Federal Appeals Court Limits Review of FTC Interpretation of FCRA

FTC FCRA

Recently, the U.S. Court of Appeals for the District of Columbia Circuit held that the FTC’s interpretation of a Fair Credit Reporting Act (FCRA) provision is not subject to direct review by the federal appeals court. Nat’l Auto. Dealers Assoc. v. FTC, 670 F.3d 268 (D.C. Cir. 2012). In July 2011, the FTC promulgated a rule to implement changes made by the Dodd-Frank Act to FCRA’s risk-based pricing protections. Those protections entitle consumers to a notice when they are offered credit at materially less favorable terms based on information contained in their credit reports. As part of the July 2011 rule, the FTC provided “supplementary information” that included an interpretation of the scope and applicability of the rule, stating that automobile dealers are subject to the rule, even when dealers rely on third-party financing sources and not directly on credit reports obtained from a consumer reporting agency. The National Association of Automobile Dealers (NADA) filed a petition asking the appeals court to review the FTC’s interpretation. NADA concurrently filed a complaint in district court seeking a review of the rule under the Administrative Procedures Act. The appeals court held that direct appellate review of an agency action is only permissible when a statute unambiguously grants such a review. In this case, the direct review provision of the FTC Act is not ambiguous and clearly does not apply to the FCRA interpretation at issue. Under the FTC Act, direct review is only available for challenges to trade regulation rules and substantive amendments thereto. NADA is not challenging a substantive amendment, but rather an interpretation, and in any case the FCRA interpretive statement is not related to a trade regulation rule. Therefore, the appeals court dismissed the petition without prejudice to the parallel district court action.