## Facts

- The Fair Credit Reporting Act (FCRA) requires notice to a consumer when an insurer takes an “adverse action” based in whole or in part on a consumer report, including an increase in an insurance charge or other unfavorable change in coverage terms.
- FCRA provides civil liability for negligent noncompliance (actual damages) and enhanced liability for willful noncompliance (actual, statutory, and punitive damages).
- GEICO used applicants’ credit information to assign them to a subsidiary and rate tier and to set premiums.
- GEICO sent adverse action notices only when a “neutral” (average) credit score would have resulted in placement in a lower-priced tier or company; it did not notify applicants merely because better credit could have yielded a lower rate.
- Edo alleged GEICO willfully failed to provide the required notice when his premium was set using credit information but no notice was sent under GEICO’s neutral-score approach.
- Safeco used credit reports to set initial premiums for new applicants.
- Burr and Massey alleged Safeco offered them higher-than-best initial rates due to credit information but provided no adverse action notices.
- District courts entered summary judgment for GEICO (no adverse action under its neutral-score comparison) and for Safeco (no adverse action for a single initial rate).
- The Ninth Circuit reversed, adopting a broad adverse-action view (lower rate would have been available with more favorable report information) and holding that “willful” noncompliance includes reckless disregard.
- The Supreme Court granted certiorari in both consolidated cases.

## Issues

1. Under FCRA, what constitutes an “adverse action” in initial insurance pricing when credit information affects the premium or terms offered?
2. Does “willfully” in FCRA’s civil-liability provision include reckless violations as well as knowing violations?
3. If recklessness is included, did Safeco’s and GEICO’s conduct amount to a willful violation supporting statutory and punitive damages?

## Decision

- The Supreme Court held that “willfully” under FCRA includes both knowing violations and reckless violations.
- The Court applied an objective recklessness standard and concluded that an interpretation is not reckless when it is not objectively unreasonable in light of statutory text, structure, and available guidance.
- As to adverse action in insurance pricing, the Court rejected the view that a first-time, single initial rate can never be adverse action; the relevant comparison is to the rate the consumer would have received absent the challenged use of credit information (or with more favorable information).
- Even assuming notice duties were triggered on the facts alleged, the Court held that neither Safeco nor GEICO acted willfully because each company’s interpretation, though incorrect, was objectively reasonable at the time.
- The Court therefore rejected willful-liability claims under FCRA’s enhanced-remedies provision against both insurers.

## Legal Principles

- When a statute conditions civil liability on “willfulness,” the term ordinarily covers both knowing and reckless violations unless Congress indicates otherwise.
- Recklessness for FCRA willfulness is assessed objectively and requires a risk of violating the law substantially greater than mere carelessness.
- A defendant does not act willfully under FCRA when its reading of the statute, though ultimately wrong, is not objectively unreasonable given then-existing legal and regulatory context.
- In the insurance context, an “adverse action” can occur at the initial-offer stage when credit information causes the consumer to receive less favorable pricing or terms than would otherwise have been offered.

## Conclusion

The Court interpreted FCRA “willfulness” to include reckless violations but limited enhanced FCRA liability to conduct that is objectively unreasonable; because Safeco’s and GEICO’s notice-related interpretations were plausible at the time, neither insurer was liable for willful noncompliance even though the Court rejected their adverse-action theories.


Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47 (2007)