 U.S.C. 16810(a) (2000 & Supp. IV 2004)......... 3

15 U.S.C. 1681p (Supp. IV 2004) ................. 3

SERA, SSA eer ee se 14

ED \nndebece ccaniideecceceheoucdtes 14

15 U.S.C. 1681s(a)-(b) (2000 & Supp. [V) .......... 1

ED en ccowdcccvevenvessvees 14

Fair Housing Act, 42 U.S.C. 3601 ef seg. ..........-.. . 19

Fair Labor Standards Act of 1938, 29 U.S.C. 201

DL. waekGirun dscns 66h s eeniccebess Heegesee 10, 12

ED nntddbdceichs dibnntaibhénee ¥< 10

PU ED cc cccccecccccevessesmstnessece 10

Statutes and regulations—Continued: Page

Fair Labor Standards Amendments of 1966, Pub. L.

No. 89-601, § 601(b), 80 Stat. 844 ..................

Family and Medical Leave Act of 1993, 29 U.S.C. 2617.

Occupational Safety and Health Act of 1970, 29 U.S.C.

EE Ebchiekuh osc ops Cub ogneevbbsébsnvabuphs cons

EE a cn cdtsdu icudens badeleddulinkeeds

I 5 ning sen neduse’ osu dint batles oink

18 U.S.C. 923(e) (Supp. IV 2004) ........... cece eee

SE iiané cactkecepucbiasies ts Ceekhoowagns’

I: Skbvdcccccesdesctccvediuwsstesvesst

nn ccupesdiesiddisiebededemmiacitn

IID 0 vc cinckecicedvdvventdenies beeen

ei, oi cin dt clstsdians wergtcen hanes aaee

NE dines cenrecsascemrsncscovestberdevees

IL in. cccwcntnesencunscbeestdess

Ariz. Rev. Stat. Ann. § 44-1695(c) (West 2003) .........

Cal. Civ. Code (West):

EE 5s vocab sat haataets deities fal

I vc. ve utecceesont¥esceces

§ 1786.40 (Supp. 2006) ...... ste nnvdesnt ion’ ies

Kan. Stat. Ann. (1994):

Ab dw dds Kdbd ene hades oe kewkbaeesh ed an

Ns Liduiibles imine tewevced§ tigmetians

$1880 (Sapp. 2005) ...0.............cce eee eee

Statutes and regulations—Continued: Page

Md. Code Ann. Com. Law (LexisNexis):

ER nh ie» paatud ws oiuedentgadndtekt 18

en ee 18

Mont. Code Ann (2005):

ST sinc laintid aise b's Weteipihdel tameakied teal 18

II set. ditinn dss 0 dyacne é adatmweidtenwi asain 18

SC cnksdinicins 4 46>. etiiamensiaoe dinmith omnis 18

N.Y. Gen. Bus. Law (McKinney):

§ 380-1 (1996) .......... 550%) ASowiasediraain 18

IIE «. ecchiinersiniierdgsitn'e tice 8 aéhicn Seat 18

16 C.F.R. Pt. 600:

scr itisce sua taSiihiaratiarmeegsls tae x Eines 1, 25

EE ctccvcagihinda de ccaeed ike 25

Miscellaneous:

Black’s Law Dictionary (rev. 4th ed. 1968) ............ 15

H.R. 19403, 91st Cong., 2d Sess. (1970) ............... 7

H.R. 19410, 91st Cong., 2d Sess. (1970) ....0.. 02.24.44. 17

H.R. Conf. Rep. No. 1587, 91st Cong., 2d Sess. (1970) .. 16

H.R. Rep. No. 486, 103d Cong., Ist Sess. (1994) ........ 26

Letter from Hannah Stires, FTC, to James Bail

(Mar. 1, 2000) <http://www ftc.gov/os/statutes/

ED Js es 4uiilicd dd dene i.ds bd eas Rs eine 30

William L. Prosser, The Law of Torts (4th ed.

SEY pdbunda deceddalhs4dscedhesddésduocces 16, 21, 22

Restatement (Second) of Torts (1979) ........ 0.20044 18

S. 823, 91st Cong., Ist Sess. (1969) ........ 2.22. 20045. 16

&. Rep. No. 517, 91st Cong., Ist Sess. (1969) ...... 1, 16, 26

Miscellaneous—Continued:

S. Rep. No. 209, 103d Cong., 1st Sess. (1993)

Webster’s New Int'l Dictionary (2d ed. 1958)

Webster’s Third New Int'l Dictionary (1961)

INTEREST OF THE UNITED STATES

This case concerns the proper construction of the

adverse-action and civil-liability provisions of the Fair

Credit Reporting Act (FCRA), 15 U.S.C. 1681 et seq.

Congress charged the Federal Trade Commission (Com-

mission) with primary responsibility for civil enforce-

ment of the FCRA, while vesting federal banking and

other agencies with complementary authority over the

Act’s application in certain specialized contexts. See 15

U.S.C. 1681m(h)(8)(B) (Supp. IV 2004); 15 U.S.C.

1681s(a)-(b) (2000 & Supp. IV 2004). The Commission

has also issued formal guidance on the FCRA’s construc-

tion and implementation, see 16 C.F.R. Pt. 600 App. The

United States accordingly has a vital interest in ensuring

the proper interpretation and application of the FCRA’s

provisions, and participated as amicus curiae in this

Court’s prior FCRA case. See TRW Inc. v. Andrews, 534

U.S. 19 (2001).

STATEMENT

1. a. Congress enacted the FCRA in 1970 to prevent

harm to consumers arising from flaws in the credit re-

porting system, to protect consumer privacy, and to im-

prove the integrity and reliability of credit reports,

thereby promoting efficiency in the Nation’s banking and

consumer credit systems. TRW, 534 U.S. at 23; S. Rep.

No. 517, 91st Cong., Ist Sess. 1 (1969). Congress found

that “[aln elaborate mechanism has been developed” for

investigating, cataloguing, and disseminating informa-

tion about the “credit standing, credit capacity, charac-

ter, and general reputation” of tens of millions of con-

sumers. 15 U.S.C. 1681(a)(2). Congress passed the

FCRA “to insure that consumer reporting agencies exer-

cise their grave responsibilities with fairness, impartial-

(1)

ity, and a respect for the consumer’s right to privacy.”

15 U.S.C. 1681(a)(4). Improving the “[a]ecuracy and fair-

ness of credit reporting,” 15 U.S.C. 1681(a), was critical

because “|i/naccurate credit reports directly impair the

efficiency of the banking system” and erode “the public

confidence which is essential to the continued functioning

of the banking system,” 15 U.S.C. 1681(a)(1). Congress

thus directed consumer reporting agencies “[to] adopt

reasonable procedures for meeting the needs of com-

merce for consumer credit, personnel, insurance, and

other information” in a manner that is “fair and equitable

to the consumer, with regard to the confidentiality, accu-

racy, relevancy, and proper utilization of such informa-

tion.” 15 U.S.C. 1681(b).

The FCRA identifies the purposes for which consumer

reports may permissibly be requested and used, includ-

ing the underwriting of insurance. 15 U.S.C.

~ 1681b(a)(3)(A)-(C) (Supp. IV 2004). The Act also gives

consumers the right to see their credit report, 15 U.S.C.

168lg (2000 & Supp. IV 2004), and establishes detailed

procedures for the resolution of consumers’ disputes over

the accuracy of reports, 15 U.S.C. 16811 (2000 & Supp. IV

2004). The Act further requires all users of credit re-

ports to provide notice to the affected consumer when-

ever they “take[] any adverse action with respect to any

consumer that is based in whole or in part on any infor-

mation contained in a consumer report,” and to inform

the consumer of the right to obtain a copy of the report

and to challenge its content. 15 U.S.C. 1681m(a).

b. Congress created a federal cause of action for con-

sumers against those who furnish credit information, or

who create, market, or use credit reports in violation of

the FCRA. 15 U.S.C. 1681p (Supp. IV 2004).' Under 15

U.S.C. 16810 (2000 & Supp. IV 2004), “[aJny person who

is negligent in failing to comply with any requirement

imposed under [the FCRA] with respect to any con-

sumer” is liable for “actual damages sustained by the

consumer as a result of the failure,” as well as costs and

attorney’s fees. 15 U.S.C. 1681lo(a) (2000 & Supp. IV

2004). If the failure to comply with a requirement of

FCRA is ”willful[],” the consumer may obtain (i) either

actual damages or statutory damages “of not less than

$100 and not more than $1,000,” (ii) “such amount of pu-

nitive damages as the court may allow,” and (iii) costs

and attorney’s fees. 15 U.S.C. 1681n(a)(1)(A)-(3).*

2. This case arises out of two separate proposed class

actions against two different insurance companies for

allegedly failing to comply with the FCRA’s adverse-ac-

tion notice requirements.

a. Respondent Edo applied to GEICO for automobile

insurance.’ GEICO relied on Edo’s credit report to eval-

' In 2003, Congress limited private enforcement of violations of

Section 1681m. See 15 U.S.C. 1681m(h)(8) (Supp. IV 2004).

* Congress also established civil liability for specific instances of

“knowing noncompliance,” rendering any person “who obtains a

consumer report from a consumer reporting agency under false

pretenses or knowingly without a permissible purpose” liable to the

consumer reporting agency for either actual damages or $1000 in

statutory damages, “whichever is greater.” 15 U.S.C. 1681n(b).

Congress further directed that a “natural person” who obtains a

consumer report from any source “under false pretenses or knowingly

without a permissible purpose” is likewise liable for the greater of

either actual damages or $1000. 15 U.S.C. 1681n(a)(1)(B).

* While the parties disputed below which (if any) of the GEICO and

Safeco companies were proper defendants, petitioners do not press that

argument here. Accordingly, this brief refers to the petitioners in No.

06-100 as “GEICO” and in No. 06-84 as “Safeco.”

uate his application and, based in part on the report, of-

fered Edo insurance at a higher premium rate than it

offered to other applicants. 06-100 Pet. App. 39a.

Originally, GEICO provided adverse action notices to

all customers whose initial insurance rates were based,

at least in part, on adverse credit reports. 06-100 Pet.

App. 12a. GEICO subsequently changed that policy and,

instead, compared the rate an insured was offered to the

rate he would have been offered if the credit report had

been “neutral.” Jbid. Where GEICO determined, as it

did in Edo’s case, that the rate would not have changed

if it had applied a neutral credit score (or if it had not

considered his credit score at all), GEICO did not issue

an adverse action notice. Jd. at 14a, 2lan.12. In 2002,

GEICO abandoned that policy and resumed issuing ad-

verse action notices “whenever a report with more favor-

able credit information would have resulted in a lower

insurance rate.” /bid.

Edo filed a proposed class-action lawsuit against

GEICO alleging that GEICO violated the FCRA by fail-

ing to provide him with an adverse action notice. The

complaint sought statutory and punitive damages. 06-

100 Pet. App. 9a. The district court granted GEICO’s

motion for summary judgment, id. at 37a-47a, holding

that no adverse action occurred because Edo’s insurance

rate “would have been the same even if GEICO Indem-

nity did not consider information in |Edo’s] consumer

credit history.” Jd. at 46a.

b. Respondents Charles Burr and Shannon Massey

_ purchased insurance policies from Safeco. Safeco relied

on information in their consumer reports to set the initial

premiums and, based on that information, charged them

higher rates than it charged customers with better re-

ports. Safeco, however, did not issue Burr or Massey

adverse action notices. 06-84 Pet. App. 4a-5a, 11a.

