Three industry organizations filed suit against the Nevada Attorney General and the Commissioner of the Nevada Financial Institutions Division, claiming that a newly enacted Nevada law conflicts with and is preempted by federal law, including the Fair Credit Reporting Act (FCRA) and the Equal Credit Opportunity Act (ECOA). They are seeking an injunction preventing Nevada officials from enforcing the law.
The bill in question, SB 311, would allow, under certain circumstances, for an applicant who has no credit history to request that the creditor deem the credit history of the applicant to be identical to the applicant’s spouse (or former spouse). According to the bill’s sponsor, the bill was meant to assist a person who “may not be able to obtain credit, even though the person contributed to the development of the couple’s credit history, because the credit history is entirely in the spouse’s name.” If a creditor violates the new law, the violation would be deemed discrimination based on marital status. The bill was enacted earlier this year and was set to take effect on October 1, 2019, the day this lawsuit was filed.
The plaintiffs – the American Financial Services Association, the Nevada Credit Union League, and the Nevada Bankers’ Association – are industry associations whose members include financial institutions and furnishers of credit reporting information. They argue that SB 311 would force creditors to violate the FCRA by requiring them to access and use the non-applicant spouse’s consumer report without a permissible purpose. They also contend that ECOA generally prohibits creditors from requesting information concerning the spouse of an applicant. In contrast, SB 311 would require creditors to obtain information about a spouse or ex-spouse.
The industry organizations also assert the Nevada bill violates longstanding privacy and data security rules by requiring creditors to access credit information and disclose it to an applicant without the knowledge of the consumer (the spouse or ex-spouse). Finally, they claim the law is “hopelessly unworkable” from a practical standpoint as creditors have no way of obtaining a credit report associated with a particular period in time, such as during a marriage, so the credit report they would be required to obtain would not necessarily be an accurate reflection of an ex-spouse’s credit contributions.
This action is similar to recent litigation in Maine where the Consumer Data Industry Association is seeking for the court to declare that two newly enacted state statutes are preempted by the FCRA, which our blog covered here. The two cases taken together show the tension between attempts by states to protect consumers and the financial services industry’s need for uniform applicability in a complex area of law.