Identity Theft and the Fair Credit Reporting Act: An Analysis of TRW v. Andrews and Current Legislation

CRS Report for Congress
Received through the CRS W eb
Identity Theft and t he Fair Credit Reporting
Act: An Analysis of TRW v. Andrews and
Current Legislation
Legislative Attorney
American Law Division
One of t he ways in which victims of identity theft m ay recover for financial harm
is by filing s uit under t he Fair Credit Reporting Act.1 However, the Act imposes a t wo
year s t at ute of limitations on suits filed. On November 13, 2001, the S upreme C ou r t
deci ded a cas e i nterpreting when t he Act’s s tatute of limitations begi ns to run. In that
case, the C ourt h eld t hat t he statute o f limitations begi ns to run when i naccurate
d i s c l o s u r e s fi rst occur, and not when t h e consum er l earns of t h e i naccuraci es i n hi s
Several p ieces of legi sla tion attempting t o provide consumers with additional time
to file suit were i n troduced in response t o t he Court’s d ecision, and l egislation was
enact ed last year to ex tend the FCRA’s stat ute of limitations. This report will provide
a brief summary of the Fai r C redit R eportin g Act provisions in question, as well as an
anal ys i s o f t h e recent S uprem e C ourt d eci si on and an overvi ew o f recent l y enact ed
legi slation (P.L. 108-159). This report will be updated as events warrant.
Fai r Cr edi t Repor ti ng Ac t
The Fair C redit R eporting Act (FCRA) was enacted on October 26, 1970. 2 The
purpose of t he FCRA is “to requi r e t h a t c onsumer reporting agencies adopt reasonable
procedures for m eeting t he needs o f commerc e for consumer credit, personnel, insurance,
a n d o t h er information i n a manner which is fair and equitable t o t he consumer , w i t h

1 For more i nformation on r emedies available t o victims of i dentity theft, see CRS Report
RS21163, Remedies Available t o Victims of I dentity Theft .
2 P.L. 91-508, tit. 6, § 601, 84 Stat. 1128, 15 U.S.C. 1681 et. s eq. For more i nforma tion on t he
Fair Credit Reporting Act, s ee CRS Rep o r t RL31666, Fair Credit Reporting Act: Rights and
Congressional Research Service ˜ The Library of Congress

regard to the confidentiality, accuracy, relevancy, and proper u tiliz ation o f s uch
information.”3 The FCRA applies t o t h e files m aintained b y “consumer reporting
agenci es,” a t erm b roadl y defi ned t o i ncl ude anyone in the business of furnishing reports
on the credit worthiness o f consumers t o t hird parties. 4 Consumer credit reports generally
include information about a consumer’s “cred it worthiness, credit sta nding, credit
capaci t y, charact er, general reput at i on, personal characteristics, or mode of living. ”5 This
information i s gat hered and sold to creditors, employers, l andlords and other businesses.
The FCRA outlines a consumer’s rights in relation t o his or her credit report, as well as
permissible u ses for credit reports and d isclosure requiremen t s . In addition, the FCRA
requires credit reporting agencies t o follow “reas onable procedures to assure max imum
possible accuracy of the i nf o r m ation concerning the i ndividual about whom the report
The FCRA allows consumers t o file su it for violations of the Act , which could
include the d isclosure o f i naccurate inform ation about a consumer by a credit reporting
agency. 7 A consumer who i s a victim of identity theft could file s u i t agai n s t a credit
report i n g agency for t h e agency’s fai l u re t o veri fy t h e accuracy of i n form at i o n cont ai ned
i n t h e report and t h e agency’s d i s cl osure o f i naccurat e i n form at i o n a s a r e s u l t of t h e
consumer’s stolen identity. P rior to the ena ctment of recent l egislation, the FCRA
required a consumer to file suit “within two years from the date on which the li ability
ari s es.”8 However, there was an ex cep tion i n cas es where t here was willfu l
misrepres entation of i nformation t hat i s required t o b e d isclosed to a consumer and s uch
information i s m at erial t o t he es tablishment of t he defendant’s liability. 9 In such cases,
the action could “be brought any time wit h in two years after the discovery by the
individual o f t he misrepresentation.”10
The plaintiff i n TRW v. Andrews was a victim of identity theft.11 An imposter, who
had t he same last name and first initial as t he plai ntiff, obtai ned Andrews’ soci al security
number and attempted t o open numerous credit accounts under t he imposter’s name. On
four occasions, t he credito r s responding to the impostor’s applications sought reports

