1 (Slip Opini o n) OCTOBER T ERM , 20 06 Sy llabu s N O TE : Wh er e it i s feas ibl e , a s y llab u s (h ead n ot e) wil lbe rel e as ed , as is bein g d o n e incon n ecti onwithth is cas e , a tth e ti meth e op in i o n is is s u ed

. Th e s y ll abu s con s titu tes n o p a r t of th e op in i o nof th eC o u r t bu t h a s be en pre p are dbyt h e Re po rte ro f De ci sio n s fo r t h e co nveni e nce of t h e reade r . Se e United Statesv. Detro it Timbe r& Lumb er Co., 200U. S

. 3 21, 337

. 

# SUPREME CO URT O F THE UNI TED STATES
Sy llabu s 

### SAF E C O INSU RAN C E CO. OF AM ERICA ET AL


### . v . BUR R ET AL


### . CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT No. 06–8 4. Ar g u ed Jan u a ry 16, 200 7 —D ec ided Ju ne 4, 2007 * The Fair Cre d it Re porting Act (FCRA) r e q u ires not i ce t o acons umer

su bjec ted to “ a dv er se ac tion

. . . based in w h o le orinpar tonan yin

forma t i on cont a i ned in ac o ns umer [cre dit] report .” 1 5 U. S

. C. §168 1m(a). A s applied to in su r a n c e c o mpan ies, “adv e r s e ac tion” is “a denia lor ca ncella tion of, a n increa s e in a n y cha rge for , or areduct ion or ot her a dve rs e or unfav o r ab l e cha nge in t h e t e rms of covera geor a m ountof, a n y ins ura nce , e x is t i ng orapplied for.” §1681a(k)(1)(B)(i)

. FCRA provides aprivate right of ac tion a g ainst busines s es that use c o n s u m err e por t s bu t fai lto c o mply

. A n e g lig en t v i olati onen titles a c o n s u m erto a c tu al damag e s , §1681 o (a), an d a willful one entitles the c o n s u m erto a c tu al, statu tor y , an d ev enpun i tiv e damag e s, §1681n (a).

Petition er s in No. 06– 10 0 (G EICO ) u s e anapplic an t’s c r e dit sc or e t o s e lect t h e appropria t e s u b s idia ry ins ura nce compa n y a n d t h e pa r t i cula rra t e at which apolicy ma y b e is s u ed. GEICO sends a na d

vers e a c t i on not i ce only if a neut ra l credits c ore would have putt h e applic an t inalow e rpr ic ed t i erorc o mpany ; th e applic an t is n o t oth

erwis e t o ld if he would ha ve go ttenbe tter ter m s w i th a betterc r e di t s c ore. Res p ondentEdo’s credits c ore wa s t a k en int o accou n twhen GEICO is s u ed him apolicy, b u tGEIC O s e ntno a dvers e a c t i on not i ce bec a u s e h i s c o mpan yan d ti erplac emen t w o u l d h av e beenth e same with a neutral score. Edo fil e d a proposed class action, a lleging will

fu l v i olationof §1681 m(a) a n d seekin gstatu tor yan d pu n i tiv e dam

ag es u n d er§1681n (a). Th e D i str i c tCou r tg r an ted G E ICO su mm ar y j u dgment , fin d ing noa dve rs e a c t i on b e ca us e t h e pre m ium would

——————

* Tog e th erw i th No. 06–1 00, GEICO Gen eral Insu ranc e Co. et al. v. Edo, a l s o on c e rt iora ri t o t h e s a me court
.2 SAFECO IN S. CO. OF AM ERICA v. BUR R Sy llabu s have b een t h e s a me ha d Edo’ s credithis t ory notb e en con s idered. Pe

tition er s inN o . 06–1 00 ( S af ec o) also r e lyonc r e dit r e por t s to se t in i

t i a lins ura nce premiums

. Res p ondent s Burr a n d Ma s s e y—whom Safeco offered highe rthan the bestrates possible with out sending adverse actionnotices—join ed a pr opose dclass action, alleging will

fu l v i olationof §1681 m(a) a n d seekin gstatu tor yan d pu n i tiv e dam

ag es u n d er§1 681n (a). Th e D i str i c tCou r tg r an ted Safec o su mmar y judgment on the ground that offeringa si ngle, initial ra te for insur

