Key Takeaways:

  • The Fair Credit Reporting Act (FCRA) provides a statute of limitations for claims, typically two years from discovery or five years from the violation.
  • Exceptions to the statute include the "discovery rule," which delays the start of the limitations period under specific circumstances like willful misrepresentation.
  • Courts have emphasized the need for consumers to identify the exact dates of violations to correctly calculate the statute of limitations.
  • Each credit report transmission may constitute a separate violation with its own statute of limitations.
  • Seeking legal advice is crucial to navigate FCRA claims effectively.

When faced with a potential Fair Credit Reporting Act case, it is crucial that you identify the correct statute(s) of limitation for claims against consumer reporting agencies and subscribers. The FCRA provides a two (2) year statute of limitation commencing from the date of the violation of the Act, regardless of whether the victim even knows of the violation. It is perhaps the least consumer-friendly provision of the anti-consumer FCRA.

How the Statute of Limitations Is Calculated

Where an action against a consumer reporting agency is lodged under the FCRA, it must be analyzed accordingly. If more than two years have tolled since the violation of the FCRA, then any cause of action as to that specific violation may be prescribed. If an action against the consumer reporting agency is based on state law theories, under 15 U.S.C. 1681h(e), then state law statute of limitations should be applied. Most subscribers are not directly subject to actions under the FCRA. However, if the subscriber violates the "user" provisions of the FCRA, then liability under the FCRA exists and suit on the cause of action for the violation of the FCRA must be brought within two (2) year statute of limitation commencing from the date of the violation of the Act. Again, if the action against the subscriber is a state law action, under 15 U.S.C. 1681h(e), then state law statute of limitations should be applied. The uniform rules applicable to the consumer reporting agencies under the FCRA do not apply to common law claims against the agencies, subscribers or other third parties. In federal court these state law claims would be covered by the "Erie" doctrine.

Understanding State vs. Federal Statutes

The Fair Credit Reporting Act (FCRA) operates alongside state laws, which can sometimes have their own statutes of limitations for claims. While the FCRA specifies a two-year period from the date of discovery (or five years from the violation), state statutes might apply different timelines depending on the nature of the case. For instance, when filing under state laws like defamation or negligence, the statute of limitations varies by state. Understanding these differences can significantly impact the success of your claim.

Exceptions to the Statute

A limited exception to the two year statute of limitation under the FCRA, 15 U.S.C. 1681p, exists. The "discovery rule" provides that commencement of the statute of limitation does not begin until the consumer knew or should have known of the issuance of the report or the injury was incurred. Some courts have held that the "discovery rule" only applies in cases where there ave been willful and/or intentional violations of the FCRA and does not apply to negligence actions. Some courts have held that the "discovery rule" only applies where the defendant materially and willfully misrepresented information. The court in Houghton v. Insurance Crime Prevention Institute, held that the exception to 15 U.S.C. 1681p requires plaintiff to prove that defendant materially and willfully misrepresented any information required to be disclosed to the consumer by the FCRA and the misrepresented information was material to the establishment of defendant's liability to plaintiff.

In Allen v. Equifax Credit Information Services, Inc., a prisoner sued Equifax for wrongfully providing his consumer report to the FBI. The Court dismissed his action finding that more than two years had passed "from the date on which liability arises." The "material and willful misrepresentation" exception is a limited exception to the jurisdictional statute, 15 U.S.C. 1681p. additional exception may not be implied. The Allen court concluded by commenting that the FCRA statute of limitations would toll even against an incarcerated person.

In Williams v. Avco, plaintiff sued Avco for impermissibly accessing his consumer report. Defendant raised the statute of limitations defense. The Court applied 15 U.S.C. 1681p, but found that the suit record was not clear as to when Avco "obtained" the consumer report thereby precluding summary judgment. The date Avco "obtained" the report is operative as the date of the violation of the FCRA.

Nonetheless, each transmission of the same credit report is a separate and distinct tort to which a separate statute of limitation applies. Defendant, who defames plaintiff, is liable for the harm from the initial reporting and any and all republications which were reasonably foreseeable.

Separate Violations and the "Continuing Violation" Doctrine

Under the FCRA, each act of a violation—such as repeated transmission of incorrect credit reports—can be treated as a distinct violation. This means that every instance of improper reporting restarts the statute of limitations. Known as the "continuing violation" doctrine, this approach is particularly relevant in cases where inaccuracies are distributed multiple times over several months or years. However, courts vary on this interpretation, making it critical to consult an attorney to understand its applicability.

Statute of Limitations for Willful vs. Negligent Violations

The FCRA distinguishes between willful and negligent violations, impacting the remedies and timelines available. Willful violations often involve recklessness or intentional misconduct, triggering harsher penalties such as statutory damages (up to $1,000 per violation) and punitive damages. Negligent violations, while still serious, focus on actual damages and associated costs. Both types of violations adhere to the same statute of limitations, but proving willfulness can sometimes extend the discovery timeline under the "discovery rule."

Frequently Asked Questions

1. What is the general statute of limitations under the FCRA? It is two years from the date the violation is discovered or five years from the date of the violation, whichever is sooner.

2. Does each transmission of an incorrect credit report restart the statute of limitations? Yes, under the "continuing violation" doctrine, each new transmission can constitute a separate violation.

3. Can I sue for FCRA violations under state law? Yes, but state statutes of limitations and rules may apply differently than federal FCRA guidelines.

4. Are there stricter penalties for willful violations? Yes, willful violations may lead to statutory and punitive damages in addition to actual damages.

5. What should I do if I suspect an FCRA violation? Document the violation, determine the timeline, and consult a qualified attorney to explore your legal options.

As you can see, the statute of limitations provision under the FCRA can cause real problems for the consumer or his attorney. Cautiously determine each action you intend to bring and each FCRA violation you can prove. Once you determine the dates or "trigger points" for FCRA- based liability then count forward two years from the commencement or origination of liability and you should have your statute of limitation.