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Protecting Consumers’ Right to Accurate Credit Reporting

Public Citizen News / March-April 2022

By Agnes Cazemiro

This article appeared in the March/April 2022 edition of Public Citizen News. Download the full edition here.

The major credit bureaus generate credit reports on millions of Americans every year. A credit report includes information about the consumer’s credit activity and current credit situation, such as loan paying history and the status of credit accounts.

Banks, mortgage companies, auto dealers, potential employers, landlords, and debt collectors rely on credit reports to make decisions. A good credit history, therefore, is important to enable consumers to obtain credit at a fair price and can affect the ability to get a job offer or an apartment, among other things.

The credit bureaus receive the information they report from creditors: credit card companies, financial services companies, and landlords, for example. In addition, federal government agencies furnish much of the information that appears on individuals’ credit reports.

Because the accuracy of a credit reports is very important, the Fair Credit Reporting Act (FCRA) permits individuals to dispute inaccurate information and to sue the furnisher of the information if dissatisfied with how the dispute is resolved. As a general rule, however, a federal government agency can be sued only if Congress has passed a law expressly allowing suits against the government. Because federal government agencies often furnish information to credit bureaus, the question has arisen whether federal agencies can be sued under the FCRA.  Public Citizen is representing a consumer in a case that poses that question, Kirtz v. Trans Union LLC.

In October 2020, Reginald Kirtz filed a lawsuit under the FCRA against a federal agency, the U.S. Department of Agriculture Rural Development Rural Housing Service (USDA), concerning a dispute about information that USDA furnished to TransUnion LLC, a credit reporting agency. A Pennsylvania district court dismissed Kirtz’s claim against USDA, concluding that the agency had sovereign immunity from suit because the FCRA does not waive sovereign immunity. Kirtz appealed that decision to the U.S. Court of Appeals for the Third Circuit.

Public Citizen Litigation Group attorney Nandan Joshi represents Kirtz as co-counsel on appeal. “This case implicates two important and related issues. The first is the right of consumers to accurate credit reports, which has such a profound effect on their access to credit. The second is the ability of consumers to access the courts to obtain redress when they are wronged,” said Joshi, explaining  the significance of the issue on appeal.

Our appellate brief on behalf of Kirtz emphasizes the FCRA’s text, which states that any “person” may be liable for negligently or wilfully violating the statute and defines “person” to include “any government or governmental subdivision or agency.” We argue that, by expressly specifying that a governmental agency is a “person” under the statute, Congress waived sovereign immunity for federal agencies.

“Congress gave consumers the right to file disputes and to sue furnishers of information so that credit reports would be more accurate. The government’s argument that federal agencies are immune from suit, if accepted by the courts, would undercut the mechanism that Congress put in place to make credit reports fairer and more accurate,” Joshi explained.

The issue whether federal agencies can be held liable under the FCRA has arisen in numerous cases. The answer, therefore, is important for consumers’ ability to protect their rights under the statute and their access to credit.