Depending on the statutory violation, the Fair Credit Reporting Act (FCRA) allows plaintiffs to recover a wide array of damages and exposes defendants to significant liability. Seemingly minor violations of the Act may result in hundreds of thousands, if not millions, of dollars in damages.

By way of backdrop: if a defendant negligently violates the FCRA, the statute permits consumers to recover actual damages, attorneys’ fees, and costs. However, willful violations of the act substantially broaden the damages recoverable and increase defendants’ exposure. Defendants who willfully violate the Fair Credit Reporting Act are not only liable for actual damages, fees and costs, but also statutory and even punitive damages. See § 1681n(a).

While statutory damages under the FCRA range from $100 to $1000 per violation, punitive damages are only limited by the limits of the Due Process Clause. (As a quick side note: in evaluating whether a punitive damages award is sufficient, courts consider the degree of reprehensibility of the defendant’s misconduct, the difference between the punitive damages and actual damages award in comparable cases, and the disparity between the harm suffered and the punitive damages award).

Even if a plaintiff is not entitled to statutory or punitive damages, defendants still may face considerable liability for actual damages. Courts have consistently held that, under the Act, actual damages may include not only economic damages, but also damages for humiliation and mental distress – which are often hard to quantify and perhaps even more difficult for Defendants to counter. This can result in significant damages awards. Take, for example, Robinson v. Equifax Info. Servs., LLC. There, the Plaintiff alleged that, after her identity was stolen, Equifax repeatedly violated the Act in mishandling her file. A jury awarded the plaintiff $200,000.00 in actual damages. Both parties appealed. Plaintiff argued she was entitled to statutory and punitive damages whereas the defendant argued that the actual damages award was excessive. The Fourth Circuit rejected Plaintiff’s argument that she was entitled to punitive and statutory damages because she failed to prove that Equifax’s violations were willful. Nonetheless, the Court affirmed the $200,000.00 award for actual damages.

But defendants’ potential exposure does not end there. Regardless of whether the defendant’s statutory violations are willful or negligent, prevailing plaintiffs may recover attorneys’ fees and costs. This can easily increase a defendant’s liability by hundreds of thousands of dollars or more. In Domonske v. Bank of America, for example, the district court awarded class counsel an attorney fee award of $1.79 million dollars, which represented less than 20% of the total award to the Plaintiffs. 790 F. Supp. 2d 466, 477 (W.D. Va. 2011).

In short, the FCRA exposes defendants to potentially significant liability. Even negligent violations can result in six and seven figure damages awards. With this in mind, defendants should be aware of their exposure and ensure that seemingly minor mistakes do not result in disastrous consequences.

Stay tuned to FCRAland for more to come on damages under FCRA.