Know Your Rights

Seventh Circuit Confirms that FCRA Claims are to Remain Solely in Federal Court

The Fair Credit Reporting Act ("FCRA") is the federal statute that protects consumers from the collection, dissemination, and use of consumer credit information.  If you have been the victim of conduct in violation of this statute you likely filed suit in federal court.  Despite the fact that most states have their own independent laws in place to protect their citizens from identical violations, the FCRA preempts or takes precedence over, the conduct and a consumer can only seek remedy in a federal court in their jurisdiction. 

Specifically, under the FCRA credit reporting agencies and furnishers of information, such as credit card companies, banks and lenders, are liable for reporting false or inaccurate information and failing to conduct a reasonable investigation into this information after receiving notice of its inaccuracy from the consumer.  In a recent opinion, the Seventh Circuit reaffirmed this long standing rule that the FCRA preempts all state law claims, in Aleshire v. Harris, N.A. ("Aleshire").
In Aleshire, the plaintiff Suzanne Aleshire ("Aleshire") applied for a multi-million dollar loan from Harris Bank.  Upon acceptance, when the bank reported the loan to the credit reporting agencies, it allegedly reported the loan information inaccurately with incorrect balances and duplicate accounts, and showed she exceeded her credit limit.  After discovering the inaccurate information, Aleshire disputed with the credit reporting agencies and Harris Bank as required by the FCRA, however the information was verified as accurate and remained on her credit file.  In response, Aleshire filed suit alleging violations of both the FCRA and state law claims however the federal court dismissed her state law claims in the initial states of litigation. 

Aleshire, appealed this decision to the Seventh Circuit arguing that the FCRA only preempts state law claims arising under state statutes not claims arising under the common law.  In support of her argument, Aleshire highlighted a section of the FCRA precluding a consumer from alleging conduct such as defamation, invasion of privacy and negligence against furnishers of information unless such conduct is willful or done with the intent to harm the consumer. 

In response to her argument, the Seventh Circuit stated that while Aleshire's argument is not unreasonable, the state laws and federal laws she is filing suit under have consistent remedies and will provide her with the identical recovery for the violations she suffered.  Despite a few courts allowing duplicate filing, the Seventh Circuit affirmed the decision of the district court and rejected Aleshire's argument dismissing her state law claims only and allowing her to proceed with her FCRA claims at the district court level.

If you have issues with information on your credit report and need the assistance or advice of counsel as you believe you have suffered a violation of the Fair Credit Reporting Act, contact SmithMarco P.C. for a free case review.

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