Maine district court rules FCRA partially preempts state law on credit reporting restrictions

FAIR CREDIT REPORTING ACT
Consumer Data Industry Association v. Frey
Date: Jan. 11, 2024

Issue: Whether the Fair Credit Reporting Act (FCRA) preempts two Maine laws regulating the reporting of overdue medical debt and debt resulting from economic abuse.

Case Summary: A Maine federal district court ruled the Fair Credit Reporting Act partially preempts Maine’s Medical Debt Reporting Act (MDRA) and Economic Abuse Debt Reporting Act (EADRA), both of which amended the Maine Fair Credit Reporting Act.

Under FCRA Section 1681t(b)(1), state laws are not preempted unless they are “with respect to any subject matter regulated under” certain sections or subsections of the FCRA. This includes Section 1692t(b)(1)(E), which provides the FCRA preempts state laws “relating to information contained in consumer reports.”

In September 2019, the Consumer Data Industry Association (CDIA) sued the state of Maine to challenge certain provisions of Maine law. The MMDA and EADRA amended the Maine Fair Credit Reporting Act, adding state-specific restrictions on information inclusion in consumer credit reports. According to CDIA, the FCRA preempts these provisions, and enforcing these amendments threatens the accuracy, integrity, and reliability of consumer report information.

A Maine federal district court granted CDIA’s motion for summary judgment, asserting Maine’s laws are preempted by FCRA Section 1681t(b)(1)(E). On appeal, however, the First Circuit reversed, ruling the FCRA did not broadly preempt the entirety of Maine’s laws. The First Circuit narrowly construed the FCRA to preempt state laws only if they regulate the specific issues Congress addressed in Section 1681c, rather than the subject matter addressed in the section—namely, “information contained in consumer reports.”

ABA and a group of trade organizations (Amici) filed an amicus brief urging the U.S. Supreme Court to grant the CDIA’s certiorari petition and hold the FCRA preempts the two new provisions addressing debt reporting. In its brief, Amici argued the First Circuit’s decision misreads the FCRA, conflicts with other courts of appeals understandings of the FCRA, and destroys the nationwide uniformity of credit reporting. However, the U.S. Supreme Court denied certiorari.

On remand from the First Circuit, a Maine district court ruled the FCRA does not totally preempt all state consumer reporting laws. The court first examined whether the FCRA preempts the MDRA or EADRA on stale data. CDIA contended Maine may not regulate the reporting of medical debt or economic abuse because both categories of debt would naturally entail accounts and adverse information. However, the district court explained, although the FCRA mentions that states may not impose a “requirement or prohibition” with respect to itemized subject matters, the subject matters in question only pertained to the regulation of information more than seven years old. The Court found no congressional intent to preempt state reporting regulation about information less than seven years old. Therefore, the Court concluded that it did not see a viable facial challenge to the Maine reporting requirements.

On the MDRA, the court ruled the FCRA preempts the state provisions related to the timing of reporting on veterans’ medical debts. In the court’s view, Congress specified in the FCRA that states cannot impose any requirement or prohibition concerning any subject regulated under FCRA Section 1681c, which regulates the subject matter of the earliest timing of reports related to veterans’ medical debts. The court noted, however, FCRA Section 1681c does not preempt the MDRA on non-veterans’ medical debt.

On the EADRA, the court ruled the FCRA provisions related to identity-theft preempt Maine’s state law requirements when identify theft is the only method of economic abuse identified by the consumer.  In these cases, the court held that “the blocking of reporting activity on identity-theft-related grounds must proceed according to federal requirements and state requirements are of no effect.” However, the court its ruling does not support preemption of the EADRA if a consumer’s debt is alleged to be the product of economic abuse “by means other than or in addition to identity theft.”

Bottom Line: As of Feb. 1, 2024, Maine has not indicated if it will appeal.

Documents: Brief

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