Maine Federal Court Finds State-Imposed Credit Reporting Restrictions Preempted by the FCRA

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A federal court in Maine recently held that the federal Fair Credit Reporting Act (“FCRA”), 15 U.S.C. § 1681, et seq., preempts burdensome credit reporting restrictions imposed by the Maine Fair Credit Reporting Act. “By seeking to exclude additional types of information” from consumer credit reports, the court held that “the Maine Amendments intrude upon a subject matter that Congress has recently sought to expressly preempt from state regulation.” The case is captioned Consumer Data Industry Association v. Frey, 2020 U.S. Dist. LEXIS 187061 (D. Me. Oct. 8, 2020).

As Troutman Pepper reported previously, the Maine legislature passed two amendments to the Maine Fair Credit Reporting Act in 2019 prohibiting consumer reporting agencies (“CRAs”) from including certain kinds of information in a consumer’s credit report (the “Maine Amendments”). Specifically, the Maine Amendments prohibit reporting (a) medical debts less than 180 days old, (b) medical debts that have been settled or paid, and (c) debts that are the product of “economic abuse.” Me. Rev. Stat. Ann. tit. 10, §§ 1310-H(4), 1310-H(2-A) (2019). Both laws required a CRA to engage in additional, extensive investigations of the underlying circumstances, conditions, and status of a consumer’s debts to determine whether those debts are reportable. The Consumer Data Industry Association (“CDIA”) filed suit against the Maine Attorney General and the Superintendent of the Maine Bureau of Consumer Credit Protection, seeking declaratory judgment that both laws were preempted by the FCRA. The parties filed cross-motions for judgment on a stipulated record in April 2020.

This October, the U.S. District Court for the District of Maine ruled in favor of the CDIA, holding that the Maine Amendments were preempted by the FCRA. Engaging in a detailed analysis of the language and history of the FCRA’s preemption provisions, the court rejected a narrow construction advocated by the State of Maine that would limit preemption to the specific types of information already regulated by the FCRA. “In the Court’s reading, the amended language and structure of [the FCRA’s preemption provisions] reflect an affirmative choice by Congress to set ‘uniform federal standards’ regarding the information contained in consumer credit reports.” As such, the court held that the FCRA preempted any state regulation of information contained in consumer reports – rejecting the more narrowed approach offered by the State of Maine. Because the Maine Amendments place additional prohibitions on the kind of information that may be included in a consumer report, they concern the exact subject matter expressly preempted by Congress.

Although the immediate effect of this decision is limited to the State of Maine, the court’s analysis may have ramifications for other states seeking to impose their own restrictions on consumer credit reports. The defendants have filed an appeal of the district court’s decision, which will give the Court of Appeals for the First Circuit an opportunity to rule definitively on this issue. Troutman Pepper will continue to monitor and report further developments.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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