3 15 U.S.C. 1681(b).
4 15 U.S.C. 1681a(f).
5 15 U.S.C. 1681a(d). In addition t o credit i nformation, consumer reporting agencies are allowed
to include information on t he failure of the consumer to pay overdue child support, if such
information has been provided to the agency by a state or l ocal child support enforcement agency
or verified by any s tate or federal government agency. T his information r emains on the consumer
report f or up to 7 years. 15 U.S.C. 1681s-1.
6 15 U.S.C. 1681e(b).
7 15 U.S.C. 1681n; 15 U.S.C. 1681o.
8 15 U.S.C. 1681p.
10 Id.
11 122 S. Ct. 441 (2001).

from TRW, a credit reporting a gen c y. T R W m at ched the s ocial s ecurity number, last
name, and first i nitial with Andrews’ file and discl osed her credit history to the creditors.
Andrews d id not learn o f t he disclosures until she attempted t o refinance her home
and requested a copy of her credit report, which reflect ed the impostor’s activity. TRW
correct ed Andrews’ fi l e when not i fi ed o f t he mistakes. However, A ndrews alleged t hat
the b lemishes o n h er credit report “forced her t o abandon her refinancing efforts and settle
for an alternative line of credit on l es s favorable terms.”12
Andrews filed s uit against TRW o n O c t o b er 21, 1996, approx imately 17 months
aft er s he becam e aware of t h e i naccurat e i n form at i o n o n h er credi t report and m o re t h an
two years a ft er TRW made the two initial disclosures.13 Andrews alleged t hat TRW ’s
failure to verify, prior to disclosing information t o creditors, t hat s he initiated t he requests
or was o therwise involved i n t he underlyi ng transactions was i n v iolation o f t he Fair
C redi t R eport i n g A ct ’s r e qui rem ent t h at cred it reporting agencies m aintain reasonable
procedures to a v o i d i m p r oper d isclosures.14 By failing t o v erify t hat Andrews was the
init i a t o r o f t he requests, Andrews alleged t hat TRW facilitated t he identity theft. She
sought injunctive relief, punitive dam ages and other compensation.
TRW argued t hat Andrews’ claims based o n the two earliest disclosures were barred
because the Fair C redit R eporting Act’s two year statute o f l i mitations had ex p ired. 15
Andrews countered that all o f h er claims we re timely because the s tatute of limitations did
not t o l l unt i l t h e d at e s he l earned o f t he i n accurat e di scl o sures. Thi s argu m ent was b ased
upon Andrews’ contention t hat t he FCRA incorporated a general federal rule which tolls
t h e s tatute of limitations at the time the plaintiff becomes aware of the i njury. T h e
Di st ri ct C ourt agreed wi t h TR W , and h el d t hat a general federal di scovery rul e was not
incorporat ed into the Fai r C redit R eporting Act, t hus barring Andrews’ claims based o n
the t w o earliest disclosures.16 The District C ourt also granted TRW’s m otion for
summary judgem ent on t he two rem ai ning cl aims, fi n d i n g that TRW had maintained
adequate procedures to avoid improper d isclosures. 17
The Ninth Circuit C ourt o f Appeals reversed t h e D i s t r i c t C o u r t , applyi ng the “gene r a l
federalrule...thatafederalstatueoflimitations begi ns to run when a party knows o r h as
reason to know that she was inj u r e d . ” 18 The Ninth Circuit rej ect ed the District C ourt’s
assertion t hat t he tex t of 15 U.S.C. 1681p, including the ex ception t o t he commencement
of the s tatute of limitations, precl uded t he application of general federal discovery rules,

12 122 S. Ct. 445.
13 Id.
14 Id. Not r elevant t o t he Sup r e me Court’s opini on was a n a dditional c laim by Andrews t hat
T RW f ailed t o “follow r easonable p r o c e d u r e s to assure maximum possible accuracy of the
information” in the r eports, i n violation of 15 U.S.C. 1681e(b). T his claim was resolved by a j ury
in favor of T RW. Id a t 446, note 3.
15 122 S. Ct. a t 446.
16 Andrews v . Trans Union Corp. , 7 F. Supp.2d 1056, 1066-1067 (CD Cal. 1998).
17 7 F. Supp.2d at 1068-1071.
18 Andrews v . TRW, 225 F.3d 1063, 1066 (9th Cir. 2000).

