Supreme Court Holds Federal Agencies Are Subject to FCRA Liability

A unanimous United States Supreme Court has held that individuals can sue federal agencies for violations of the Fair Credit Reporting Act, 15 U.S.C.A. §§ 1681n and 1681o (“FCRA”). Finding that federal agencies are “persons” within the meaning of the FCRA, the Court found that the Act explicitly waives sovereign immunity and allows individuals to sue the agencies. Department of Agricultural Rural Development Rural Housing Service v. Kirtz.

Kirtz sued the Rural Housing Service, a division of the United States Department of Agriculture (USDA), for failing to conduct a good-faith investigation into allegedly inaccurate information it had reported to credit reporting agency TransUnion regarding a loan it made to Kirtz. The USDA argued that sovereign immunity barred the claim, and the United States District Court agreed. On appeal, while acknowledging a circuit split on the issue, the Third Circuit found that the FCRA explicitly waived sovereign immunity by imposing liability on any “person,” the definition for which includes “any…government or governmental subdivision or agency.”

At the Supreme Court, the USDA argued that application of the definition of person to it would lead to absurd outcomes, potentially exposing government agencies to criminal prosecution under Section 1681q. The Justices, however, noted that any such absurdity can be corrected by the Court without distorting other provisions of the statute. Where the statutory language in Section 1681a of the FCRA defines a “person” to include any government or governmental subdivision or agency, that definition includes the USDA, and sovereign immunity is waived as to suits against government agencies by individuals under Sections 1681n and 1681o.

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