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

On Behalf of | Nov 13, 2013 | Consumer Protection

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
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.