FreedomWorks Foundation Files Amicus Brief with Supreme Court; Brief Shows Fair Credit Reporting Act ruling Will Harm Consumers

28 August 2006

On August 21, FreedomWorks Foundation filed an amicus brief before the Supreme Court supporting petitioners who requested that the Supreme Court review a decision of the U.S. Court of Appeals for the Ninth Circuit regarding the Fair Credit Reporting Act (FCRA). In that decision, the court ruled that under FCRA an insurer is required to issue consumers an "adverse action" notice whenever it offers a policy at a rate greater than the rate the company might offer if the consumer had a perfect credit rating.

FreedomWorks believes that this interpretation of FCRA conflicts with previous interpretations in other circuit courts. The FCRA ruling also has the potential to increase the costs of insurance for all consumers while decreasing the likelihood that consumers will benefit from any "adverse action" notice.

"Adverse action notices are a tool to alert consumers to activities on their credit report that may be harmful to them," said Wayne Brough, chief economist at FreedomWorks. "But if we followed the ruling of the Ninth Circuit, consumers would be so inundated with notices that the effectiveness of the "Adverse Action" statements would be minimal. At the same time, compliance costs would increase substantially, raising the cost of insurance for consumers. At the end of the day, this is just an attempt by trial lawyers to exploit the law for their own gain. There's nothing in this for consumers."

FreedomWorks' amicus highlights the harm this misinterpretation of FCRA can impose on consumers and urges the Supreme Court to review the lower court's decision. As the amicus concludes, the lower court's decisions "amount to judicial over-regulation of the consumer credit market, and they should not be permitted to jeopardize FCRA's continued success in promoting the free flow of credit information while protecting consumer privacy."

FreedomWorks is a national grassroots organization with more than 800,000 members nationwide promoting lower taxes, less government, and more freedom.

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