(NewsInsights.org) – Credit scores matter a lot these days. They can potentially limit the jobs you qualify for, where you can live, and how much you might pay for things like car or house insurance. In 1970, Congress enacted the Fair Credit Reporting Act (FCRA), requiring credit furnishing and reporting agencies to correct mistakes or inaccuracies. Now, a January 8 Supreme Court (SCOTUS) ruling has affirmed that federal government agencies aren’t immune from the FCRA statutes or resulting lawsuits if they fail to correct consumer credit information.
Reginald Kirtz brought suit against the US Department of Agriculture (USDA) Rural Development Rural Housing Service. He took out a home loan from the USDA subsidiary and repaid it in full by mid-2018. However, instead of reporting that Kirtz had satisfied the loan, the agency repeatedly reported to TransUnion, one of the three major credit reporting agencies, that Kirtz failed to make payments and was facing default, damaging his credit score and limiting his ability to secure future loans.
Kirtz attempted to correct the information with TransUnion, and the company requested a correction from the USDA. However, according to Kirtz, the USDA took no corrective actions. In response, he sued the government agency under the FCRA.
The USDA moved to dismiss Kirtz’s suit, claiming “sovereign immunity” from lawsuits. Typically, individuals cannot bring suit against the US government without authorization from Congress. The agency claimed nothing in the FCRA overrode their claim of sovereign immunity. While the district court agreed, the Third Circuit Court of Appeals did not and reversed the district court’s ruling.
The USDA and federal government appealed to the SCOTUS. Yet, the High Court unanimously held that the appellate court ruled correctly that Congress clearly meant to allow consumers to sue “persons,” including the federal government, to obtain compliance and corrections.
In a last-ditch attempt to salvage a defense, US Solicitor General Elizabeth Prelogar argued that as the single largest supplier of credit consumer information in the US because of the number of people it employs and the loans it extends, invalidating sovereign immunity in FCRA cases would potentially open the US government to a landslide of lawsuits and cases.
Justice Neil Gorsuch, who wrote the unanimous opinion, said that while the executive branch “may question the wisdom” of the Court’s decision, Congress was clear: “A consumer may sue ‘any’ federal agency for defying the law’s terms.”
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