Home > Uncategorized > The FCRA class action sensation that’s sweeping the nation

The FCRA class action sensation that’s sweeping the nation

May 13, 2011

A few years back, there were a spate of class action lawsuits which claimed that retailers systematically violated the FCRA.  How?  By printing receipts which contained a buyer’s entire credit card number instead of just the last few digits.  The FCRA had been amended to prohibit this in 2003, but the provision didn’t take effect until 2006, and a number of retailers were caught off guard when it did.  Within a few months, plaintiffs lawyers filed class actions around the country which alleged that retailers willfully breached the new law, which if true meant that they were subject to millions or sometimes even billions of dollars in statutory damages.  This was because the FCRA imposes damages of $100 to $1,000 per willful violation, with no cap, and most retailers print hundreds or even thousands of receipts per day.  I co-wrote an article about the whole phenomenon, which is available here.  The craze fizzled out after a few months:  the lawyers who filed the suits settled, and retailers quickly learned to print receipts which conformed to the new law.

Now there appears to be a new class action FCRA craze:  allege that an employer systematically obtained background checks about current or possible employees without first obtaining their consent as required by law.  One of the earliest such suits recently survived a motion to dismiss.

Time will tell whether these suits are as common as the old receipt suits.  My guess is that there will be fewer of them at any one time, but they will not fizzle out as the receipt suits did.  Why?  Because each time an employer starts a new business line or expands into a new location, it will be possible for it to forget to implement procedures like obtaining consent to an initial background check.  Moreover, many states have consent laws that can differ from the FCRA, and failure to comply with these laws can also give rise to a class action.

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