By Dan Smith, President and CEO, Consumer Data Industry Association
The Fair Credit Reporting Act is one of the most important consumer protection laws on the books. For more than fifty years, it has given Americans the right to accurate credit reports, the right to dispute errors, and the right to hold companies accountable when they get it wrong. Those rights matter because credit reports affect whether people can buy homes, get loans, rent apartments, and participate fully in the economy.
But one part of the law no longer works the way Congress intended. Over time, the FCRA’s civil liability provisions have drifted far out of line with other federal financial consumer protection laws. Many comparable statutes place reasonable limits on damages in class action lawsuits. The FCRA does not. Statutory damages are uncapped, and punitive damages sit on top of them with no ceiling at all.
That gap has become an invitation. When the potential payout in a single class action runs into the tens or hundreds of millions of dollars, the case becomes less about compensating consumers who were actually harmed and more about the size of the settlement. The result is a system that rewards the volume of claims more than the severity of the harm.
We have all seen how this plays out. A class action settles for an enormous sum. The attorneys who brought the case collect fees that can reach into the multi-millions. The consumers the lawsuit was supposedly filed to protect receive a few dollars or a check small enough that many never bother to cash it. That is not the model Congress should want for a law as important as the FCRA. The law was written to deliver justice to people harmed by inaccurate reporting, not to make consumer protection a vehicle for plaintiff attorney windfalls.
Other consumer financial protection laws take a more balanced approach. Statutes such as the Truth in Lending Act and the Electronic Fund Transfer Act include limits on class action damages, preserving accountability while preventing enforcement from becoming detached from actual consumer harm. The FCRA should be brought into the same framework.
Representative Barry Loudermilk has introduced a straightforward fix: the FCRA Liability Harmonization Act. The bill would bring FCRA class action remedies into line with the structure Congress has used in other federal consumer financial laws. It would place reasonable limits on statutory damages and punitive damages, while preserving the core protections consumers rely on every day: the right to dispute inaccurate information, the right to seek actual damages, and the right to pursue individual claims when they are harmed.
Consumers need real remedies when the law is violated. But a remedy system loses credibility and impact when weak or technical claims can create settlement pressure far beyond any actual injury.
What the bill changes is the incentive structure. By bringing damages in line with comparable laws, Congress can keep enforcement focused on accuracy, accountability, and meaningful remedies for consumers—not the threat value of uncapped damages that only serves to incentivize attorneys.
This is not a license for bad actors. Companies that violate the FCRA should be held accountable and will continue to be if this bill is signed into law. The private consumer litigation remedy is in addition to robust enforcement by federal and state regulators, used to ensure the consumer reporting is focused on consumers and the accuracy of data. When a furnisher reports inaccurate information, when a credit reporting agency fails to investigate a legitimate dispute, or when a consumer is genuinely harmed, the law should provide a real remedy. The goal is to make sure that remedy reaches the consumer instead of being diluted by litigation incentives that serve plaintiffs’ attorneys first.
Congress should pass the FCRA Liability Harmonization Act. It is a narrow, sensible fix that would bring the FCRA into line with the rest of federal consumer financial law while ensuring the law works as intended—for consumers first.