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The FCRA does not impose strict liability. So what are “strict procedures?”

February 11, 2011

One of the interesting aspects of the FCRA is how much it relies on “reasonable procedures.”  Probably the most common claims against a consumer reporting agency are that it did not apply “reasonable procedures” in creating a credit report or reinvestigating a consumer’s diuspute.  See 15 USC Secs. 1681e(b) and 1681i.  In both cases, Congress intentionally did not define what an agency had to do to avoid liability – the statutes simply require the agency to act reasonably.  What that means is for the courts to decide.  And there are lots and lots of cases in which the courts have decided what “reasonable” means in particular situations.

But there is an exception to this general focus on reasonableness.  15 USC 1681k says that if an agency prepares a background report that contains adverse information about a consumer (say a criminal record), the agency must either:  1) send a copy of the report to the consumer; or 2) follow “strict procedures” to make sure that the information in the report is current.

This “strict procedures” provision is unique in that it’s a departure from the normal FCRA focus on reasonableness.  It’s also unique in that the phrase has – as far as I can tell – only been defined by one court, in Poore v. Sterling Testing Sys., 410 F. Supp. 2d 557, 572 (E.D. Ky. 2006).  The court there held that an agency follows “strict procedures” if a record in its report matches a record on file with a public court or other entity in every respect.

Time will tell if the Poore interpretation of “strict procedures” is followed by other courts.  My guess is that it will be.  Lots of other cases hold that the FCRA does not make agencies strictly liable for errors in their reports.  And that general view is not in conflict with Poore.  Under Poore, if a public record is wrong, the agency can repeat the error and still escape liability.     

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