When discussing FCRA, we often concentrate our focus on certain individuals and entities trying to enforce the statute: the CFPB (or BCFP), FTC, class action firms, and individual plaintiffs. Nonetheless, a recent settlement demonstrates the importance of yet another actor—state agencies. In In the Matter of Encore Capital Group, Inc., Midland Funding, LLC, and Midland Credit Management, Inc., a debt buyer learned this lesson while facing a multi-million dollar enforcement action from over 40 states, alleging violations of both FCRA and the Fair Debt Collection Practices Act (the “FDCPA”).
While state authority to enforce the FDCPA and other consumer finance statutes arose as a result of the Dodd-Frank Consumer Financial Protection Act, state agencies have long been vested with the authority to enforce FCRA. 15 U.S.C. § 1681s(c) provides state agencies with the authority to investigate and bring enforcement actions against credit reporting agencies, furnishers, and other regulated persons under FCRA. This includes a broad range of relief, including injunctive relief, actual damages, statutory damages, and attorney’s fees.
The authority of state agencies under FCRA is not unlimited. State agencies must confer with the CFPB and the FTC, and allow the federal agencies to participate in any FCRA suit they file. Even more importantly, state agencies must start by seeking injunctive relief rather than monetary relief. And their monetary relief is limited to relief for violations that occur after the defendant breaches injunction.
Because of these limitations, state agencies rarely file suit to enforce FCRA. Nonetheless, companies who find themselves in the crosshairs of state regulators for other reasons should keep a close eye on FCRA compliance, particularly while negotiating settlement agreements with state regulators. If, for instance, a settlement agreement contains injunctive provisions involving FCRA (as is the case in the Midland settlement agreement), then the state agency will have a broad range of FCRA-related enforcement mechanisms at its disposal if it believes that the settlement agreement was violated.