Supreme Court: Federal Government May Be Immune From FCRA Money Damages
On November 13, 2012, the United States Supreme Court left open the door to further litigation under the Fair Credit Reporting Act (FCRA) by consumers who receive receipts or other documents that contain their confidential credit card information. The case, United States v. Bormes, No. 11-192, is one of a mass of class action suits involving alleged violations of the Credit Card Accountability Responsibility and Disclosure (CARD) Act of 2009, an amendment to the FCRA. Ironically, even the federal government was not immune from this rash of litigation. The specific issue in Bormes was whether the so-called “Little Tucker Act” – which, along with the similar “Tucker Act”, waives the government’s sovereign immunity for certain money damages claims – applies to FCRA lawsuits. The FCCA is designed to ensure fair and accurate credit reporting and protect consumer privacy; to that end, it provides for statutory as well as compensatory and punitive damages under certain circumstances.
In a unanimous decision, the high court rejected the application. It ruled that the Little Tucker Act did not apply because the FCRA provides its own remedial scheme for plaintiffs. Under the Little Tucker Act, the government’s sovereign immunity is not displaced if Congress has provided a separate remedy that includes monetary damages. The Court found that the FCRA is such a law. In doing so, the Supreme Court ruled that the government did not necessarily give up its sovereign immunity in FCRA cases; it failed, however, to decide the question of whether the FCRA waives sovereign immunity for damages claims against the federal government. That issue was left for the Seventh Circuit on remand.
The case was filed by a Chicago attorney, James K. Bormes, who paid a court filing fee with his American Express credit card. Thereafter, he was sent a receipt and confirmation email that included his credit card’s expiration date and last four digits of the account number. Alleging consumer privacy violations, Bormes filed a FCRA class action on behalf of thousands of similarly situated individuals.
The Bormes decision illustrates the potential for class actions based on allegations of hyper-technical violations of the FCRA. Companies that interact with consumer data, particularly private information such as credit card account numbers, must stay abreast of recent case law decisions and regulatory guidance.
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