FCRA Preempts California Private Right of Action
In Liceaga v. Debt Recovery Solutions, LLC, the First District California Court of Appeal has held that the federal Fair Credit Reporting Act, 15 U.S.C. §1681 et seq. ("FCRA"), preempts the private right of action provision of California's Credit Reporting Agencies Act, Civ. Code §1785.1 et seq. ("CRAA").
Plaintiff Rebecca Liceaga was the apparent victim of identity theft. Her identity was used to open a Sprint cell phone account without her knowledge. When the account became delinquent, Sprint assigned the debt to defendant Debt Recovery Solutions, LLC, which eventually reported the delinquency to credit reporting agencies, despite plaintiff's protests that the debt was the result of identity theft. Plaintiff sued, alleging a violation of California's CRAA. The trial court granted defendant's motion for judgment on the pleadings on the grounds that FCRA preempts any private right of action under CRAA. Plaintiff appealed.
On appeal, the First District affirmed. Although section 1681t(b) of FCRA preempts any state law "relating to the responsibilities of persons who furnish information to consumer reporting agencies...", plaintiff asserted that California's CRAA was specifically exempted from that preemption provision, along with a similar statute in Massachusetts. The Court disagreed, holding that the California exemption to FCRA preemption applied only to Civil Code section 1785.25(a), not to section 1785.25 generally. The Court also rejected plaintiff's assertion that the language of the FCRA preemption provision should be interpreted broadly to allow a consumer in any state to bring a private state law right of action.
The Court of Appeal held that FCRA preempts the California CRAA private right of action against a "furnisher" of credit information.
