Consumers Sue Equifax for Data Breach

Consumers are starting to sue Equifax in small claims court for the recent data breach:

A librarian from Vermont took the credit-reporting agency to court shortly after the massive hack was disclosed. Jessamyn West, 49, filed suit in small claims court, arguing that the ordeal she went through from the recent death of her mother that July was only compounded by having to sort through her finances along with the prospect of having her other family members’ data exposed, according to an account from cybersecurity blogger Brian Krebs.

Its hard to tell the specific claims these consumers are suing under.  Assumedly, they are under the Fair Credit Reporting Act.  If the Equifax data breach has harmed you, the claim could be worth more than just the small claims limits.  Not only is compensation available for any harm done, the FCRA also provides punitive damages to deter Equifax and other companies from improper business practices that allow these harms to occur.  A Court in the Northern District of Alabama addressed this in Brim v. Midland Credit Mgmt., 795 F. Supp. 2d 1255 (N.D. Ala. 2011):

The threat of punitive damages under §1681n of the FCRA is the primary factor deterring erroneous reporting by the credit reporting industry. See Yohay v. City of Alexandria Employees Credit Union, 827 F.2d 967, 972 (4th Cir. 1987).  Any reduction by this Court of an award that was decided by a jury who were fully instructed regarding all relevant aspects and the economic ability (substantial net worth) of the offending defendant to withstand such an award while forcing it to acknowledge the award’s legitimate punitive and deterrent purpose, would be purely arbitrary. The jury’s damages award in this case enters no such zone of arbitrariness as it reasonably punishes defendant for particularly egregious “conduct that harmed the plaintiff, not for being an unsavory individual or business.” State Farm, 538 U.S. at 423, 123 S.Ct. 1513.

The United States Bankruptcy Court for the Western District of Texas in Lowry v. Croft (In re Croft), 500 B.R. 823 (Bankr. W.D. Tex. 2013) stated in an FCRA case:

The Court finds that an award of $75,000 in punitive damages is appropriate under the circumstances to achieve the goals of punishing Defendant for his willful violation of the FCRA and deterring Defendant from engaging in the prohibited conduct in the future. The Supreme Court has held that HN17 punitive damages may be imposed in order to further “legitimate interests in punishing unlawful conduct and deterring its repetition.”  BMW of N. Am. Inc. v. Gore, 517 U.S. 559, 568, 116 S. Ct. 1589, 134 L. Ed. 2d 809 (1996).

While small claims court offers a less formal environment for consumers sue in, the cap on the size of claims and judgements can cause problems for consumers that have been harmed more than the limit.  The good news is that reasonable attorney fees can be awarded under the FCRA so consumers can take advantage of the law with little to no out of pocket costs.