Supreme Court: United States Government Not Immune from FCRA Suits

In a unanimous decision, the U.S. Supreme Court held that a consumer may sue the federal government under FCRA, potentially exposing one of the country’s largest lenders to a new category of suits.

An individual borrower, who had secured a loan from the Rural Housing Service, a division of the U.S. Department of Agriculture (USDA), sued the USDA for incorrectly informing a credit reporting agency (CRA) that his account was past due.  As a result, the borrower’s credit score and ability to secure future credit were negatively impacted.  Under FCRA, a consumer can sue a lender who negligently or willfully supplies false information about the consumer to credit reporting agencies.  The question before the Supreme Court was whether sovereign immunity barred suits under FRCA.  The Court held that sovereign immunity was statutorily waived.

The Supreme Court found that Congress’s waiver was unmistakably clear from the statutory language.  In 1996, FCRA was amended to expand the private right of action.  Prior to the amendment, a consumer could only bring a suit against CRAs and users of their information.  The 1996 amendment allowed a consumer to bring that same suit against “[a]ny person,” which FCRA expressly defined to include any governmental agency.  The Supreme Court therefore held that FCRA allows a consumer to sue any federal agency for a violation of its terms.