Burr and Massey subsequently joined as named plain-

tiffs in a proposed class-action lawsuit alleging that

Safeco’s failure to provide adverse action notices after

setting higher insurance premiums based on their credit

reports constituted a willful violation of the FCRA. 06-

84 Pet. App. 24a. While they did not allege actual dam-

ages, Burr and Massey sought statutory and punitive

damages. 06-84 Pet C.A. Supp. E.R. 3-4.

The district court granted Safeco’s motion for sum-

mary judgment against Burr and Massey. 06-84 Pet.

App. 3a-14a. The court held that the use of a credit re-

port to set higher premiums for an initial application for

insurance was not an “adverse action” because the FCRA

requires an “increase in any charge for” insurance, 15

U.S.C. 1681a(k)(1)(B)(i), and such an increase could oc-

cur only if the “insurer charges an insured one price for

insurance and then subsequently increases that charge.”

06-84 Pet. App. lla-12a.

3. The court of appeals reversed in both cases. 06-84

Pet. App. la-2a; 06-100 Pet. App. la-36a.

a. In respondent Edo’s case, the court held that

GEICO’s use of his credit report to set his insurance rate

constituted an “adverse action” under the FCRA, be-

cause the company relied on the report and, if Edo’s

credit rating had been better, he would have been

charged a lower rate. 06-100 Pet. App. 20a-21a.

Addressing the standard for a willful violation of the

FCRA, the Ninth Circuit agreed with the Third Circuit

that a defendant acts “willfully” if it acts with either a

conscious disregard of consumers’ known rights under

the FCRA or “reckless disregard of whether the policy

[or action] contravened those rights.” 06-100 Pet. App.

31a (quoting Cushman v. Trans Union Corp., 115 F.3d

220, 227 (3d Cir. 1997)). The court further held that, un-

der the reckless-disregard standard, a defendant will be

liable if it relies “on creative lawyering that provides

indefensible answers,” “implausible interpretations,” or

“creative but unlikely answers to ‘issues of first impres-

sion.’” Jd. at 33a-34a. The court concluded that “at least

some of the interpretations” in the case were “implausi-

ble,” id. at 34a, and remanded to the district court for

further proceedings. /d. at 36a.

b. In petitioner Safeco’s case, the court of appeals re-

versed. 06-84 Pet. App. la-2a. Based on its decision in

Edo, the court held that the FCRA’s adverse action pro-

vision applies to increases in the charge for an initial

policy of insurance, id. at la-2a, and that Safeco could be

held to have acted willfully, id. at 2a.

SUMMARY OF ARGUMENT

I. Under the FCRA, a person willfully fails to comply

with the law if he or she acts knowingly or in reckless

disregard of the Act’s requirements. For decades, this

Court has repeatedly held that the term “willfully” in

civil statutes encompasses not only knowing, but also

reckless, disregard of the law or the rights of others.

That familiar pattern includes statutes that were enacted

contemporaneously with the FCRA and that share its

focus on compliance with laws protecting federally cre-

ated rights. In the absence of a contrary indication in

the text—and there is none in the FCRA—this Court’s

settled practice is to assume that Congress hewed to that

pattern, rather than departed anomalously from it. That

ordinary reading of “willfully” also comports with the

FCRA’s structure, which separately carves out for more

serious treatment certain violations committed “know-

ingly,” a limitation that would be meaningless if “will-

fully” were already confined to violations of known legal

standards.

While the court of appeals was correct to construe

“willfully” as incorporating a reckless-disregard compo-

nent, the court misdescribed and misapplied that stan-

dard. To establish reckless disregard in failing to comply

with the law, a plaintiff must show more than an unrea-

sonable, unlikely, or implausible construction of the law.

The plaintiff must establish that the defendant acted

either in disregard of known legal obligations or with

indifference to an objectively high and obvious risk of

unlawfulness. Reckless disregard, in other words, re-

quires such an extreme departure from standards of or-

dinary care as either to be tantamount to acting know-

ingly or to reflect such disregard for the law as to merit

equivalent censure.

II. The court of appeals correctly held that charging

a customer a higher rate for insurance based on his

credit report constitutes an adverse action. The FCRA

defines “adverse action” to include “an increase in any

charge for [insurance] * * * applied for” based on the

content of a credit report. 15 U.S.C. 1681a(k)(1)(B)(i).

That language readily encompasses charging an individ-

ual a higher rate than that given to customers with

better credit reports, just as charging a higher premium

based on a new applicant’s other individual characteris-

tics, such as age, gender, or a poor driving record, would

naturally be described as an “increase” in the rate

charged.

GEICO argues that no adverse action occurred be-

cause Edo would have received the same insurance rate

if his credit report had not been used. But that is irrele-

vant. Edo’s credit report was used, and GEICO charged

Edo a higher rate as a result. The rate he would have

been charged if, contrary to fact, his report has not been

consulted is beside the point. Insurers are not required

to use credit reports, but when they choose to do so they

must comply with Congress’s calibrated scheme, which

seeks to protect both consumers and the integrity and

reliability of the Nation’s credit and banking systems,

and which makes providing consumers with notice of all

adverse actions critical to accomplishing those goals.

While GEICO’s construction of the adverse-action

notice requirement was erroneous, the resulting failures

to notify consumers were not willful violations of the

FCRA. The legal question of the FCRA’s coverage was

one of first impression that was not settled by statutory

text, formal agency guidance, or case law. GEICO’s

reading, while wrong, does not reflect the type of ex-

treme departure from responsible judgment that

amounts to reckless disregard of the law.

ARGUMENT

Il. A “WILLFUL” FAILURE TO COMPLY WITH THE RE-

QUIREMENTS OF THE FCRA REQUIRES PROOF THAT

THE DEFENDANT EITHER KNOWINGLY OR RECK-

LESSLY DISREGARDED THE LAW

“|W jillfully” is “a word of many meanings,” the con-

struction of which “is often dependent on the context in

which it appears.” Bryan v. United States, 524 U.S. 184,

191 (1998) (quoting Spies v. United States, 317 U.S. 492,

497 (1943)).* When the word appears in criminal stat-

utes, it generally refers to a “culpable state of mind,”

* See Ratzlaf v. United States, 510 U.S. 135, 141 (1994); United

States v. Bishop, 412 U.S. 346, 352 (1973); Screws v. United States, 325

U.S. 91, 101 (1945).

such as a “bad purpose” to violate the law, Bryan, 524

U.S. at 191 & n.12. By contrast, when (as here) “will-

fully” appears in a civil statute—particularly one that is

designed to protect federal rights and that is framed in

terms of the defendant’s compliance with the law—the

term means a knowing or reckless disregard of the law.

“Recklessness,” in turn, requires more than mere negli-

gence. McLaughlin v. Richland Shoe Co., 486 U.S. 128,

133 (1988). It imposes an objective standard that is satis-

fied only if the defendant acted in the face of such a high

risk that its conduct would violate the law that the ille-

gality was either known or so obvious as to require the

exercise of greater care.

A. “Willfully” Is Traditionally Interpreted In Civil Statutes,

Particularly Laws Designed To Enforce Federal Rights, To

Mean Either Knowing Or Reckless Disregard Of Legal

Obligations

Construing the word “willfully” in the FCRA to en-

compass both knowing and reckless disregard of the law

“is surely a fair reading of the plain language of the Act.”

Richland Shoe, 486 U.S. at 133. More than a half-cen-

tury ago, in United States v. Illinois Central R.R., 303

U.S. 239 (1938), the Court approved the following “useful

guide to the meaning of the word ‘willfully’” in the civil

context: “it means purposely or obstinately and is de-

signed to describe the attitude of a [defendant], who,

having a free will or choice, either intentionally disre-

gards the statute or is plainly indifferent to [the stat-

ute’s] requirements,” id. at 243.

More recently, in TWA, Inc. v. Thurston, 469 U.S. 111

(1985), this Court held that liquidated damages for “will-

ful violations” of the Age Discrimination in Employment

Act of 1967 (ADEA), 29 U.S.C. 601 et seq., required proof

that the defendant “knew or showed-reckless disregard

for the matter of whether its conduct was prohibited by

the ADEA.” Thurston, 469 U.S. at 125-126; see Hazen

Paper Co. v. Biggins, 507 U.S. 604, 617 (1993) (same).

The Court reached the same conclusion under the Fair

Labor Standards Act (FLSA), 29 U.S.C. 201 et seg. See

Richland Shoe, 486 U.S. at 133.° -

That generally established understanding of “will-

fully” in the civil context forms the backdrop against

which Congress enacted the FCRA’s willful liability pro-

vision, and thus the “absence of [any] contrary direction”

in the statute evidences Congress’s “satisfaction with

[that] widely accepted definition[{], not * * * a depar-

ture from [it].” Morissette v. United States, 342 U.S.

246, 263 (1952). That common-sense assumption has par-

ticular salience here, for two reasons.

First, when Congress’s aim is to enforce federal rights

and to induce regulated entities’ attention and adherence

to the obligations of federal law, Congress has a long

tradition of employing the reckless-disregard standard

to accomplish that end. In the FCRA, just like the FLSA

and the ADEA, the object to which the willfulness stan-

dard refers is a defendant’s failure to comply with the

particular legal constraints imposed by the Act itself.

Compare 15 U.S.C. 1681n(a), with 29 U.S.C. 255(a); 29

* GEICO notes (06-100 Pet. 15) that Richland Shoe involved only a

statute-of-limitations provision. There is no reason why that distinction

should matter, however. Indeed, it was the established construction of

the FLSA’s criminal willfulness provision that provided the predicate

for the Court’s adoption of that recklessness standard. See Richland

Shoe, 486 U.S. at 133; Thurston, 469 U.S. at 125-127. Moreover, the

FLSA’s civil penalty provision, 29 U.S.C. 216(e), accords “willfully” the

same established meaning. See Baystate Alternative Staffing. Inc. v.

Herman, 163 F.3d 668, 679-680 & n.14 (1st Cir. 1998).

U.S.C. 626(b).° It was in that context that this Court

concluded in Thurston and Richland Shoe that willful-

ness encompasses a defendant’s reckless disregard of the

law. That same recklessness standard governs liability

provisions in other federal laws, like (i) the Family and

Medical Leave Act, 29 U.S.C. 2617(c)(2) (statute of limi-

tations)’; (ii) the Occupational Safety and Health Act, 29

U.S.C. 666(a) (civil penalties)’; (iii) the Copyright Act, 17

U.S.C. 504(e)(2)"; and (iv) firearms licensing, 18 U.S.C.

923(e) (Supp. IV 2004).

Congress similarly employed a standard of reckless

disregard or reckless indifference to federal rights to

enforce, through punitive damages, compliance with Title

VII, 42 U.S.C. 2000e et seg., and the Americans with Dis-

abilities Act, 42 U.S.C. 12101 et seg. See 42 U.S.C.

198la(b)(1); Kolstad v. American Dental Ass’n, 527 U.S.

