In first action since taking CFPB seat, Chopra/agency join in appealing consumer FCRA decision

Arguing that a consumer reporting agency is subject to requirements of the Fair Credit Reporting Act (FCRA), the federal consumer financial protection agency has joined the state of North Carolina and the Federal Trade Commission (FTC) in an appeal to reverse a lower court’s decision.

It’s the first public action newly installed Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra, sworn into office Oct. 12, has taken in his new role.

According to the CFPB, it has filed an amicus curiae brief with the U.S. 4th Circuit Court of Appeals in support of consumer plaintiffs in the case of Henderson v. The Source for Public Data, L.P. The case is currently before that appeals court after a lower court found in favor of the defendant, The Source for Public, which CFPB describes as a consumer reporting agency that uses the Internet to obtain public records and assemble them into consumer background check reports for its customers.

According to CFPB, the district court ruled The Source for Public Data could not be held liable for violating FCRA’s procedural requirements when disseminating consumer reports that included false, incorrect, or misleading consumer information because the plaintiffs’ FCRA claims treat The Source for Public Data as a publisher and speaker of third-party information and are therefore barred under Section 230 of the Communications Decency Act.

The CFPB, and along with the FTC and the North Carolina Department of Justice, contend that Section 230 does not apply to the plaintiffs’ claims. They challenge The Source for Public Data’s failure to abide by the FCRA’s procedural requirements when it disseminated its own reports.

In a joint statement, CFPB Director Rohit Chopra and FTC Chair Lina M. Khan said the case highlights a dangerous argument that could be used by market participants to sidestep laws expressly designed to cover them.

“Across the economy such a perspective would lead to a cascade of harmful consequences,” they stated. “As tech companies expand into a range of markets, they will need to follow the same laws that apply to other market participants. The CFPB and FTC will be closely scrutinizing tech companies’ efforts to use Section 230 to sidestep applicable laws and will seek to ensure that this legal shield is not being used or abused to gain an undue competitive advantage over law-abiding businesses.”

CFPB, FTC and North Carolina Department of Justice File Amicus Brief in Henderson v. The Source for Public Data, L.P.