Fourth Circuit Addresses Whether The CDA Bars Fair Credit Reporting Act Claims Against Online Background Report Site

• Published date: 17 November 2022
• Subject Matter: Finance and Banking, Consumer Protection, Financial Services, Consumer Law, Consumer Credit
• Law Firm: Morrison & Foerster LLP
• Author: Mr J. Alexander Lawrence, Aaron Rubin, Michael Burshteyn and Dillon Kraus

Online background report providers have proliferated on the Internet. Consumers with claims against these sites arising under the Fair Credit Reporting Act (FCRA) have faced hurdles under Section 230(c)(1) of the Communications Decency Act (CDA). Because the sites collect and organize publicly available data from third parties, they assert Section 230 immunity. The sites argue that they are not credit reporting agencies subject to FCRA, but rather online service providers.

Although some lower courts have tried to answer the question of whether Section 230 immunity applies to FCRA claims brought against online background report retailers,¹ Henderson v. Source for Public Data²'decided in November 2022'was the first time any U.S. court of appeals addressed the issue. While Section 230 may still immunize some claims asserted against the sites, the Fourth Circuit's decision in Henderson suggests that such immunity is not categorical and depends on how the sites present third-party data.

Section 230 and FCRA

FCRA was enacted in 1970 to promote accuracy, fairness, and privacy in consumer information prepared by consumer reporting agencies.³ It was intended to get consumer reporting agencies to "adopt reasonable procedures" in how they handle consumer credit information in order to promote confidentiality, accuracy, and proper use of data.⁴

FCRA created a cause of action for consumers to sue credit reporting agencies for violations of its requirements.⁵ Among its requirements are the following: Section 1681g requires credit agencies to provide a consumer with a copy of the information in their file when the consumer requests it.⁶ Section 1681b(b)(1) states that when an employer requests a consumer report on someone for employment purposes, the credit reporting agency must obtain certification from the employer that it has complied with and will comply with FCRA's requirements governing their request and use of the report.⁷ Section 1681k(a) requires a consumer reporting agency that is providing a report for employment purposes that contains items based on public record which are "likely to have an adverse effect upon the consumer's ability to obtain employment" to inform the consumer and to take extra precautions to ensure accuracy and completeness of those items.⁸ Section 1681e(b) requires a consumer reporting agency to "follow reasonable procedures to assure maximum possible accuracy" of the information in a consumer report.⁹

Section 230 of the CDA states: "No...