February 11, 2024

SCOTUS says federal government can be sued for false debt reporting

In a unanimous ruling issued on Feb. 8. the U.S. Supreme Court held that the Biden administration can be sued for false debt reporting, as The Epoch Times reports.

In doing so, the high court rejected the government's argument that it enjoys immunity from provisions of the Fair Credit Reporting Act (FCRA), the statute that permits consumers to file suit against creditors for erroneous reporting about their debts.

Administration suffers defeat

The underlying case originated when Reginald Kirtz of Pennsylvania filed suit against the Rural Housing Service within the U.S. Department of Agriculture over its reporting of his debt.

Kirtz alleged that his credit score was harmed when the agency erroneously reported to credit bureaus that he had overdue loans.

In response to his complaint, the agency claimed immunity pursuant to the FCRA and sought dismissal of the case, though the matter went through several additional stages of adjudication before reaching the Supreme Court.

The crux of the dispute that was reviewed by the court was whether Congress, when it overhauled consumer protection laws roughly three decades ago, intended to waive the government's sovereign immunity from lawsuits such as Kirtz's.

Writing for the majority, Justice Neil Gorsuch declared, “We think the Third Circuit reached the right decision in this case: The FCRA effects a clear waiver of sovereign immunity.”

Decision praised, limitations noted

In the wake of the court's ruling, Nandan Joshi, an attorney from the Public Citizen Litigation Group who delivered oral arguments in the case, heralded the outcome, as The Epoch Times explained.

Joshi wrote in a statement, “Today's decision confirms that federal agencies cannot escape accountability when they fail to comply with their responsibilities to consumers under the FCRA.”

He went on, “As the court explained, FCRA's text means what it says: The FCRA allows consumers to sue any 'person' that violates the statute and defines 'person' to include any government agency.”

As the National Law Review noted, however, just because the court ruled that the government can be sued for erroneous debt reporting, that is not to say that all the protections consumers may enjoy in the context of debt collection must necessarily be observed by its agencies.

The outlet explains that unlike with the FCRA, the definition of “person” in the Telephone Consumer Protection Act that regulates robocalls does not include the government, and therefore its agencies cannot be sued for calls made without recipient consent.

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