* That stands in distinction to willfulness standards that focus on

conduct external to the statute. See, e.g., Convention for the Unification

of Certain Rules Relating to International Transportation by Air,

opened for signature Oct. 12, 1929, art. 25(1), 49 Stat. 3020, 137

L.N.T.S. 27 (“willful miseonduct”); 11 U.S.C. 523(a)(6) (“willful and

malicious injury”); 38 U.S.C. 1110 (“willful misconduct”).

* See Porter v. New York Univ. Sch. of Law, 392 F.3d 580, 581-532

(2d Cir. 2004); Hanger v. Lake County, 390 F.3d 579, 583-584 (8th Cir.

2004); Hillstrom v. Best Western Hotel, 354 F.3d 27, 33 (ist Cir. 2003).

* See, e.g., A.J. McNulty & Co. v. Secretary of Labor, 283 F 3d 328,

337 (D.C. Cir. 2002); Brock v. Morello Bros. Constr., Inc., 809 F. 2d 161,

- (1st Cir. 1987) (Breyer, J.).

* See, e.g., Island Software & Computer Serv., Inc. v. Microsoft

peating 413 F.3d 257, 263 (2d Cir. 2005) (willfulness requires actual

knowledge or “reckless disregard,” or “willful blindness”); /n re

Aimster Copyright Litigation, 334 F 3d 643, 650 (7th Cir. 2003), cert.

denied, 540 U.S. 1107 (2004).

” See RSM, Inc. v. Herbert, No. 06-1393, 2006 WL, 3026344, at *5 (4th

Cir. Oct. 26, 2006) (“deliberate disregard” or “plain indifference”).

526, 535-538 (1999). That same standard has been em-

ployed to enforce constitutional and civil rights generally

under 42 U.S.C. 1983. See Smith v. Wade, 461 U.S. 30,

51 (1983) (“adoptling]” for Section 1983 “the policy judg-

ment of the common law—that reckless or callous disre-

gard for the plaintiff's rights * * * should be sufficient

to trigger a jury’s consideration of the appropriateness

of punitive damages”).

Second, the FCRA was enacted in 1970, contempora-

neously with other statutes in which “willfully” has been

held to encompass reckless disregard. The ADEA was

enacted in 1967, see Pub. L. No. 90-202, 81 Stat. 602,

while the FLSA provision at issue in Richland Shoe was

enacted in 1966, Pub. L. No. 89-601, § 601(b), 80 Stat.

844. There is no sound basis for holding that the mean-

ing of “willfully” in civil statutes deviated dramatically

before 1970. See Dixon v. United States, 126 S. Ct. 2437,

2445 (2006) (courts must construe a statutory term in a

liability provision “as Congress may have contemplated

it” at the time of enactment). eto

Accordingly, giving “willfully” in the FCRA’s civil lia-

bility provision the same established meaning that the

term signifies in substantively analogous and contempo-

raneously enacted statutes would be consistent with Con-

gress’s general practice of employing a “reckless disre-

gard” standard to enforce compliance with federal law

and to induce solicitude for federally created rights."

" Safeco argues (Pet. 20) that Thurston and Richland Shoe are

distinguishable because the “willful” provisions in the ADEA and the

FLSA were enacted “against the backdrop of consistent circuit

precedent interpreting the term ‘willful’ to include ‘reckless disre-

gard."” But that circuit precedent merely reflected this Court's

repeated decisions construing “willful” to include a reckless-disregard

component. See Thurston, 469 U.S. at 126 (“The definition of ‘willful’

B. The Structure Of The Fair Credit Reporting Act Demon-

strates That “Willfully” Includes Both Knowing And Reck-

less Disregard Of The Law

Petitioners’ argument (06-84 Pet. 28; 06-100 Pet. 21-

24) that willfulness requires actual knowledge of the vio-

lation of federal law not only overlooks established usage

of the term in civil statutes, but also fails to comport with

the overall structure and design of the FCRA.

First, when Congress wanted to restrict liability

to knowing violations of the FCRA, it said so explicitly.

Section 1681n(a)(1)(B) explicitly identifies and targets

‘for separate treatment a specialized subset of violators

within the general category of willful violations of the

FCRA: those defendants who violate 15 U.S.C. 1681b(f)

by obtaining a credit report either “under false pre-

tenses” or “knowingly without a permissible purpose.”

15 U.S.C. 1681n(a)(1)(B). If the word “willfully” in the

overarching civil-liability subsection (15 U.S.C. 1681n(a))

already restricted the scope of that provision to “know-

ing” violations of the law, there would have been no rea-

son for Congress to repeat that “knowingly” limitation in

subparagraph (1)(B). This Court does not generally con-

strue statutory terms in a manner that leaves them “with

no job to do.” Doe v. Chao, 540 U.S. 614, 623 (2004).

Congress also increased the minimum statutory damages

for such violators to no less than $1000, 15 U.S.C.

adopted by the above cited courts [of appeals] is consistent with the

manner in which this Court has interpreted the term in other criminal

and civil statutes.”); see also id. at 126-127. Indeed, that meaning was

so well settled that the Richland Shoe Court rejected a contrary

standard that had, in fact, been “widely used for a number of years” by

courts of appeals, 486 U.S. at 133, because that reading was contrary to

the “plain language of the statute,” which dictated a knowing or

reckless-disregard standard, id. at 134.

1681n(a)(1)(B), which underscores that Congress consid-

ered the conduct more culpable than the “willful” viola-

tions covered by the rest of the provision—such as ob-

taining a report with reckless disregard of the

impermissibility of the purpose, which would render the

person liable under Section 1681n(a)(1)(A) for a willful

violation of Section 1681b(f).

Likewise, in Section 1681n(b), Congress created a

cause of action for consumer reporting agencies (as op-

posed to consumers) that is limited to actions taken un-

der false pretenses or “knowingly without a permissible

purpose.” 15 U.S.C. 1681n(b). Congress subtitled that

provision “Civil liability for knowing noncompliance,” in

contrast to Section 1681n’s general caption of “Civil lia-

bility for willful noncompliance.” If willfulness were al-

ready limited to knowing violations, there would have

been no reason for Congress to separate out structurally

those violations that require a knowing violation of the

FCRA. See also 15 U.S.C. 1681s(a)(2)(A) (civil liability

actions by the Commission require a “knowing violation”

of the FCRA). The plain import of Congress’s language

and structure thus confirms what the ordinary under-

standing of the text says—liability for “willful” violations

reaches further than just knowing violations of the

law and includes conduct in reckless disregard of

the FCRA’s requirements.

Second, Congress’s deliberate use of different mens

rea phraseology in the FCRA’s criminal prohibitions un-

derscores Congress’s sensitivity to the distinct usages of

“willfully” in civil and criminal law. In 15 U.S.C. 1681q

and 168Ir respectively, Congress criminalized the ob-

taining of credit reports under false pretenses and the

unauthorized disclosure of consumer information when

done “knowingly and willfully.” Together, these terms

are understood to mean a conscious and intentional viola-

tion of a statute, Black’s Law Dictionary 1012 (rev. 4th

ed. 1968), and suggest a “bad purpose” component to

“willfully” that is consonant with its traditional usage in

criminal statutes, see Bryan, 524 U.S. at 191 & n.12; see

also United States v. Murdock, 290 U.S. 389, 395 (1933),

overruled in other part, Murphy v. Waterfront Comm’n,

378 U.S. 52 (1964)."*

Petitioners, however, propound a reading of “willfully”

that leaves little, if any, room between Congress’s differ-

ently articulated criminal and civil provisions. See 06-84

Pet. 18 (requiring an “intentional refusal to abide by

known legal requirements”); id. at 28; 06-100 Pet. 21.

This Court should “refrain from concluding here that the

differing language in the two subsections has the same

meaning in each,” especially when it would have the ef-

fect of equating the higher mens rea of the criminal pro-

hibitions with the requirements of the distinctly worded

civil provisions. Russello v. United States, 464 U.S. 16,

23 (1983).

Third, petitioners’ reading of “willfully” leaves no nat-

ural home in the structure of the liability provisions for

reckless disregard of the FCRA’s requirements. The

FCRA authorizes civil damages actions for “willful non-

compliance,” 15 U.S.C. 1681n, and “negligent noncompli-

ance,” 15 U.S.C. 1681v (2000 & Supp. IV 2004). As be-

tween the two, the more natural and traditional home for

liability based on reckless disregard is the willfulness

" Tellingly, even in the criminal context, “willfully” has been

understood to include reckless disregard of the law or the rights of

others. See, e.g., Thurston, 469 U.S. at 125-126 (equating its “reckless

disregard” standard with the standard for establishing criminal liability

under thie FLSA).

provision. See Hazen Paper, supra; Richland Shoe, su-

pra; Thurston, supra.

Furthermore, as petitioners note (06-84 Pet. 20-21; 06-

100 Pet. 22), Congress considered and rejected a provi-

sion that would have made “gross negligence,” rather

than negligence, the standard for obtaining actual dam-

ages. As passed by the Senate, the predecessor bill to

the FCRA dichotomized civil liability into “willful non-

compliance” and “grossly negligent non-compliance.”

S. 823, 91st Cong., Ist Sess. § 617 (1969); see S. Rep. No.

517, supra, at 7. In the Conference Committee, the lat-

ter standard was lowered to mere negligence. H.R. Conf.

Rep. No. 1587, 91st Cong., 2d Sess. 30 (1970).

Equating “gross negligence” with reckless disregard

(06-84 Pet. 20; 06-100 Pet. 22), petitioners contend that

Congress must have intended that the willfulness provi-

sion not extend to grossly negligent conduct. But “most

courts consider that ‘gross negligence’ falls short of a

reckless disregard of consequences,” W. Prosser, The

Law of Torts § 34, at 183 (4th ed. 1971), so the failure to

incorporate a gross negligence standard into Section

16810 sheds little light on Congress’s views regarding

recklessness. Moreover, it is highly doubtful that the

same Members of Congress who rejected “gross negli-

gence” as too high a threshold for actual damages simul-

taneously concluded that the threshold for the further

remedies of statutory and punitive damages should be as

high as knowing conduct, and not reckless disregard.

Petitioners’ reading of the FCRA’s text and legislative

history is not only counterintuitive, but also would leave

“reckless disregard” of the FCRA’s terms a statutory

orphan—a standard of culpability that sets too high a bar

to fit logically within the Act’s negligent non-compliance

provision and too low a bar to fall within the willful non-

compliance provision.”

Fourth, petitioners argue (06-84 Pet. 23-24; 06-100

Pet. 15, 17) that “recklessness disregard” sets too low a

threshold for punitive damages. But reckless disregard

or indifference to federal rights is an established stan-

dard for punitive damages liability and a familiar one to

businesses, including those involved in consumer report-

ing, see Dun & Bradstreet, Inc., v. Greenmoss Builders,

Inc., 472 U.S. 749, 751, 760-763 (1985) (plurality opinion)

(credit reporting agencies favor a reckless-disregard

standard). Indeed, a number of State consumer-report-

ing laws appear to impose the same or a similar standard

for punitive damages, so it is a standard with which peti-

tioners are already familiar when using consumer re-

ports."

