Federal Court Holds that FCRA Preempts State Credit Reporting Restrictions

Earlier this fall, a federal court granted a trade association’s motion for a declaratory judgment against the Maine attorney general and the superintendent of Maine’s Bureau of Consumer Credit Protection. The litigation concerned amendments the Maine legislature enacted to the Maine Fair Credit Reporting Act. Consumer Data Indus. Ass’n v. Frey, 2020 U.S. Dist. LEXIS 187061 (D. Me. 2020).

As readers of CPW already know, consumer credit reports matter as they can determine whether, and on what terms, a person may obtain a mortgage, a student loan, a credit card, or other financing. The Fair Credit Reporting Act (“FCRA”), 15 U.S.C. § 1681 et seq., was enacted by Congress in 1970 to “ensure fair and accurate credit reporting, promote efficiency in the banking system, and protect consumer privacy.” Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47 (2007) (citing 15 U.S.C. § 1681). To accomplish this objective, the FCRA regulates the creation and the use of consumer reports by consumer reporting agencies for certain specified purposes (such as credit transactions, insurance, licensing, consumer-initiated business transactions, and employment).

In 2013, the current version of the Maine Fair Credit Reporting Act was enacted for the purpose of supplementing the FCRA. The Maine law required “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 . . . .” 10 M.R.S.A. § 1307. The trade association in Frey, whose members include consumer credit reporting agencies (“CRAs”), commenced litigation in 2019 challenging two amendments to the Maine Fair Credit Reporting Act as preempted by the FCRA. FULL ARTICLE