a nce ca nnotb e “ a dvers e a c t i on.” The Ni nt h Circuit re vers ed b o t h j u dgment s . In GEICO’s ca s e , itheld t h ata na dvers e a c t i on occu rs whene ver acons umer would have re ceivedalower ra t e ha d his con s u mer reportcont a i ned m o re fa vorab l e informa t i on. S i nce t h a t would have h a ppened t o Edo, GEICO’ s fa ilure t o give not i ce wa s a n adverse action. The court also heldthat a ninsurer willfully fails t o comply wit h FCRA if it a c t s in reckles s dis r ega r d of acons umer’s FCRA rights, remanding for further proceedings on the reckless dis

regard issue. Relying on its deci s i on in GEICO’s ca s e , t h e Nint h Cir

cuitrej e ct ed t h e Dis t rictCourt ’s pos i t i on in t h e S a feco ca s e a n d re

manded for further pro c eedi n gs. Held: 1. Willful failure covers a viol ation commit t e d in reckless disregard of the notice o b ligation. Wh ere willful ness is ast atutory condition of civil liabili ty, it is generally takent o cove r noto n ly k n owing viola

tion s of a st an dar d , bu t r e c k less on es a s w e ll. See, e. g., McLaughlin v. Richlan d Shoe Co. , 486 U. S. 128, 133. This construction reflects common la w us a g e. The s t a n da rd civil us a g e t hus couns els rea d ing §168 1n(a)’s phrase “willf ully fails to comply” as reaching reckless FCRA viola t io ns, both on the inte rpretive assump tion that Congres s kn ow s h o w th is Cou r tc o n s tru e s statu te s a n d ex pec t s it to r u ntr u eto form, see Commissionerv. Keyston eConsol

. Indu str i es , I nc. , 508 U. S. 152, 1 59, an du n d erth e rule th at a c o mmonlawter m ina st atu t e comes wit ha common la w mea n ing, ab s e nta n yt hing point i ng a n ot her wa y, Beckv. Prupi s , 529 U. S. 4 94, 500 –5 01. Pet i tion er s c l aim th at §1 68 1n (a)’s dr aftin gh i stor ypoin ts to a r e adin gth a tli abil i tya t

tac h e s on lyto kn ow in g v i olation s, bu t th e tex tas fi n a llyadopt e d points to the traditional understan ding of willfulness in the civil s p here. Theirot her t e xt ua l a n d s t ruct ur a la r gument s a r e a l s o un per s u a siv e . Pp. 6–10.

2

. Init ia l ra t e s cha rged fo r n e w ins ura nce policies ma y be a dvers e ac tion s. Pp. 10–1 7. (a) Rea d ing t h e phra s e “incr ea s e in a n y cha rge for .

. . a n y ins ur an c e , ex istin gorapplied for ,” §1681a(k)( 1 )(B)(i), to in c l u d e a disad

v a n tag eou s r ate ev enw i thn o pr iordealin gfits w i tht h e ambi tiou s objectiv e of FCRA’s s tate m e nt of purpos e, which uses ex pansiv e3 Cite as: 55 1 U

. S. ____ (2007) Sy llabu s ter m s to desc r ibe th e adv e r s e effec t s of u n fairan d in ac c u r ate c r e dit report ing a n dt h e res p ons ib ilit i es of cons umer report ing a g en cies

. See §16 81(a). Th ese desc r i ption s do n o th in gto su g g e st that r e medie s for cons ume r s dis a dva n ta ged b yuns oundcreditra t i ng s s h ould b e den i ed to fir s t-time v i c t im s , an d th e legisla t iv e h i stor ies of both FCRA’s original enactm ent and a 199 6 a m endmen t reveal no reason to c o n f in e atte n t ionto c u s to mer s an d bu si n e sses w i thpr iordealin g s . Fina lly, not h ing ab o utins ura nce cont ra c t s s u gges t s tha tCongres s mean t to diffe r e n t iate applic an ts fr om ex istin gc u s tomers w h e nit set t h e not i ce req u irement ; t h e newly i n s uredwhoget s c h a r ged more o w ing t o a nerroneous reportis in t h e s a me b o a twit ht h e renewa l a ppli

c a n t
. Pp. 10–13. (b ) An increa s ed ra t e is not “b a s ed in whole or in pa rton” acredit reportunde r §1 6 8 1 m (a) unles s t h e reportwa s aneces s a ry condit ion of the increase. I n common talk, “bas e don ” indicate s a but-for causal rela t i ons h ip and t hus aneces s a ry logica l condit ion. Thoughs o me t e xt ua l a r gument s pointa n ot her wa y, itm a kes more s e ns e t o s u s p ec t t h a tCongres s mea n tt o require not i ce a n d promptacons umer cha l

