Often, when faced with litigation, it can be difficult to assess potential exposure for defendants. While actual damages may be easy to calculate, treble damages, attorneys’ fee awards, and punitive damages significantly complicate the risk analysis associated with litigation depending on the claims asserted. Unfortunately, the Fair Credit Reporting Act is no different. A wide array of damages is recoverable under the statute. Understanding the statutory scheme, however, may help alleviate some confusion.
To begin with, the Act categorizes statutory violations as “negligent” or “willful.” Actual damages are recoverable regardless of whether the statutory violation is negligent or willful. These include financial losses suffered directly as a result of the defendants’ statutory violation and also for other costs incurred, such as time lost correcting a false credit report. Surprisingly, emotional distress and a loss of reputation are also compensable even in the absence of out-of-pocket expenses. See, e.g., Fischl v. General Motors Acceptance Corp., 708 F.2d 143, 151 (5th Cir. 1983); Arriola v. Safeco, 15 F.3d 1082 (9th Cir. 1993). Thus, direct losses, indirect losses, and emotional damage are recoverable for even negligent violations of the Act.
If a defendant is guilty of willfully violating the Act, plaintiffs are entitled to even more. For willful noncompliance, plaintiffs may recover actual or statutory damages ranging from $100 to $1000 per violation. The Act also permits recovery of punitive damages, though courts have broad discretion in this regard. As always, punitive damages may be limited by the Due Process Clause. (While this may offer some comfort to Defendants, judges are reluctant to modify a jury award except in the most extreme cases). Adding insult to injury, attorney’s fees and costs are also recoverable.
In short, when faced with FCRA claims, understanding the damages recoverable under the Act goes a long way in analyzing potential exposure and risk associated with litigation.