'* Petitioners argue that Congress actually “consider{ed]” versions of

the liability provision that would have allowed actual and punitive

damages for “willful or grossly negligent” violations. See 06-100 Pet.

22 (emphasis omitted); see also 06-84 Pet. 21. That is a generous

reading of the legislative history. The two House bills to which they

refer never received a single day of debate or hearings, and never made

_ it out of Committee, let alone the House. See H.R. 19403, § 52, 91st

Cong., 2d Sess. (Sept. 22, 1970); H.R. 19410, § 52, 91st Cong., 2d Sess.

(Sept. 22, 1970). Furthermore, even if a handful of Representatives

were aware of that language, their failure to press for its enactment

may well have reflected their concurrence with this Court’s view that

the “gross negligence” standard is “too vague, and too likely to be

confused with mere ordinary negligence, to provide a fair standard” for

punitive damages. Smith, 461 U.S. at 43; see id. at 49; Farmer v.

Brennan, 511 U.S. 825, 836 n.4 (1994).

'* See Cal. Civ. Code § 1785.20 (West 1998); id. §§ 1785.31, 1786.40

(West Supp. 2006); Simms v. Royal Thrift & Loan Co., No. E028659,

2002 WL 32576, at *6 (Cal. Ct. App. Jan. 11, 2002) (unpub.) (violation is

“willful” if “the defendant knowingly failed to fulfill an obligation

without a good faith, reasonable belief in the legality of his or her

In addition, petitioners are already subject to punitive

damages if they recklessly disregard the requirements

of Title VII or the Americans with Disabilities Act. See

42 U.S.C. 1981a; Kolstad, supra. Reckless disregard is

also the standard courts apply under the ADEA for liqui-

dated damages, which are “punitive in nature,”

actions”); Ariz. Rev. Stat. Ann. § 44-1695(C) (West 2003) (“grossly

negligent”); Armenta v. City of Casa Grande, 71 P.3d 359, 364 (Ariz. Ct.

App. 2003) (defining “[g)jross, willful, or wanton conduct” generally as

“action or inaction with reckless indifference to the result or the rights

or safety of others”); Kan. Stat. Ann. §§ 50-714, 50-715 (1994); Reeves

v. Carlson, 969 P.2d 252, 256-257 (Kan. 1998) (in tort law, “willful”

means a person has “knowledge of existing conditions and [is] aware

* * * that [harm] will likely or probably result from his or her conduct,

and with reckless indifference to the consequences, consciously does

some act or omits to discharge some duty, which produces the injurious

result”); Me. Rev. Stat. Ann. title 10, § 1320 (West Supp. 2005); id.

§ 1322 (West 1997); Skrader-Miller v. Miller, 855 A.2d 1139, 1144 (Me.

2004) (In tort law, “willfully” “mean[s| conduct displaying an ‘utter and

complete indifference to and disregard for the rights of others.’”); Md.

Code Ann. Com. Law § 14-1212 (LexisNexis 2005); id. § 14-1213 (Supp.

2006); Williams Constr. Co. v. Garrison, 400 A.2d 22, 25 (Md. Ct. Spec.

App. 1979) (“willful[ness] in worker’s compensation law includes “the

intentional doing of something * * * with a wanton and reckless

disregard of its probable consequences”); Mont. Code Ann. §§ 31-3-131,

31-3-142, 33-18-608 (2005); Cooper v. Rosston, 756 P.2d 1125, 1130

(Mont. 1988) (“When a person knows or has reason to know facts which

create a high degree of risk of harm to the substantial interests of

another, and * * * recklessly proceeds in unreasonable disregard of or

indifference to that risk, his conduct meets the standard of willful,

wanton, and/or reckless to which the law of this State will allow

imposition of punitive damages.”); N.Y. Gen. Bus. Law. § 380-i

(McKinney 1996); id. § 380-1 (Supp. 2006); Welch v. Mr. Christmas Inc.,

440 N.E.2d 1317, 1321 (N.Y. 1982) (“{Rlecovery of exemplary or

punitive damages in a common-law action requires a showing of

conscious disregard of the rights of others or conduct so reckless as to

amount to such disregard.”); see generally Restatement (Second) of

Torts § 908(2) (1979).

Thurston, 469 U.S. at 125, under the Equal Credit Op-

portunity Act, 15 U.S.C. 1691e(b), and under a number of

other federal laws.'” Indeed, reckless disregard has al-

ready been determined to be an adequate shield even in

areas of First Amendment concern, see Gertz v. Robert

Welch, Inc., 418 U.S. 323, 349 (1974)."®

Finally, the question of how the FCRA responds to

covered entities who recklessly disregard the statute’s

requirements is, at bottom, a question about Congress’s

level of tolerance for reckless disregard of the law. The

FCRA is designed to protect individuals from abuse, to

enhance individual privacy, and to promote integrity,

See, e.g., Barbourv. Merrill, 48 F 3d 1270, 1277 (D.C. Cir. 1995) (42

U.S.C. 1981), cert. dismissed, 516 U.S. 1155 (1996); Ragin v. Harry

Macklowe Real Estate Co. , 6 F.3d 898, 909 (2d Cir. 1993) (Fair Housing

Act, 42 U.S.C. 3601 et seq.); United States v. Balistrieri, 981 F.2d 916,

936 (7th Cir. 1992) (Fair Housing Act), cert. denied, 510 U.S. 812 (1993);

Asbury v. Brougham, 866 F.2d 1276, 1282 (10th Cir. 1989) (42 U.S.C.

1982); Stephens v. South Atl. Canners, Inc., 848 F.2d 484, 489-490, 492

& n.6 (4th Cir.) (42 U.S.C. 1981), cert. denied, 488 U.S. 996 (1988);

Williamson v. Handy Button Mach. Co., 817 F.2d 1290, 1296 (7th Cir.

1987) (42 U.S.C. 1981): Fischl v. General Motors Acceptance Corp., 708

F.2d 143, 148 (5th Cir. 1983) (Equal Credit Opportunity Act).

"© Petitioner Safeco contends (06-84 Pet. 21) that Congress “implicitly

endorse[d]” reading “willfully” to mean knowing violations of the law

when it amended the FCRA in 1996 without changing the legal

standard. There is nothing in the legislative history that supports that

conclusion or, more particularly; that suggests that Congress under-

stood the circuits’ “conscious disregard” standard to exclude reckless

disregard. Indeed, both the Third and Ninth Circuits have included

“reckless disregard” within a “conscious disregard” standard, see 06-84

Pet. App. 127a; Cushman, 115 F.3d at 226-227, and other courts have

used the phrases interchangeably in this context, see Casella v. Equifax

Credit Info. Servs., 56 F.3d 469, 476 (2d Cir. 1995), cert. denied, 517

U.S. 1150 (1996), and elsewhere, see, ¢.g., Bevolo v. Carter, 447 F.3d

979, 982-984 (7th Cir. 2006); Stuart v. United States, 337 F.3d 31,36 (st

Cir. 2003); United States v. Gonsalves, 435 F.3d 64, 70 (ist Cir. 2006).

y \

efficiency, and reliability in the Nation’s banking system.

See 15 U.S.C. 1681(a)(1), (4) and (b). In the face of those

critical interests, petitioners posit a statutory scheme

that cares sufficiently little about non-compliance and

the harms that it can cause as to treat ordinary negli-

gence and heedless disregard of the law with equivalent

censure. But the FCRA demands, as its starting point,

that regulated entities take reasonable measures and

strike reasonable balances in exercising their “grave re-

sponsibilities,” 15 U.S.C. 1681(a)(4) and (b), purposes

that cannot be reconciled with petitioners’ proposed envi-

ronment of broad tolerance for companies’ reckless indif-

ference to harm and failure to exercise even slight care

in complying with the law.

C. Reckless Disregard Requires Indifference To Clearly Es-

tablished Law Or The Disregard Of An Obvious And High

Probability That Conduct Is Unlawful

- While the court of appeals correctly held that “will-

fully” in the FCRA includes a reckless-disregard compo-

nent, the court misconceived the import of that standard

and misapplied ii in these cases. For example, the court

of appeals held that “implausible” interpretations (06-100

Pet. App. 34a) or knowing reliance on Jegal opinions

“that provide creative but unlikely answers to ‘issues of

first impression’” (id. at 33a) constitute reckless disre-

gard. The court further noted (id. at 34a) that whether

consultation with attorneys would provide evidence of a

lack of willfulness would depend upon the “unreasonable-

ness” of the erroneous interpretation. That resembles a

mere negligence standard, and thus sets too low a bar.

See Richland Shoe, 486 U.S. at 134-135 & n.13.

To be sure, “the term recklessness is not self-defin-

ing,” Farmer v. Brennan, 511 U.S. 825, 836 (1994), nor

capable of being cabined into “one infallible definition,”

St. Amant v. Thompson, 390 U.S. 727, 730 (1968). “Inev-

itably its outer limits will be marked out through case-

by-case adjudication, as is true for so many legal stan-

dards.” /d. at 730-731. Nevertheless, there are two es-

sential aspects of “reckless disregard” in the civil context

that should have guided the court’s application.

First, recklessness bespeaks an aggravated or ex-

treme departure from standards of ordinary care. In

contrast to negligence, recklessness entails action or

inaction “in the face of an wnjustifiably high risk of

harm” or unlawfulness, Farmer, 511 U.S. at 836 (empha-

sis added). The probability that harm or a violation of

the law will result must be apparent to a “high degree.”

Harte-Hanks Comme’ns, Inc. v. Connaughton, 491 U.S.

657, 667 (1989). Accordingly, “[t]he usual meaning as-

signed to * * * ‘reckless’ * * * is that the actor has

intentionally done an act of an unreasonable character in

disregard of a risk known to him or so obvious that he

must be taken to have been aware of it, and so great as

to make it highly probable that harm [or illegality] would

follow.” Prosser, supra, § 34, at 185; see Farmer, 511

U.S. at 837.

Proof of such an aggravated deviation from the stan-

dard of ordinary care is necessary because “reckless dis-

regard” is designed to capture two acute forms of culpa-

bility. The reckless-disregard standard reaches conduct

that is so wrongful under the circumstances that it is a

proxy for or functionally equivalent to knowing or inten-

tional conduct, which can in some contexts be difficult to

prove.’’ But when couched (as in the FCRA) in terms of

' See, ¢.g., Barry v. Edmunds, 116 U.S. 550, 563 (1886) (standard

captures that “reckless indifference to the rights of others which is

reckless disregard of the law, the recklessness standard

also captures failures to conform behavior to the law that

are so extreme as to independently merit censure."*

Second, reckless disregard in the civil context is, at

bottom, an objective standard. See Farmer, 511 U.S. at

836-837; Prosser, supra, § 34 at 185 (“an objective stan-

dard must of necessity in practice be applied”). That is

even more true when, as here, the recklessness standard

is framed in terms of compliance with the law, and the

statutory standard itself is not necessarily well-estab-

lished. Although inquiries into recklessness often take

place in areas of well-established duties of care, in the

statutory context, when the concern is whether the disre-

gard of the law was reckless, the extent to which the law

was well-established and clearly understood must be part

of the analysis. Therefore, courts must undertake an

objective inquiry to determine whether the defendant's

conduct reflected a colorable interpretation of the law.

