Court Determines State Amendments Were Preempted by FCRA

In this case involving two consumer reporting agencies, a federal court ruled that the terms of the Fair Credit Reporting Act (FCRA) superseded Maine state credit reporting restrictions.

Enacted by Congress in 1970, the Fair Credit Reporting Act (FCRA) was created to "ensure fair and accurate credit reporting, promote efficiency in the banking system, and protect consumer privacy." In this capacity, the FCRA regulates the creation and utilization of consumer reports by consumer reporting agencies (CRA) for specified purposes (i.e. credit transactions, insurance, licensing, employment, etc.).

To supplement the FCRA, Maine enacted the current version of the Maine Fair Credit Reporting Act in 2013, requiring "consumer reporting agencies to adopt reasonable procedures for meeting the needs of commerce for consumer credit, personnel, insurance and other information in a manner that is fair and equitable to the consumer, with regard for confidentiality, accuracy, relevancy and proper use of this information."

In this case, Consumer Data Industry Association (CDIA) v. Frey (Maine's Attorney General, Aaron M. Frey), the trade association (comprised of two CRAs) initiated litigation in 2019 challenging two amendments to the Maine Fair Credit Reporting Act as preempted by the FCRA. The first ("An Act Regarding Credit Ratings Related to Overdue Medical Expenses") involves restrictions regarding the timeframes permitted when including medical debt in a consumer report. The second ("An Act to Provide Relief to Survivors of Economic Abuse") involves the removal of debt references from a consumer report if specific circumstances surrounding the debt were the product of "economic abuse."

The trade association argued that this language intended to encompass all claims related to information contained in consumer reports; the defendants argued for a more narrow interpretation. Siding with the trade association, the court determined that the language within the FCRA reflected an affirmative choice by Congress to set "uniform federal standards" as to the information contained in consumer credit reports. As such, Maine's attempt to exclude additional types of information intruded upon the subject matter Congress expressly sought to preempt from state regulation. In short, the court determined that Maine amendments were preempted by the FCRA.

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