The recent Supreme Court ruling in Dep’t of Agric. Rural Dev. Rural Hous. Serv. v. Kirtz, 2024 WL 478567 (U.S. Feb. 8, 2024) marks a significant development in the legal landscape surrounding the Fair Credit Reporting Act (FCRA). In a unanimous decision on February 8, 2024, the Court clarified that sovereign immunity does not shield federal agencies from lawsuits seeking damages under the FCRA.

This ruling has far-reaching implications for consumers seeking redress for FCRA violations committed by federal agencies and for broader consumer litigation involving federal entities under various federal statutes.

The case at hand involved a dispute between a consumer and the Rural Housing Service (RHS), a division of the U.S. Department of Agriculture (USDA), over inaccurate information furnished by the USDA to a consumer reporting agency (CRA).

The consumer alleged that the USDA failed to reasonably investigate the dispute after being notified by the CRA, potentially leading to damages recoverable under the FCRA. This dispute brought to light the question of whether federal sovereign immunity shields agencies from FCRA liability.

Contrary to arguments put forth by the USDA, the Supreme Court held that the language of the FCRA explicitly waives sovereign immunity, thus allowing consumers to pursue damages against federal agencies for violations of the Act.

Notably, the Court emphasized that the statute's language itself is decisive, rendering legislative history irrelevant in this context. Consequently, the Court's decision allows consumers to hold federal agencies accountable for FCRA violations, setting a precedent that extends beyond the immediate case.

This ruling isn't limited to the USDA alone; it applies to all federal agencies that furnish information to CRAs and fail to investigate consumer disputes adequately. This includes agencies such as the Department of Veterans Affairs, the Department of Education, and the Social Security Administration, among others.

Moreover, the scope of the ruling extends beyond credit-related information, encompassing any data provided by federal agencies to CRAs.

Furthermore, the implications of this ruling extend to federal agencies using consumer reports, not just those furnishing information. Federal agencies must adhere to FCRA provisions regarding the permissible purposes for obtaining and using consumer reports. The Court's ruling in Kirtz clarifies that failure to do so may subject you to liability for damages under the FCRA.

Additionally, while federal agencies are subject to FCRA regulations as "persons," state and local government agencies enjoy sovereign immunity from FCRA claims due to limitations imposed by the Eleventh Amendment.

However, sovereign immunity for local government entities and quasi-government entities depends on their classification as "arms of the state," requiring a case-by-case analysis.

Overall, the Supreme Court's ruling in Kirtz signifies a landmark development in consumer protection law, ensuring that federal agencies can be held accountable for FCRA violations. This decision reaffirms the FCRA's role in safeguarding consumer rights and underscores the importance of accountability and transparency in the realm of credit reporting.