But because the standard is recklessness, not negligence,

more than mere unreasonableness or implausibility must

be shown. See Richland Shoe, 486 U.S. at 134-135 &

n.13. The plaintiff must demonstrate either that the le-

gal position ran afoul of clearly established law or that

equivalent to an intentional violation of them”); Saba v. Compagnie

Nationale Air France, 78 F.3d 664, 667-668 (D.C. Cir. 1996) (in some

statutes, reckless disregard “providjes} a proxy” for knowing or

intentional conduct, while “alleviat|ing| problems of proof”).

* See, e.g., [illinois Cent., 303 U.S. at 243 (willfulness encompasses

actions that either “intentionally disregard| | the statute or [are] plainly

indifferent to its requirements”); Brock, 809 F.2d at 164 (in civil cases,

a person acts willfully if “the offender shows ‘indifference’ to the rules;

he need not be consciously aware that the conduct is forbidden at the

time he performs it, but his state of mind must be such that, if he were

informed of the rule, he would not care”).

the defendant failed to act with necessary care in the

face of a high and obvious risk of legal error. In other

words, the defendant’s determination of his legal obliga-

tions must be shown to have fallen outside the range of

responsible judgment."” The reckless-disregard compo-

nent of willfulness thus requires violation of clearly es-

tablished law or indifference to an objectively high and

obvious risk of unlawfulness.”

That purely legal inquiry into the objective reckless-

ness of the defendant’s failure to comply with the FCRA

can, and generally should, be undertaken at an early

stage in the case. Only if the defendant’s failure to com-

ply with the law was objectively reckless would it become

necessary for a court to probe, as the court of appeals

invited here (06-100 Pet. App. 33a-34a), the defendant’s

subjective good faith. Resolving the objective reckless-

ness of the defendant’s non-compliance with the law at

the outset will (i) help to develop the contours of FCRA

law, thereby providing prospective guidance concerning

the law’s requirements and reducing violations; (ii) “per-

mit the resolution of many insubstantial claims on sum-

mary judgment,” Harlow v. Fitzgerald, 457 U.S. 800, 818

(1982); and (iii) minimize the significant intrusions on

attorney-client privilege that often attend inquiries into

" In that respect, the test is similar to the qualified-immunity inquiry

into whether a defendant's conduct violated “clearly established law.”

Harlow v. Fitzgerald, 457 U.S. 800, 818 (1982). Indeed, this Court has

acknowledged the overlap of the qualified-immunity inquiry and the

“reckless disregard” standard. See Smith, 461 U.S. at 51-54.

” Cf. Professional Real Estate Investors, Inc. v. Columbia Pictures

Indus., Inec., 508 U.S. 49, 60 (1993) (to overcome Noerr-Pennington

immunity in antitrust law, the defendant’s litigation position must have

been “objectively baseless” and “objectively meritless”).

subjective good faith compliance with the law, see 06-100

Pet. App. 34a.

The court of appeals deviated substantially from that

framework. The court gave improper significance to al-

legedly improper motivations at the outset, 06-100 Pet.

App. 33a, and inappropriately collapsed the objective and

subjective components of recklessness into a single in-

quiry, inviting immediate inquiry on remand into the

“privileged advice of counsel, id. at 34a. The court also

applied too diluted a standard for recklessness, suggest-

ing that it can be satisfied by “unreasonableness,” “un-

likely answers,” or “implausible interpretations,” id. at

33a-34a. Because the court concluded that “at least some

of the [defendants’| interpretations are implausible,” and

hence reckless under the court’s analysis, and because

the court ordered the case remanded for further pro-

ceedings “consistent with [its] opinion” setting forth an

incorrect articulation of the governing recklessness stan-

dard (id. at 34a, 36a; see 06-84 Pet. App. 2a), the court’s

judgments cannot stand.

Il. AN ADVERSE ACTION NOTICE IS REQUIRED WHEN

THE CONTENT OF A CONSUMER’S CREDIT REPORT

PREVENTED THE CONSUMER FROM OBTAINING A

BETTER INSURANCE RATE

A. Providing A Higher Insurance Rate Based, In Part, On

A Credit Report Constitutes An Adverse Action

The court of appeals correctly concluded in No. 06-100

(Pet. App. 20a-21a) that GEICO took an adverse action

against Edo. The FCRA defines an adverse action in the

insurance context as:

a denial or cancellation of, an increase in any charge

for, or a reduction or other adverse or unfavorable

change in the terms of coverage or amount of, any in-

surance, existing or applied for, in connection with the

underwriting of insurance.

15 U.S.C. 1681a(k)(1)(B)(i).”"

GEICO concedes (06-100 Pet. App. 10a) that charging

a new customer a higher rate than that available to other

customers based, at least in part, on the customer’s

credit report can constitute an “increase in a[| charge for

[insurance] * * * applied for,” 15 U.S.C.

1681a(k)(1)(B)(i), and thus an adverse action. That con-

cession was a wise one. The plain meaning of “increase”

is “to become” or “to make” “greater in some respect.”

Webster’s Third New Int'l Dictionary 1145 (1961); see

Webster’s New Int'l Dictionary 1260 (2d ed. 1958).

When an insurer charges one new customer more than

others based, at least in part, on the content of the cus-

tomer’s credit report, it requires no linguistic leaps to

conclude that the insurer has “increase[d]” the insurance

charge for that customer.

Nothing in the meaning or usage of that term in the

FCRA presupposes that the baseline for determining

whether a rate is greater must be a price previously paid

by the same customer himself, as opposed to the price

offered to others.~ The FCRA’s prohibitions are not

* The FCRA defines “adverse action” differently depending on the

type of transaction involved (7e., insurance, credit, employment, or

licensing). See 15 U.S.C. 168la(k)\(1). This case concerns only the

insurance provision.

= See 16 C.F.R. Pt. 600 App., at 519 (notice required if any adverse

action is taken, even if the information is non-derogatory); 16 C.F.R. Pt.

698 App. H, at 552 (Notice of User Responsibilities) (“‘adverse action’

is defined very broadly” and includes any decision “hav[ing] a negative

impact”); S. Rep. No. 209, 103d Cong., ist Sess. 4, 8 (1993) (adverse

action notice required “any time the permissible use of a report results

limited to repeat customers. Nor is such a reading re-

quired by common usage. Had Edo pulled into a gas sta-

tion and been charged ten cents a gallon more because of

his race, gender, or the fact that his license plate ended

in an odd, rather than an even, number, Edo would have

suffered an “increase|d|” charge for gasoline, regardless

of whether he had ever purchased gasoline at that station

before. See Cornist v. B.J.T. Auto Sales, Inc., 272 F.3d

322, 327 (6th Cir. 2001) (a charge imposed on credit pur-

chasers of new cars was an “increase” over the price

charged to cash customers).

GEICO argues (06-100 Pet. 25-29) that no adverse

action occurred because it determined after the fact that

Edo’s rate would have been the same if no credit report

had been requested and GEICO had instead applied a

neutral credit score. GEICO does not dispute, however,

that it, in fact, obtained and used Edo’s actual credit

score and, on that basis, charged him a higher rate for

insurance than what was offered to certain other custom-

ers and what would have been offered to him if his credit

score had been better. 06-100 Pet. App. lla-12a, 14a.

What GEICO would have done in the absence of a credit

report is beside the point, because what GEICO did—use

a credit report adversely without providing no-

tice—violated the statute.”

in an outcome adverse to the interests of the consumer”); H.R. Rep. No.

486, 103d Cong., 2d Sess. 26 (1994) (same); S. Rep. No. 517, supra, at 7

(adverse action notice required whenever a consumer is “charged a

higher rate for * * * insurance” because of his credit report).

™ Indeed, had GEICO not intended to use Edo’s report in connection

with the underwriting of insurance, such as to set his insurance rate, it

would have obtained the report without any permissible purpose, in

violation of 15 U.S.C. 1681 b(a) (Supp. IV 2004).

Nothing in the FCRA conditions the existence of an

adverse action on the absence of post hoc rationales for

the higher rate. By the statute’s plain terms, an “ad-

verse action” requires nothing more than that the insur-

ance company “take[] any adverse action,” 15 U.S.C.

1681m(a)—such as an “increase” in the charge for insur-

ance, 15 U.S.C. 1681a(k)(1)(B)(i)—“based in whole or in

part on any information contained in a consumer report.”

15 U.S.C. 1681m(a). If it does, an adverse action notice

is required. /bid. Properly understood, therefore, the

adverse action occurred and was completed the moment

Edo’s insurance rate was set at a higher and less-prefer-

able level based, at least in part, on his credit report—

and, at that point, the obligation to issue an adverse-ac-

tion notice was triggered. See TRW, 534 U.S. at 35 (un-

der the FCRA, “[p]unitive damages * * * could pre-

sumably be awarded at the moment of TRW’s alleged

wrongdoing,” regardless of whether and when actual

damages might be established); cf. McKennon v. Nash-

ville Banner Publ’g Co., 513 U.S. 352, 357 (1995).

Indeed, GEICO’s position defies the statutory text

and purpose. The FCRA’s definition of an adverse action

foeuses on whether the credit report had a negative ef-

fect on Edo’s insurance rate, not whether his rate never-

theless fell within some statistical median or “neutral”

insurance rate for customers of similar backgrounds.

GEICO’s after-the-fact evidence may speak to whether

actual damages accrue, McKennon, 513 U.S. at 360-362,

but it says nothing about whether an adverse action was,

in fact, taken based on his credit report.

Furthermore, the purpose of the adverse action notice

is not to alert consumers only when a report is below

average; it is to advise any affected consumer that the

information in his report is not as good as it might be and

that the deficiency has had material consequence. Under

the FCRA, each consumer plays a pivotal role in assur-

ing the accuracy of his or her consumer report and

thereby contributes to the integrity of the system as a

whole. See Philbin v. Trans Union Corp., 101 F.3d 957,

962 (3d Cir. 1996) (noting “the detrimental effects inac-

curate information can visit upon both the individual con-

sumer and the nation’s economy as a whole”). It is the

adverse action notice that generally triggers the con-

sumer’s role. In the absence of such notice, there may be

nothing to alert the consumer to check the report and no

information as to how to check a report. A consumer

with perfect credit who should receive a discount, but

instead is charged a higher rate based on a mistaken

report that her credit is average is no less entitled to

notice than a consumer with average credit who is

charged a higher-than-average rate based on a mistaken

report of a poor credit history.

Moreover, the obligation to provide notice is a conse-

quence GEICO chose for itself. Nothing in federal law

requires insurance companies to use credit reports in

setting their rates. The FCRA simply requires that, if an

insurance company opts to use the credit reporting sys-

tem and enjoy its benefits, it must also comply with the

FCRA’s obligations. That ensures that the other side of

the balance—the consumer’s interest in being alerted

when his credit rating denies him a benefit and the finan-

cial system’s interest in ensuring the accuracy and integ-

rity of consumer information—is maintained.

Safeco’s and GEICO’s concerns (06-84 Pet. 24; 06-100

Pet. 25-29) about the policy implications of applying the

adverse action definition as it is written are neither well-

founded nor properly directed. For the past four years,

GEICO has been providing the requisite notices, without

any evidence of paralysis or unworkability induced by its

compliance with the FCRA. 06-100 Pet. App. 14a. And

in any event, petitioners could avoid the FCRA’s obliga-

tions by not relying upon credit reports. Beyond that,

objections to the requirements of the FCRA should be

directed to Congress.

