Should insurance companies notify consumers when their bad credit is used against them?

The essential question is: Are insurance companies violating the Fair Credit Reporting Act (FCRA) when they make an adverse decision based on information contained in a credit report and fail to tell the consumer?

The U.S. Supreme Court has agreed to hear two consolidated cases that address the issue.

According to the Supreme Court of the United States blog: Although the facts for each plaintiff-respondent differ, their complaints are essentially based on the same theory: respondents were entitled to an adverse action notice because they received rates that were higher than the best available rates the companies could offer; and because the companies willfully failed to provide these notices, respondents are entitled to both statutory and punitive damages. Click here for the full post.

Opinion in the business community tends to support insurers; consumer groups claim the insurance companies are weakening the system. A key issue is whether the insurance companies willfully broke the law.

If your business is subject to the FCRA, you’ll want to monitor this case.

Jacquelyn Lynn