New FCRA Bill Slashes Class Action Payouts to $500K Cap, Limiting Recovery for Credit Report Errors

The new FCRA Liability Harmonization Act focuses on one thing: putting a hard cap on how much money consumers can recover when credit reporting agencies or other companies violate the Fair Credit Reporting Act (FCRA). The FCRA is the law that keeps your credit report and financial data honest. This bill drastically changes the math for class action lawsuits, which are often the only way to hold massive companies accountable for widespread, systemic errors.

The New Ceiling on Accountability

If a company messes up your credit report—say, by mixing up your file with a stranger’s or reporting a paid debt as delinquent—and faces a class action lawsuit, this bill limits the total payout to the entire group of affected consumers. For both intentional (willful) and careless (negligent) violations, the total recovery is capped at the lesser of $500,000 or 1 percent of the company's net worth (SEC. 2). Think about that cap: if a major credit bureau with billions in net worth systematically harms millions of consumers, the total fine is still only $500,000. That’s essentially a parking ticket for a multibillion-dollar error.

Why the Class Action Cap Matters to You

Class actions are crucial because they offer a path to justice when the harm to any single person is small, but the total harm to millions is huge. Imagine a company accidentally reports a late payment on 500,000 people's credit files. Under the current system, the potential liability acts as a major deterrent against sloppy practices. Under this new bill, if that $500,000 is split among 500,000 people, each person gets a dollar. If you’re trying to buy a house, and that error costs you a higher interest rate or even a denial, a dollar doesn't cover your actual damages or the headache. Furthermore, the bill eliminates the court’s ability to set a minimum damage amount for each person in willful violation cases, meaning consumers are guaranteed even less.

The Cost of Legal Help Just Got Harder

This bill also targets the economics of bringing these cases in the first place by capping attorneys' fees and court costs. For class actions, these fees cannot exceed the lesser of $100,000 or 40 percent of the awarded damages (SEC. 2). When the total damages are capped at $500,000, the maximum a lawyer can recover is $100,000—regardless of how complex the case is or how many hours they put in. This makes it much less financially viable for consumer attorneys to take on the large, complex cases required to fight massive data errors, potentially limiting access to justice for regular folks.

New Limits on Individual Claims, Too

Even if you sue a company individually for a negligent violation—meaning they were careless but not malicious—the bill caps your recovery. Your damages can’t exceed the lesser of $100,000 or 40 percent of any actual damages the court determines (SEC. 2). While $100,000 might sound like a lot, it sets a hard ceiling on compensation for serious financial harm caused by carelessness. The overall effect of this bill is clear: it significantly reduces the financial risk for companies that handle your sensitive financial data, whether they violate the rules intentionally or by mistake. The financial incentive for them to be meticulous just got a whole lot smaller.