B. GEICO’s Erroneous Understanding Of The Adverse Action

Provision Was Not Willful

While GEICO erred in concluding that no adverse

action report was required in Edo’s situation, the district

court’s grant of summary judgment was proper because

GEICO’s departure from the FCRA’s terms was not ob-

jectively reckless. The question whether an “in-

crease|d]” charge can be made for any initial application

for insurance was itself an issue of first impression, 06-

100 Pet. App. 17a, and the legal novelty of that question

was compounded in Edo’s case because there was an al-

ternative justification for the rate.

In addition, the statutory text is not so pellucid on the

question as to render GEICO’s position an extreme de-

parture from the bounds of responsible judgment, as

evidenced by the district court’s judgment in GEICO’s

favor (06-100 Pet. App. 46a). See id. at 38a n.1 (describ-

ing GEICO’s arguments as “well-reasoned and thought-

ful”). Generally, “[i]f judges * * * disagree on a [legal]

question, it is unfair to subject [defendants] to money

damages for picking the losing side of the controversy.”

Wilson v. Layne, 526 U.S. 603, 618 (1999). Nor had the

Commission provided specific formal guidance on the

question. Cf. Thurston, 469 U.S. at 129-130 (airlines’

position not reckless where legal advice was sought and

position was within the range of reason).”* Nothing in

the statute’s text, its established interpretation, agency

guidance, court decisions, or the facts of the situation

made it apparent that there was an objectively high risk

that GEICO’s construction of the law was wrong. As a

result, GEICO’s position did not reflect such an extreme

departure from the range of responsible judgment as to

be either tantamount to a knowing violation of the law or

to reflect such heedless disregard of its duty to comply

with the law as to be commensurately culpable.

CONCLUSION

The judgment of the court of appeals in No. 06-84

should be vacated and remanded, and the judgment in

No. 06-100 should be reversed.

Respectfully submitted.

PAUL D. CLEMENT

WILLIAM BLUMENTHAL Solicitor General

General Counsel THOMAS G. HUNGAR

JOHN F. DALY Deputy Solicitor General

Deputy General Counsel for PATRICIA A. MILLETT

Litigation Assistant to the Solicitor

LAWRENCE DEMILLE-WAGMAN Greneral

Attorney

Federal Trade Commission

NOVEMBER 2006

“ Commission staff had provided informal guidance advising that

denying a new customer a better insurance rate wholly or partly

because of information in the customer's credit report is an adverse

action. See Letter from Hannah Stires, FTC, to James Ball (Mar. 1,

2000) <http:/Awww.fte.gov/os/statutes/fera/ball.htm >.

APPENDIX

The following Sections are found in Title 15 of the

United States Code.

§ 1681. Congressional findings and statement of purpose

(a) Accuracy and fairness of credit reporting

The Congress makes the following findings:

(1) The banking system is dependent upon fair and

accurate credit reporting. Inaccurate credit reports

directly impair the efficiency of the banking system, and

unfair credit reporting methods undermine the public

confidence which is essential to the continued function-

ing of the banking system.

(2) An elaborate mechanism has been developed for

investigating and evaluating the credit worthiness,

credit standing, credit capacity, character, and general

reputation of consumers. .

(3) Consumer reporting agencies have assumed a

vital role m assembling and evaluating consumer credit

and other information on consumers.

(4) There is a need to insure that consumer reporting

agencies exercise their grave responsibilities with

fairness, impartiality, and a respect for the consumer’s

right to privacy.

(b) Reasonable procedures.

It is the purpose of this title to require that con-

sumer reporting agencies adopt reasonable procedures

for meeting the needs of commerce for consumer credit,

personnel, insurance, and other information in a manner

which is fair and equitable to the consumer, with regard

(la)

to the confidentiality, accuracy, relevancy, and proper

utilization of such information in accordance with the

requirements of this title.

§ 168la. Definitions; rules of construction

(a) Definitions and rules of construction set forth in

this section are applicable for the purposes of this

subchapter.

(b) The term “person” means any individual, partner-

ship, corporation, trust, estate, cooperative, association,

government or governmental subdivision or agency, or

other entity.

(d) Consumer report.—

(1) IN GENERAL.—The term “consumer report”

means any written, oral, or other communication of any

information by a consumer reporting agency bearing on

a consumer’s credit worthiness,' credit standing, credit

capacity, character, general reputation, personal charac-

teristics, or mode of living which is used or expected te

be used or collected in whole or in part for the purpose

of serving as a factor in establishing the consumer’s

eligibility for—

(A) credit or insurance to be used primarily

for personal, family, or household purposes;

(B) employment purposes; or

section 1681b of this title.

*keE*

' So in original. Probably should be “creditworthiness,”.

(k) ADVERSE ACTION.—

(1) ACTIONS INCLUDED.—The term “adverse

action” —

(A) has the same meaning as in section

1691(d)(6) of this title; and

(B) means—

(i) a denial or cancellation of, an increase in

any charge for, or a reduction or other ad-

verse or unfavorable change in the terms of

coverage or amount of, any insurance, exist-

ing or applied for, in connection with the

underwriting of insurance;

(ii) a denial of employment or any other

decision for employment purposes that ad-

versely affects any current or prospective

employee;

(iii) a denial or cancellation of, an increase

in any charge for, or any other adverse or un-

favorable change in the terms of, any license

or benefit described in section 1681b(a)(3)(D)

of this title; and

(iv) an action taken or determination that

Is— i

(I) made in connection with an appli-

cation that was made by, or a transaction

that was initiated by, any consumer, or in

connection with a review of an account

under section 1681b(a)(3)(F )(ii) of this ©

title: and

(II) adverse to the interests of the

consumer.

(2) APPLICABLE FINDINGS, DECISIONS,

COMMENTARY, AND ORDERS.—For purposes of any

determination of whether an action is an adverse action

under paragraph (1)(A), all appropriate final findings,

decisions, commentary, and orders issued under section

1691(d)(6) of this title by the Board of Governors of the

Federal Reserve System or any court shall apply.

x** KK *

§1681b. Permissible purposes of consumer reports

(a) In general

Subject to subsection (c) of this section, any consumer

reporting agency may furnish a consumer report under

the following circumstances and no other:

(1) In response to the order of a court having

jurisdiction to issue such an order, or a subpoena

issued in connection with proceedings before a Federal

grand jury.

(2) In accordance with the written instructions of the

consumer to whom it relates.

(3) To a person which it has reason to believe—

(A) intends to use the information in connection

with a credit transaction involving the consumer on

whom the information is to be furnished and involv-

ing the extension of credit to, or review or collection

of an account of, the consumer; or

(B) intends to use the information for employment

purposes; or

with the underwriting of insurance involving the

consumer; or

(D) intends to use the information in connection

with a determination of the consumer’s eligibility for

a license or other benefit granted by a governmental

instrumentality required by law to consider an

applicant’s financial responsibility or status; or

(E) intends to use the information, as a potential

investor or servicer, or current insurer, in connection

with a valuation of, or an assessment of the credit or

prepayment risks associated with, an existing credit

obligation; or

(F) otherwise has a legitimate business need for

the information—

(i) in connection with a business transaction

that is initiated by the consumer; or

(ii) to review an account to determine whether

the consumer continues to meet the terms of the

account.

(4) In response to a request by the head of a State

or local child support enforcement agency (or a State

or local government official authorized by the head

of such an agency), if the person making the request

certifies to the consumer reporting agency that—

(A) the consumer report is needed for the

purpose of establishing an individual’s capacity to

make child support payments or determining the

appropriate level of such payments;

(B) the paternity of the consumer for the child

to which the obligation relates has been esta-

blished or acknowledged by the consumer in

accordance with State laws under which the

obligation arises (if required by those laws);

prior notice to the consumer whose report is

requested, by certified or registered mail to the

last known address of the consumer, that the

report will be requested; and

(D) the consumer report will be kept con-

fidential, will be used solely for a purpose de-

scribed in subparagraph (A), and will not be used

in connection with any other civil, administrative,

or criminal proceeding, or for any other purpose.

(5) To an agency administering a State plan under

Section 454 of the Social Security Act (42 U.S.C.

§ 654) for use to set an initial or modified child

support award.

*e ERE

§ 1681m. Requirements on users of consumer reports

(a) Duties of users taking adverse actions on basis of

information contained in consumer reports

If any person takes any adverse action with respect to

any consumer that is based in whole or in part on any

information contained in a consumer report, the person

shall—

(1) provide oral, written, or electronic notice of

the adverse action to the consumer;

(2) provide to the consumer orally, in writing, or

electronically—

(A) the name, address, and telephone number

of the consumer reporting agency (including a

toll-free telephone number established by the

agency if the agency compiles and maintains

files on consumers on’a nationwide basis) that

furnished the report to the person; and

(B) a statement that the consumer reporting

agency did not make the decision to take the

adverse action and is unable to provide the

consumer the specific reasons why the adverse

action was taken; and

(3) provide to the consumer an oral, written, or

electronic notice of the consumer’s right

(A) to obtain, under section 612 [§ 1681j], a

free copy of a consumer report on the consumer

from the consumer reporting agency referred to

in paragraph (2), which notice shall include an

indication of the 60-day period under that

section for obtaining such a copy; and

(B) to dispute, under section 611 [§ 1681i],

with a consumer reporting agency the accuracy

or completeness of any information in a con-

sumer report furnished by the agency.

(b) Adverse action based on information obtained from

third parties other than consumer reporting agencies

(1) In general

Whenever credit for personal, family, or household

purposes involving a consumer is denied or the charge

for such credit is increased either wholly or partly

because of information obtained from a person other

than a consumer reporting agency bearing upon the

consumer’s credit worthiness,’ credit standing, credit

capacity, character, general reputation, personal charac-

teristics, or mode of living, the user of such information

~' o in original. Probably should be “ereditworthiness,”.

shall, within a reasonable period of time, upon the

consumer’s written request for the reasons for such

adverse action received within sixty days after learning

of such adverse action, disclose the nature of the

information to the consumer. The user of such infor-

mation shall clearly and accurately disclose to the

consumer his right to make such written request at the

time such adverse action is communicated to the

consumer.

(2) Duties of person taking certain actions based on

information provided by affiliate

(A) Duties, generally

If a person takes an action described in subpara-

graph (B) with respect to a consumer, based in whole

or in part on information described in subparagraph

(C), the person shall—

(i) notify the consumer of the action, including

a statement that the consumer may obtain the

information in accordance with clause (ii); and

(ii) upon a written request from the consumer

received within 60 days after transmittal of the

notice required by clause (i), disclose .o the

consumer the nature of the information upon

which the action is based by not later than sd

days after receipt of the request.

(B) Action described

An action referred to in subparagraph (A) is an

adverse action described in section 1681a(k)(1)(A) of this

title, taken in connection with a transaction initiated by

the consumer, or any adverse action described in clause

(i) or (ii) of section 1861a(k)(1)(B) of this title.

