FCRA Liability Harmonization Act
This bill, titled the FCRA Liability Harmonization Act, would add explicit class-action liability rules to the Fair Credit Reporting Act (FCRA) and place caps on damages and legal costs in those class actions. It targets both willful and negligent violations of FCRA requirements, with the goal of “harmonizing” civil liability between individual suits and class actions. The key change is that class actions alleging FCRA violations would face upper limits on total damages (tied to the defendant’s net worth or a fixed cap), as well as caps on attorney’s fees and costs. It also eliminates guaranteed per-member minimum damages in class actions and imposes specific financial ceilings on the overall recovery and the associated litigation costs. Potential impact: The bill would likely reduce potential liability in large FCRA class actions, particularly against well-funded defendants, and could change how plaintiffs pursue and settle such cases. It would also affect the incentives for plaintiffs’ lawyers in deciding whether to bring FCRA class actions and how to structure settlements.
Key Points
- 1Willful noncompliance in class actions (amends Section 616 of FCRA): Introduces a class-action framework for willful violations, with damages capped at the lesser of $500,000 or 1% of the defendant’s net worth. It also prohibits per-member minimum damages and restricts total attorney’s fees and costs.
- 2Willful damages cap specifics: The class recovery is subject to a cap and the court may determine damages, but the total recovery cannot exceed the stated cap; the bill also tightens how attorney’s fees and costs are calculated and capped.
- 3Cap on litigation costs for willful actions: The costs of the action plus reasonable attorney’s fees may not exceed the lesser of $100,000, 40% of any damages awarded, or a combination not to exceed the cap (as defined in the bill). The structure aims to limit the financial burden of litigation.
- 4Negligent noncompliance in class actions (amends Section 617 of FCRA): Adds a class-action provision for negligent violations, allowing damages equal to actual damages sustained, but with a total class recovery cap of the lesser of $500,000 or 1% of net worth. The costs and attorney’s fees are subject to the same cap framework as in the willful provision.
- 5Cap on costs and fees for negligent actions: Similar to the willful section, the total costs and reasonable attorney’s fees must not exceed the lesser of $100,000 or 40% of actual damages (and other related caps as specified in the bill).
- 6Class-action mechanics: Across both willful and negligent provisions, the bill specifies that there is no minimum per-member recovery, and the class-wide damages are capped rather than calculated purely on individual damages.