It’s not often these days that consumer advocates can cheer a decision from the U.S. Supreme Court, but that’s what we’re doing today after the Court held unanimouslyon Thursday, in USDA Rural Development Rural Housing Service Inc. v. Kirtz, that consumers may sue the federal government if it provides false or inaccurate information to credit reporting agencies.
The Center, along with the National Consumer Law Center, Public Justice, and the Jerome N. Frank Legal Services Organization at Yale Law School, filed one of only two amicus briefs in this case. Our brief provided context for the case, presenting an exploration of the multifarious federal programs in which the government, often in the role of lender, serves as the furnisher of information on credit reports. The brief supports the plaintiff consumer’s argument – and the Court’s ultimate conclusion – that the federal Fair Credit Reporting Act (FCRA) waives federal sovereign immunity.
The need to hold the government accountable for its errors is acute. As the nation’s largest creditor and employer, the U.S. government routinely uses credit data and furnishes it to the Big Three credit reporting agencies: TransUnion, Equifax, and Experian. Writing for the Court, Justice Gorsuch described the importance of credit reports succinctly in the first sentence of the opinion: “A credit report can determine everything from whether a person can secure a credit card, purchase a home, win a new job, or start a small business.” Mistakes on credit reports, therefore, can have devastating consequences. As the Court explained later in the opinion – echoing precisely the arguments raised in our brief – mistakes can “lead lenders to insist on higher interest rates or other terms that make it difficult or impossible for consumers to obtain a mortgage, auto loan, student loan, or other credit.”
The FCRA accordingly places careful guardrails on, in the words of the statute, “persons” that use and furnish credit data, and authorizes private lawsuits against those “persons” for money damages to deter violations and compensate victims of credit reporting errors. The federal government, however, has long claimed that it cannot be sued under FCRA because Congress had not explicitly waived federal sovereign immunity in that statute.
Thursday, in a major victory for consumers, the Supreme Court repudiated the government’s position, concluding that the plain text of FCRA unequivocally waives federal sovereign immunity. The Court explained that FCRA’s definition of a covered “person” who can sue for damages under the law, which includes “government or governmental subdivision or agency,” unambiguously applies to the federal government. The statute’s use of the terms “government or governmental . . . agency” suffices as a waiver of sovereign immunity; as the Court concluded, “that is the end of the matter.” The Court then proceeded to dispense with the government’s various arguments to the contrary.
The decision is a signal victory for consumers. The FCRA provides some of the most important federal statutory protections for consumer privacy and the accuracy of credit information. The Court’s ruling vindicates the principle that the federal government is not above the law (at least, unless it has put itself there), and that the FCRA remains a potent aegis shielding consumers.
The Center congratulates petitioner Reginald Kirtz and his counsel at Public Citizen and Weisberg Law for the important, groundbreaking win for consumers across the country.