Information referred to in subparagraph (A)—

(i) except as provided in clause (ii), is

information that—

(I) is furnished to the person taking the

action by a person related by common owner-

ship or affiliated by common corporate

control to the person taking the action; and

(II) bears on the credit worthiness, credit

standing, credit capacity, character, general

reputation, personal characteristics, or mode

of living of the consumer; and

(ii) does not include

(I) information solely as to transactions or

experiences between the consumer and the

person furnishing the information; or

(II) information in a consumer report.

No person shall be held liable for any violation of this

section if he shows by a preponderance of the evidence

that at the time of the alleged violation he maintained

reasonable procedures to assure compliance with the

provisions of this section.

(d) Duties of users making written credit or insurance

solicitations on the basis of information obtained in

consumer files

(1) In general

Any person who uses a consumer report on any

consumer in connection with any credit or insurance

transaction that is not initiated by the consumer, that

10a

is provided to that person under section 1681b(c)(1)(B)

of this title, shall provide with each written solicitation

made to the consumer regarding the transaction a

clear and conspicuous statement that—

(A) information contained in the consumer’s

consumer report was used in connection with the

transaction;

(B) the consumer received the offer of credit or

insurance because the consumer satisfied the

criteria for credit worthiness or insurability under

which the consumer was selected for the offer;

not be extended if, after the consumer responds to

the offer, the consumer does not meet the criteria

used to select the consumer for the offer or any

applicable criteria bearing on credit worthiness”

or insurability or does not furnish any required

collateral;

(D) the consumer has a right to prohibit

information contained in the consumer’s file with

any consumer reporting agency from being used

in connection with any credit or insurance

transaction that is not initiated by the consumer;

and

(E) the consumer may exercise the right

referred to in subparagraph (D) by notifying a

notification system established under section

1681b(e) of this title.

* So in original. Probably should be “creditworthiness”.

lla

(2) Disclosure of address and telephone number; format

A statement under paragraph (1) shall—

(A) include the address and toll-free telephone number

of the appropriate notification system established under

section 1681b(e) of this title; and

(B) be presented in such format and in such type size

and manner as to be simple and easy to understand, as

established by the Commission, by rule, in consultation

with the Federal banking agencies and the National

Credit Union Administration.

(3) Maintaining criteria on file

A person who makes an offer of credit or insurance to

a consumer under a credit or insurance transaction

described in paragraph (1) shall maintain on file the

criteria used to select the consumer to receive the offer,

all criteria bearing on credit worthiness or insurability,

as applicable, that are the basis for determining whether

or not to extend credit or insurance pursuant to the

offer, and any requirement for the furnishing of

collateral as a condition of the extension of credit or

insurance, until the expiration of the 3-year period

beginning on the date on which the offer is made to the

consumer.

(4) Authority of Federal agencies regarding unfair or

deceptive acts or practices not affected

This section is not intended to affect the authority of

any Federal or State agency to enforce a prohibition

against unfair or deceptive acts or practices, including

the making of false ur misleading statements in

connection with a credit or insurance transaction that is

not initiated by the consumer.

12a

(e) Red flag guidelines and regulations required

(1) Guidelines

The Federal banking agencies, the National Credit

Union Administration, and the Commission shall jointly,

with respect to the entities that are subject to their

respective enforcement authority under section 1681s of

this title—

(A) establish and maintain guidelines for use by

each financial institution and each creditor regarding

identity theft with respect to account holders at, or

customers of, such entities, and update such

guidelines as often as necessary;

(B) prescribe regulations requiring each financial

institution and each creditor to establish reasonable

policies and procedures for implementing the

guidelines established pursuant to subparagraph (A),

to identify possible risks to account holders or

customers or to the safety and soundness of the

institution or customers; and

to ensure that, if a card issuer receives notification of

a change of address for an existing account, and

within a short period of time (during at least the first

30 days after such notification is received) receives

a request for an additional or replacement card for

the same account, the card issuer may not issue the

additional or replacement card, unless the card

issuer, in accordance with reasonable policies and

procedures—

(i) notifies the cardholder of the request at the

former address of the cardholder and provides to

13a

the cardholder a means of promptly reporting

incorrect address changes;

(ii) notifies the cardholder of the request by

such other means of communication as the card-

holder and the card issuer previously agreed to; or

(iii) uses other means of assessing the validity

of the change of address, in accordance with

reasonable policies and procedures established by

the card issuer in accordance with the regulations

prescribed under subparagraph (B).

(2) Criteria

(A) In general

In developing the guidelines required by paragraph

(1)(A), the agencies described in paragraph (1) shall

identify patterns, practices, and specific forms of

activity that indicate the possible existence of identity

theft.

(B) Inactive accounts

In developing the guidelines required by paragraph

(1)(A), the agencies described in paragraph (1) shall

consider including reasonable guidelines providing that

when a transaction occurs with respect toa credit or

deposit account that has been inactive for more than 2

years, the creditor or financial institution shall follow

reasonable policies and procedures that provide for

notice to be given to a consumer in a manner

reasonably designed to reduce the likelihood of identity

theft with respect to such account.

(3) Consistency with verification requirements

Guidelines established pursuant to paragraph (1) shall

14a

not be inconsistent with the policies and procedures

required under section 5318(/) of title 31.

(f) Prohibition on sale or transfer of debt caused by

identity theft -

(1) In general -

No person shall sell, transfer for consideration, or

place for collection a debt that such person has been

notified under section 605B has resulted from identity |

theft.

(2) Applicability

The prohibitions of this subsection shall apply to all

persons collecting a debt described in paragraph (1)

after the date of a notification under paragraph (1).

(3) Rule of construction

Nothing in this subsection shall be construed to

prohibit— —

(A) the repurchase of a debt in any case in which

the assignee of the debt requires such repurchase

because the debt has resulted from identity theft;

(B) the securitization of a debt or the pledging

of a portfolio of debt as collateral in connection with

a borrowing; or

acquisition, purchase and assumption transaction, or

transfer of substantially all of the assets of an entity.

(g) Debt collector communications concerning identity

theft

If a person acting as a debt collector (as that term is

defined in subchapter V of this chapter on behalf of a

third party that is a creditor or other user of a consumer

15a

report is notified that any information relating to a debt

that the- person is attempting to collect may be

fraudulent or may be the resu't of identity theft, that

person shall—

(1) notify the third party that the information may

be fraudulent or may be the result of identity theft;

and

(2) upon request of the consumer to whom the debt

purportedly relates, provide to the consumer all

information to which the consumer would otherwise

be entitled ifthe consumer were not a victim of

identity theft, but wished to dispute the debt under

provisions of law applicable to that person.

(h) Duties of users in certain credit transactions

(1) In general

Subject to rules prescribed as provided in paragraph

(6), if any person uses a consumer report in connection

with an application for, or a grant, extension, or other

provision of, credit on material terms that are materially

less favorable than the most favorable terms available to

a substantial proportion of consumers from or through

that person, based in whole or in part on a consumer

report, the person shall provide an oral, written, or

electronic notice to the consumer in the form and

manner required by regulations prescribed in

accordance with this subsection.

(2) Timing

The notice required under paragraph (1) may be

provided at the time of an application for, or a grant,

extension, or other provision of, credit or the time of

communication of an approval of an application for, or

‘16a

grant, extension, or other provision of, credit, except as

provided in the regulations prescribed under para-

graph (6).

(3) Exceptions

No notice shall be required from a person under this

subsection if—

(A) the consumer applied for specific material terms

and was granted those terms, unless those terms

were initially specified by the person after the

transaction was initiated by the consumer and after

the person obtained a consumer report; or

(B) the person has provided or will provide a notice

to the consumer under subsection (a) of this section

in connection with the transaction.

(4) Other notice not sufficient

A person that is required to provide a notice under

subsection (a) of this section cannot meet that require-

ment by providing a notice under this subsection.

(5) Content and delivery of notice

A notice under this subsection shall, at a minimum—

(A) include a statement informing the consumer

that the terms offered to the consumer are set

based on information from a consumer report;

(B) identify the consumer reporting agency

furnishing the report;

that the consumer may obtain a copy of a consumer

report from that consumer reporting agency

without charge; and

17a

(D) include the contact information specified by

that consumer reporting agency for obtaining such

consumer reports (including a toll-free telephone

number established by the agency in the case of a

consumer reporting agency described in section

603(p) of this title.

(6) Rulemaking

(A) Rules required

The Commission and the Board shall jointly prescribe

rules.

(B) Content.

Rules required by subparagraph (A) shall address,

but are not limited to—

(i) the form, content, time, and manner of delivery

of any notice under this subsection;

(ii) clarification of the meaning of terms used in

this subsection, including what credit terms are

material, and when credit terms are materially less

favorable;

(iii) exceptions to the notice requirement under this

subsection for classes of persons or transactions

regarding which the agencies determine that notice

would not significantly benefit consumers;

(iv) a model notice that may be used to comply with

this subsection; and

(v) the timing of the notice required under

paragraph (1), including the circumstances under

which the notice must be provided after the terms

offered to the consumer were set based on infor-

mation from a consumer report.

18a

(7) Compliance

A person shall not be liable for failure to perform the

duties required by this section if, at the time of the

failure, the person maintained reasonable policies and

procedures to comply with this section.

(8) Enforcement

(A) No civil actions

Sections 1681n and 16810 of this title shall not apply

to any failure by any person to comply with this section.

(B) Administrative enforcement.

This section shall be enforced exclusively under

section 1681s of this title by the Federal agencies and

officials identified in that section.

§ 1681n. Civil liability for willful noncompliance

(a) In general

Any person who willfully fails to comply with any

requirement imposed under this subchapter with

respect to any consumer is liable to that consumer in an

amount equal to the sum of—

(1)(A) any actual damages sustained by the consumer

as a result of the failure or damages of not less than

$100 and not more than $1,000; or

(B) in the case of liability of a natural person for

obtaining a consumer report under false pretenses or

knowingly without a permissible purpose, actual

damages sustained by the consumer as a result of the

failure or $1,000, whichever is greater;

19a

(2) such amount of punitive damages as the court may

allow; and

(3) in the case of any successful action to enforce any

liability under this section, the costs of the action

together with reasonable attorney’s fees as determined

by the court.

(b) Civil liability for knowing noncompliance

Any person who obtains a consumer report from a

consumer reporting agency under false pretenses or

knowingly without a permissible purpose shall be liable

to the consumer reporting agency for actual damages

sustained by the consumer reporting agency or $1,000,

whichever is greater.

Upon a finding by the court that an unsuccessful

pleading, motion, or other paper filed in connection with

an action under this section was filed in bad faith or for

purposes of harassment, the court shall award to the

prevailing party attorney’s fees reasonable in relation to

the work expended in responding to the pleading,

motion, or other paper.

§ 168lo. Civil liability for negligent noncompliance

(a) In general

Any person who is negligent in failing to comply with

any requirement imposed under this subchapter with

respect to any consumer is liable to that consumer in an

amount equal to the sum of

(1) any actual damages sustained by the consumer

as a result of the failure; and

20a

(2) in the case of any successful action to enforce

any liability under this section, the costs of the action

together with reasonable attorney’s fees as deter-

mined by the court.

