Damages, Fees, and Costs in Credit Report Litigation
The Fair Credit Reporting Act offers consumers many different forms of financial relief for violations of the Act by credit reporting agencies and companies that report to them. For the sake of simplicity, we will refer to all potential financial compensation for violations of the FCRA as “damages.”
Damages for Fair Credit Reporting Act violations fall under a number of categories. Because the meanings of these categories are not always obvious, we will break them down for you in this post.
A quick note before we dive into the categories. There are two types of violations of the Fair Credit Reporting Act. A credit bureau may have committed a “negligent” violation, or a “willful” violation. A lot can be written about the differences between negligent and willful violations but, generally speaking, willful FCRA violations are violations that a jury finds to be intentional or reckless, while negligent FCRA violations fall under the broader umbrella of inexcusable errors.
Attorney's Fees and Costs
The Fair Credit Reporting Act is called a “fee-shifting statute” because a plaintiff/consumer who prevails at trial is entitled to recover from the defendants (Consumer Reporting Agencies, furnishers of information to CRAs, and or users of consumer reports) their reasonable attorney's fees. Because Defendants are responsible for your reasonable attorney's fees, Sherman & Ticchio represents our clients without them paying us any fee out of pocket. Instead, our fees come directly from the proceeds of the case (verdicts or settlements) that are paid by defendants.
In addition to attorney's fees, the FCRA entitles a successful consumer to recover “costs.” Costs are the expenses you had to spend to bring the lawsuit, rather than fees billed by an attorney for representing you. For example, it costs more than $400 just to file a federal lawsuit in the Southern District of New York. Costs also include expenses like expert witness fees. If you win your case, the Fair Credit Reporting Act requires a defendant like Experian, Equifax, or TransUnion to pay those expenses. At Sherman & Ticchio, we almost always advance costs on behalf of our clients.
If a credit bureau's violations of the Fair Credit Reporting Act are deemed “willful” (knowing or reckless) by a Court, consumers can recover damages ranging from $100 - $1,000 for each violation of the FCRA. In some cases, there may be dozens or even hundreds of willful FCRA violations, so statutory damages under the Fair Credit Reporting Act for willful violations may be substantial.
Actual damages is a complex and expansive category of damages. Right away it is worth noting that you cannot recover both actual and statutory damages for a willful FCRA violation. Beyond that, actual damages -- for willful or negligent violations of the Fair Credit Reporting Act -- can be broken into two further categories:
- Economic damages (a/k/a pecuniary damages)
Were you denied an American Express credit card because of inaccuracy on your Experian credit report? This is called an adverse action and would entitle you to “economic” (also called pecuniary) damages. You may have also seen that Bank of America accessed your Experian credit report, and based on inaccurate information, decided to lower your credit limit. This is also an adverse action and constitutes additional economic damages. In a nutshell, economic damages accrue any time an FCRA violation causes you to suffer financial loss. Calculation of financial losses in FCRA cases can be tricky. After all, what is the value of a credit denial? Perhaps that one credit denial so badly damaged your reputation for creditworthiness that you cannot obtain credit elsewhere. Because valuation is complex, an expert witness is often useful to help establish the full amount of your financial loss.
- Emotional and medical damages (a/k/a nonpecuniary damages)
The stress of inaccurate reporting can take a terrible toll on a plaintiff's mind and body. Victims of Fair Credit Reporting Act violations often suffer severe stress, anxiety, and depression. You may, for instance, find yourself highly frustrated and extremely anxious because you know that credit bureaus are reporting false, derogatory information about you. It is not uncommon for victims of FCRA violations to seek treatment from a therapist. Some may be prescribed anxiety-reducing medication. While emotional damages can also be difficult to measure, they are, in many cases significant.
It is also not uncommon for stress, anxiety, and depression to grow so bad that they manifest as physical illness (everything from high blood pressure to gastrointestinal illness, to -- in some cases -- a heart attack). These are examples of “medical” damages. Simply put, any time you needed to seek the assistance of a medical professional because of something appearing inaccurately on your credit report, you may be entitled to medical damages.
The purpose of punitive damages is to send a message to defendants (punish them) and to deter them from committing similar misconduct. Punitive damages are explicitly authorized by the Fair Credit Reporting Act for willful (knowing and reckless) violations. While the amount of punitive damages may vary, they can and do reach well into the six figures.
The take-away for Consumers
If you are or may become a plaintiff in litigation pursuant to the Fair Credit Reporting Act, make sure your attorney is aware of all facts that could possibly shed light on the types and amounts of damages to which you may be entitled.