HR5775-119

What This Bill Does

The FCRA Liability Harmonization Act narrows class-action damages under the Fair Credit Reporting Act. For willful violations, it removes the existing punitive damages paragraph, caps individual costs and reasonable attorney fees at the lesser of $100,000 or 40 percent of damages, and creates a class-action rule under which courts may not apply a minimum damage amount to each class member. Total class recovery, excluding attorney fees, cannot exceed the lesser of $500,000 or 1 percent of the defendant's net worth, and class costs and reasonable attorney fees are capped at the lesser of $100,000, 40 percent of damages, or the lower of $100,000 or 40 percent of actual damages. For negligent violations, attorney fees are capped at the lesser of $100,000 or 40 percent of actual damages, and class recovery is limited to actual damages with total recovery capped at the lesser of $500,000, 1 percent of net worth, or the costs and attorney-fee cap. The practical effect is to reduce aggregate class-action exposure for credit reporting defendants and reduce fee leverage for consumer plaintiffs' lawyers.

Who Benefits and How

Consumer reporting agencies benefit because class-action statutory damages and attorney-fee exposure are capped. Businesses using consumer reports benefit from lower FCRA class-action settlement pressure. FCRA defendants benefit because willful and negligent class recoveries are limited to $500,000 or 1 percent of net worth. Defense attorneys benefit from clearer damages ceilings when advising credit-reporting defendants.

Who Bears the Burden and How

Consumers in FCRA class actions bear the burden because per-member minimum statutory damages are removed and aggregate recovery is capped. Consumer protection attorneys bear reduced attorney-fee leverage from the $100,000 or 40 percent caps. Federal courts must apply more detailed damages, net-worth, actual-damages, and fee-cap calculations. Consumer advocacy organizations may lose deterrence from large FCRA class-action exposure.

Key Provisions

• Amends FCRA willful noncompliance liability by removing a punitive damages paragraph and capping fees.
• Provides that courts may not apply a minimum damages amount for each member of a willful-violation class.
• Caps willful class recovery at the lesser of $500,000 or 1 percent of defendant net worth.
• Caps willful class costs and reasonable attorney fees at the lower of $100,000 or 40 percent of damages.
• Caps negligent-violation attorney fees and class recovery using actual damages, net worth, and fee limits.