(b) Attorney’s fees

On a finding by the court that an unsuccessful

pleading, motion, or other paper filed in connection with

an action under this section was filed in bad faith or for

purposes of harassment, the court shall award to the

prevailing party attorney’s fees reasonable in relation to

the work expended in responding to the pleading,

motion, or other paper.

§ 1681p. Jurisdiction of courts; limitation of actions

An action to enforce any liability created under this

title may be brought in any appropriate United States

district court, without regard to the amount in

controversy, or in any other court of competent

jurisdiction, not later than the earlier of—

(1) 2 years after the date of discovery by the plaintiff

of the violation that is the basis for such liability; or

(2) 5 years after the date on which the violation that

is the basis for such liability occurs.

§ 1681q. Obtaining information under false pretenses

Any person who knowingly and willfully obtains

information on a consumer from a consumer reporting

agency under false pretenses shall be fined under title

18, imprisoned for not more than 2 years, or both.

2la

§ 168Ir. Unauthorized disclosures by officers or

employees

Any officer or employee of a consumer reporting

agency who knowingly and willfully provides

information concerning an individual from the agency’s

files to a person not authorized to receive that

information shall be fined under Title 18, United States

Code, imprisoned for not more than 2 years, or both.

§ 1681s. Administrative enforcement

(a) Enforcement by Federal Trade Commission.

(1) Compliance with the requirements imposed under

this subchapter shall be enforced under the Federal

Trade Commission Act [15 U.S.C.A. 41 et seq.] by the

Federal Trade Commission with respect to consumer

reporting agencies anu all other persons subject thereto,

except to the extent that enforcement of the

requirements imposed under this title is specifically

committed to some other government agency under

subsection (b) hereof. For the purpose of the exercise

by the Federal Trade Commission of its functions and

powers under the Federal Trade Commission Act, a

violation of any requirement or prohibition imposed

under this title shall constitute an unfair or deceptive

act or practice in commerce in violation of section 5(a) of

the Federal Trade Commission Act [15 U.S.C.A. 45(a)]

and shall be subject to enforcement by the Federal

Trade Commission under section 5(b) thereof [15 U.S.C.

45(b)] with respect to any consumer reporting agency or

person subject to enforcement by the Federal Trade

Commission pursuant to this subsection, irrespective of

whether that person is engaged in commerce or meets

22a

any other jurisdictional tests in the Federal Trade

Commission Act. The Federal Trade Commission shall

have such procedural, investigative, and enforcement

powers, including the power to issue procedural rules in

enforcing compliance with the requirements imposed

under this title and to require the filing of reports, the

production of documents, and the appearance of

witnesses as though the applicable terms and conditions

of the Federa] Trade Commission Act were part of this

title. Any person violating any of the provisions of this

title shall be subject to the penalties and entitled to the

privileges and immunities provided in the Federal Trade

Commission Act as though the applicable terms and

provisions thereof were part of this title.

(2)(A) In the event of a knowing violation, which

constitutes a pattern or practice of violations of this

title, the Commission may commence a civil action to

recover a civil penalty in a district court of the United

States against any person that violates this title. In

such action, such person shall be liable for a civil penalty

of not more than $2,500 per violation.

(B) In determining the amount of a civil penalty under

subparagraph (A), the court shall take into account the

degree of culpability, any history of prior such conduct,

ability to pay, effect on ability to continue to do

business, and such other matters as justice may require.

(3) Notwithstanding paragraph (2), a court may not

impose any civil penalty on a person for a violation of

section 1681s-2(a)(1) of this title unless the person has

been enjoined from committing the violation, or ordered

not to commit the violation, in an action or proceeding

brought by or on behalf of the Federal Trade Com-

mission, and has violated the injunction or order, and

23a

the court may not impose any civil penalty for any

violation occurring before the date of the violation of the

injunction or order.

(b) Enforcement by other agencies

Compliance with the requirements imposed under this

subchapter with respect to consumer reporting

agencies, persons who use consumer reports from such

agencies, persons who furnish information to such

agencies, and users of information that are subject to

subsection (d) of section 1681m of this title shall be

enforced under

(1) section 8 of the Federal Deposit Insurance Act [12

U.S.C. 1818], in the case of—

(A) national banks, and Federal branches and

Federal agencies of foreign banks, by the Office of

the Comptroller of the Currency;

(B) member banks of the Federal Reserve System

(other than national banks), branches and agencies of

foreign banks (other than Federal branches, Federal

agencies, and insured State branches of foreign

banks), commercial lending companies owned or

controlled by foreign banks, and organizations

operating under section 25 or 25A of the Federal

Reserve Act [12 U.S.C. 601 et seq., 611 et seq.], by

the Board of Governors of the Federal Reserve

System; and

Corporation (other than members of the Federal

Reserve System) and insured State branches of

foreign banks, by the Board of Directors of the

Federal Deposit Insurance Corporation;

24a

(2) section 8 of the Federal Deposit Insurance Act [12

U.S.C. 1818], by the Director of the Office of Thrift

Supervision, in the case of a savings association the

deposits of which are insured by the Federal Deposit

Insurance Corporation;

(3) the Federal Credit Union Act [12 U.S.C. 1751 et

seq.], by the Administrator of the National Credit Union

Administration with respect to any Federal credit union;

(4) subtitle IV of title 49, by the Secretary of

Transportation, with respect to all carriers subject to

the jurisdiction of the Surface Transportation Board;

(5) part A of subtitle VII of title 49, by the Secretary

of Transportation with respect to any air carrier or

foreign air carrier subject to that part, and

(6) the Packers and Stockyards Act, 1921 [7 U.S.C.

181 et seq.] (except as provided in section 406 of that Act

(7 U.S.C. 226, 227]), by the Secretary of Agriculture

with respect to any activities subject to that Act.

The terms used in paragraph (1) that are not defined in

this subchapter or otherwise defined in section 3(s) of

the Federal Deposit Insurance Act (12 U.S.C. 1813(s))

shall have the meaning given to them in section 1(b) of

the International Banking Act of 1978 (12 U.S.C. 3101).

(1) Authority of States

In addition to such other remedies as are provided

under State law, if the chief law enforcement officer of

a State, or an official or agency designated by a State,

has reason to believe that any person has violated or is

violating this title, the State—

25a

(A) may bring an action to enjoin such violation in

any appropriate United States district court or in any

other court of competent jurisdiction;

(B) subject to paragraph (5), may bring an action on

behalf of the residents of the State to recover—

* i) damages for which the person is liable to such

residents under sections 1681n and 1681o] as a re-

sult of the violation;

(ii) in the case of a violation described in any of

paragraphs (1) through (3) of section 1681s-2(c) of

this title, damages for which the person would, but

for section 1681s-2(c) of this title, be liable to such

residents as a result of the violation; or

(iii) damages of not more than $1,000 for each

willful or negligent violation; and

subparagraph (A) or (B), shall be awarded the costs

of the action and reasonable attorney fees as deter-

mined by the court.

(2) Rights of Federal regulators

The State shall serve prior written notice of any action

under paragraph (1) upon the Federal Trade Com-

mission or the appropriate Federal regulator deter-

mined under subsection (b) of this section and provide

the Commission or appropriate Federal regulator with

a copy of its complaint, except in any case in which-such

prior notice is not feasible, in which case the State shall

serve such notice immediately upon instituting such

action, The Federal Trade Commission or appropriate

Federal regulator shall have the right—

(A) to intervene in the action;

26a

(B) upon so intervening, to be heard on all matters

arising therein;

States district court; and

(D) to file petitions for appeal.

(3) Investigatory powers

For purposes of bringing any action under this

subsection, nothing in this subsection shall prevent the

chief law enforcement officer, or an official or agency

designated by a State, from exercising the powers

conferred on the chief law enforcement officer or such

official by the laws of such State to conduct investiga-

tions or to administer oaths or affirmations or to compel

the attendance of witnesses or the production of

documentary and other evidence.

(4) Limitation on State action while Federal action

pending ~

If the Federal Trade Commission or the appropriate

Federal regulator has instituted a civil action or an

administrative action under section 8 of the Federal

Deposit Insurance Act [12 U.S.C. 1818] for a violation of

this subchapter, no State may, during the pendency of

such action, bring an action under this section against

any defendant named in the complaint of the Com-

mission or the appropriate Federal regulator for any

violation of this title that is alleged in that complaint.

(5) Limitations on State actions for certain violations

(A) Violation of injunction required

A State may not bring an action against a person

under paragraph (1)(B) for a violation described in any

27a

of paragraphs (1) through (3) of section 1681s-2(c) of

this title, unless—

(i) the person has been enjoined from committing

the violation, in an action brought by the State under

paragraph (1)(A); and

(ii) the person has violated the injunction.

(B) Limitation on damages recoverable

In an action against a person under paragraph ‘1)(B)

for a violation described in any of paragraphs (1)

through (3) of section 1681s-2(c) of this title, a State may

not recover any damages incurred before the date of the

violation of an injunction on which the action is based. -

(d) Enforcement under other authority

For the purpose of the exercise by any agency

referred to in subsection (b) of this section of its powers

under any Act referred to in that subsection, a violation

of any requirement imposed under this subchapter shall

be deemed to be a violation of a requirement imposed

under that Act. In addition to its powers under any

provision of law specifically referred to in subsection (b)

of this section, each of the agencies referred to in that

subsection may exercise, for the purpose of enforcing

compliance with any requirement imposed under this

subchapter any other authority conferred on it by law. ~

(e) Regulatory authority

(1) The Federal banking agencies referred to in

paragraphs (1) and (2) of subsection (b) of this section

shall jointly prescribe such regulations as necessary to

carry out the purposes of this subchapter with respect

to any persons identified under paragraphs (1) and (2)

of subsection (b) of this section, and the Board of

28a

Governors of the Federal Reserve System shall have

authority to prescribe regulations consistent with such

joint regulations with respect to bank holding companies

and affiliates (other than depository institutions and

consumer reporting agencies) of such holding com-

panies.

(2) The Board of the National Credit Union Admini-

stration shall prescribe such regulations as necessary to

carry out the purposes of this subchapter with respect

to any persons identified under paragraph (3) of

subsection (b) of this section.

(f) Coordination of consumer complaint investigations

(1) In general

Each consumer reporting agency described in section

1681la(p) of this title shall develop and maintain pro-

cedures for the referral to each other such agency of any

consumer complaint received by the agency alleging

identity theft, or requesting a fraud alert under section

1681c-1 of this title A or a block under section 1681c-2 of

this title.

(2) Model form and procedure for reporting identity theft

The Commission, in consultation with the Federal

banking agencies and the National Credit Union

Administration, shall develop a model form and model

procedures to be used by consumers who are victims of

identity theft for contacting and informing creditors and

consumer reporting agencies of the fraud.

(3) Annual summary reports

Each consumer reporting agency described in section

1681la(p) of this title shall submit an annual summary

29a

report to the Commission on consumer complaints

received by the agency on identity theft or fraud alerts.

(g) FTC regulation of coding of trade names

If the Commission determines that a person described

in paragraph (9) of section 1681s-2(a) of this title has not

met the requirements of such paragraph, the Com-

mission shall take action to ensure the person’s com-

pliance with such paragraph, which may include issuing

model guidance or prescribing reasonable policies and

procedures, as necessary to ensure that such person

complies with such paragraph.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.