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

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 2007
- **Citation:** 551 U.S. 47

## Text

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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

v.
CHARLES BURR, ET AL.

GEICO GENERAL INSURANCE COMPANY, ET AL.,
PETITIONERS

v.
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 . 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) .

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)

2a

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.

(c) The term “consumer” means an individual.
(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

(C) any other purpose authorized under
section 1681b of this title.

*keE*

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

3a

(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.

4a

(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

(C) intends to use the information in connection
with the underwriting of insurance involving the
consumer; or

5a

(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);

6a

(C) the person has provided at least 10 days’
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

7a

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,”.

8a

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.

9a

(C) Information de scribed
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.
(c) Reasonable procedures to assure compliance

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;

(C) if applicable, the credit or insurance may
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

(C) prescribe regulations applicable to card issuers
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

(C) the transfer of debt as a result of a merger,
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;

(C) include a statement informing the consumer
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.

(c) Attorney’s fees

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

(C) banks insured by the Federal Deposit Insurance

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).

(c) State action for violations
(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

(C) in the case of any successful action under
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;

(C) to remove the action to the appropriate United
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.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385016_0281%3A15. Public record. Not legal advice.