Following years of litigation, on October 21, 2009 the Ninth Circuit has finally resolved that the federal Fair Credit Reporting Act ("FCRA") does not preempt California's Consumer Credit Reporting Agencies Act ("CCRAA"). For years, large banks, finance companies and debt collectors have argued that the federal law preempts the state law, in essence rendering the state law null and void. The Ninth Circuit's ruling opens the door to California consumers holding banks and other corporations accountable under the CCRAA.
Robert F. Brennan, Esq. of Brennan, Wiener & Assoc. (my coauthor on the California edition of
Debt Collection Answers) co-authored the amicus brief on behalf of California consumers with Leslie Bailey, Esq. of Public Justice in Oakland.
Brennan explains the significance of the ruling: "Ever since the CCRAA was passed in 1975, banks, finance companies, credit card companies and debt collectors--furnishers of credit information to the credit bureaus--have hated it because it requires them to respond directly to consumers and to investigate false derogatory credit information when a consumer notifies them. Under the federal law, consumers must dispute false credit information directly with the credit bureaus before they can bring an action in court. Because consumers who learn of false information on their credit reports are frequently unaware of this requirement, they often contact the furnishers of the credit information--banks, credit card companies, finance companies and debt collectors--directly. Furnishers, meanwhile, had no legal incentive to act on the consumers' requests, nor to inform the consumers of the federal requirement that they "filter" disputes through the credit bureaus. This system strongly favored big banks and credit card companies over unsophisticated consumers.
"The CCRAA does away with this injustice by permitting consumers to sue in court after they dispute false information directly with the furnishers. If the furnishers do not correct the inaccurate information upon direct contact from the consumers, the furnishers are immediately subject to legal relief in the courts.
"It is unfortunate that consumers still need to resort to the courts to correct inaccurate credit information, but it is often necessary because furnishers often use false credit reporting to wrongfully extract money from people who don't even owe it, or who owe far less than is being collected. In this day and age when credit reports are used almost universally, credit reporting is a powerful tool, and this fact is not lost on the big banks, credit card companies, finance companies and debt collectors that use credit reporting to force consumers to pay debts, whether or not the debts are valid."
Brennan notes that several big banks and several credit card companies, including Bank of America and VISA, have petitioned the United States Supreme Court for further review of this decision, but he predicts that the Supreme Court will decline to review it. "I do not see any compelling constitutional issue which deserves Supreme Court review. Maybe the big banks and credit card companies don't like the Ninth Circuit decision, but they'll have to live with it, and California consumers are the ones who will benefit in the long run. Finally there will be a law which will make the big banks, credit card companies and debt collectors actually pay attention to their false credit reporting and actually correct it when it happens. I hope that the Ninth Circuit decision makes fair credit reporting a reality in California."
Contact Information: Robert F. Brennan,
Brennan, Wiener & Associates, 3150 Montrose Ave., La Crescenta, Ca. 91214, (818) 249-5291. Mr. Brennan and his firm are the leading consumer protection and credit damage attorneys in Southern California. Mr. Brennan has been selected as a "Southern California Super Lawyer" for four consecutive years.
Public Justice is a national public interest law firm that specializes in precedent-setting and socially significant civil litigation and is dedicated to pursuing justice for the victims of corporate and governmental abuses.