holding that “unless C ongress h a s e x p ressly l egislated otherwise the equitable doctrine
fo discovery is read into every federal stat ute of limitations.”19 The court concluded t hat
since t he Fair Credit Reporting Act contai ned no ex press legi slative directive t he general
rule applied, thus the s tatute of limitations had not ex pired on any of Andrews’ cl aims. 20
TR W appeal ed t o t h e S uprem e C ourt , whi ch reversed t he Ni nt h C i rcui t ’s d eci si on,
s t a t i n g t hat t he Ninth C ircuit “conspicuously overstated” the s cope and force of t h e
presumption t hat general discovery rules appl y unless C ongress has ex p ressly l egislated
otherwise. 21 The C ourt s ai d t hat while some lower federal courts have applied a general
discovery rule when a s tatute is silent on the i ssue, the S upreme C ourt h as not adopte d
that position. Fu rthermore, the C ourt s tate d t hat i t h ad “ n e v er endorsed t he Ninth
Circuit’s v iew t hat C ongr e s s c a n convey its refusal t o adopt a d iscovery rule only b y
ex plicit command, rather than by implication from t he struct ure or t ex t of t he particular
st at ut e.”22
While the Ninth Circuit correctly noted that the Fai r C redit R eporting Act contai ns
no speci fic directive against the application of general federal discovery rules, the C ourt
noted that the statute d o e s s et fo rt h a speci fic statute of limitations, along with a singl e
ex cept i o n t o t he general rul e. 23 Based upon the t e x t and structure o f t he statute i n
question, the S upreme C ourt d eterm i n e d that Congress’ “intent t o p recl ude j udi ci al
implication of a discovery rule” was cl ear. 24 Citing an earlier case, th e C o u r t hel d t hat
“[ w]h e re C o n gress ex plicitly enumerat es certain ex ceptions to a general prohibition,
additional ex ceptions are not to be implied, in the absence of evidence o f a contrary
legi slative i ntent.”25 Applyi ng general p rinciple s o f statutory construction, the C ourt
reas oned t hat “Congress i m plicitly ex cl uded a general discovery rule by ex plicitly
incl uding a m ore limited one.”26 To allow t he incorporation o f a general rule i n light of
t h i s fact , w oul d h ave t he pract i cal effect of rendering the s tated ex ception t o t he general
rule “entirel y superfluous i n all but the m ost unusual circumstances ,” thus violating a
“cardi nal p ri nci p al of st at ut ory const ruct i on” - t hat “a s t at u t e ought , u pon t h e whol e, t o
be so construed t hat, if it can be pr e v e n t e d , no clause, s entence, or word shall b e
superfluous, void o r i nsignificant.”27
As if anticipating t he Court’s d eci s i o n , Andrews argued t hat i f t he statute o f
limitations was t o commence on t he date on which liability arises, t he date should be t he
dat e on whi ch t he i n accuraci es com e t o t h e at t ent i o n o f t he pot ent i al p l ai n t i ff, rat h er t h an

19 225 F.3d at 1067.
20 Id. at 1066.
21 122 S. Ct. a t 446.
22 Id. at 447.
23 15 U.S.C. 1681p.
24 122 S. Ct. a t 447.
25 Id. at 447, citing Andrus v. Glover Constr. Co., 446 U.S. 608, 616-617 (1980).
26 Id.
27 Id. at 449 (citations omitted).

t h e d at e o n whi ch t h e credi t report i n g agency m ade t he i n accurat e di scl o sure.28 Andrews
relied on l egislative history pointing t o C ongress’ consideration of alternative l anguage
in making her argument. The C ourt rej ect ed Andrews’ reliance on l egislative history
noting t hat TRW was able t o p resent in f o rmation t o t he contrary. 29 The C ourt also
reject ed Andrews’ argument that liability did not arise until act ual dam ages materialized.
Refusing to address t he issue b ecause it was not raised earlier, the C ourt doubted that the
argu m ent woul d h ave ai d ed Andrews due t o t h e f a c t t h a t Andrews’ al l eged d am ages
began t o m at eri al i z e when t he i n accurat e di scl o sures were m a d e, causi ng t h e s t at u t e of
limitations to toll at the s ame time as under t he statutory l angu age i n question. 30
By reversing t he Ninth C ircu it’s d eci sio n , t h e S upreme C ourt b arred Andrews’
claims based upon the t wo earliest d i s c l o s u res. The case was remanded for further
proceedi n gs consi s t ent wi t h t h e opi ni on, presum abl y al l o wi ng Andrew s t o go forward
with the other cl aims.
Recently E nacted Legislation
H.R. 2622 was p assed b y both t he House and the S enate during t he first s ession of
the 108 th Congress and was sign ed by the P resident on December 4 , 2003. 31 This
legi slation amends the Fai r C redit R eporting Act ’s stat ute of limitations to allow s uit t o
be brought not later t han t he earlier o f 2 years after the dat e of discovery by the plaintiff
of the violation t hat i s t he basis for such liability, or 5 years after the dat e on w h i ch the
violation o ccurred. 32

28 Id. at 449.
29 Id. at 450.
30 451.
31 Fair and Accurate Credit T r ansactions (FACT ) Act of 2003, Pub. L. 108-159.
32 P.L. 108-159, Section 156.