State Law Claim Against Provider of Credit Information Is Preempted by Federal Fair Credit Reporting Act

Judge Illston of the Northern District of California recently granted a motion to dismiss a claim under California’s Unfair Competition Law (“UCL”) against an entity that provides credit information to credit bureaus, on the grounds that it was preempted by the Federal Fair Credit Reporting Act (“FCRA”). Howard v. Blue Ridge Bank, No. 3:04-CV-4619, 2005 WL 1227042, (N.D. Cal. Apr. 29, 2005 ) (order granting motion to dismiss). The plaintiff claimed the entity failed to investigate his dispute regarding information about him that the entity had provided to credit bureaus. The plaintiff alleged that this conduct was “unlawful” under FCRA, and that this entitled him to also seek an injunction under the UCL.

Judge Illston held that the FCRA preempts all state statutes imposing liability on furnishers of consumer credit information even if the state laws merely grant additional remedies for violation of duties that the FCRA imposes on the furnishers. As California’s UCL allows plaintiffs to recover injunctive relief and restitution, remedies not afforded under the FCRA, the UCL is preempted.

The ruling is important because plaintiffs in California often include similar UCL claims in FCRA cases in order to take advantage of the state law’s enhanced remedies and potentially lower scienter requirements. For more information or a copy of Judge Illston’s order, please contact Lindsay Nichols at ljn@severson.com.