lenge onl yw h e n t h e cons umer would ga in s o met h ing if t h e c h a llenge su c c eeded. Pp. 13–14. (c ) Indeter m in in gw h e ther a fir s t-t i me r a te is a di sadv a n tag eou s increa s e, t h e b a s eline is t h e ra t e t h at t h e a pplica n tw o uld have re ceived ha d t h e compa n y no tt a k en his cr edits c ore int o a ccou n t(t he “n eu tr al sc or e” r ate G E ICO u s ed inEdo’s c a se). Th at b a selin e c o m por t s w i thth e u n d er stan din gth at §168 1 m (a) n o tic e is r e qu ir ed on ly when the cred i t report’s effe ct on the initial rate is nece ssary to put t h e cons umerin awors e p o s i t i on t h a not her releva nt fa ct s would have decreed a n ywa y . Co n g res s wa s more likely conce r n ed wit ht h e pr ac tic a l qu es tionw h e th er th e c o n s u m er ’s r ate ac tuallysu ffer e d when his cred i treportwas t a k en int o a ccountt h a nt h e t h eoret i cal qu estionw h e th erth e c o n s umerw o u l d h av e g o ttena betterr ate w i th th e best poss i b le c r e dit sc ore, th e baselin e su g g e sted byth e G o v e r n menta n d res p ondent -pla int i ffs

. The Go vernment ’ s obj e ct ion t o t h is rea d ing is rej e ct ed. Alt h ought h e ra t e init ia lly offered fo r ne w ins u r ance is an “increase” calling for noti ce if i texceeds the neutral rate, once aco ns umer ha s lea rned t h a this creditreportled t h e ins urer t o cha rgemore, he need notb e t o ld wit hea ch re newa l if hi s ra t e ha s not cha nged. Aft e r init ia l dea l ing b e t w een t h e cons umer a n d t h e ins urer, t h e b a s eline for “ i ncrea s e” is t h e previous ra t e or cha rge, nott h e “n eu tr al” ba se lin e th at appli e s at th e star t. Pp. 15–17.

3. G E ICO did n o t v i olate th e st atu te, an d w h ile Safec o migh t h av e , it did n o t ac t r e c k lessly

. Pp. 18– 21. (a) Because the initial rateGEICO offered Edo was what he would ha ve re ceived ha d his credits c ore n o tb e en t a k en int o a ccount ,4 SAFECO IN S. CO. OF AM ERICA v. BUR R Sy llabu s G E ICO ow ed h i m n o adv e r s e ac tionn o tic eu n d er §1681 m(a). P. 18. (b) Even if Saf e co violated F CRA when it failed to give Burr and M a sseyn o tic e onth e mistakenbelief th at §168 1m(a) didn o t applyto init ia l a pplicat ions , t h e compa n y wa s notreckles s . The common la w ha s genera lly unders t ood “ r e c kles s n es s ” in t h e civil liab ilit ys p here a s conduct violating an objecti v e stan dard: a c tion entailing “an unjusti

fiablyh i ghr i s kof h a r mth at i s ei th erkn ow norso obv i ou s th at i t sh ou ld be kn ow n . ” Fa rmer v. Brenna n , 51 1 U. S. 825, 83 6. Th er e be

ing no indica t i on t h a tCon g res s ha d s o met h ing differentin mind, t h ere is no re a s on t o deviate from t h e co mmon la w unders t a n ding in applying the statute. See Beckv. Prupi s , 529 U. S., at 5 0 0 –50 1

. Thus, a comp any does not act in reckles s disregard of FCRA unless th e ac tionis n o t on lya v i olationu n d era r e ason able r e adin gof th e sta t u t e, bu t s h ow s th at th e c o mpan yr a na r i sk of v i ol atin gth e law su bst a n t ia lly g r eaterth anth e r i sk a ssoc i ated w i tha r e adin gth at wa s merely c a reles s . The negligen ce/re c kles s n es s line need not b e pinpointed he re, for Safeco’s reading of the s t at ut e, a l beiterroneous , w a s n o t objec t iv elyu n r e ason able. Sec t io n1681 a(k)(1)( B)(i) is silen t onth e poin t fr om w h i chto measu r e “in c r ease,” an d Saf e c o ’s r e adin g h a s a fou n d at ioninth e statu tor ytex tand a su ffic i en tlyc o nv in c i n g j u s t ificat ion t o have pers ua d e d t h e Dis t rictCourtt o a d optita n d rule in S a feco’s favor. Befo re t h e s e ca s e s , no co urtof a ppea l s ha d s p oken onth e is su e, an d n o au th o r itativ e g u ida n c e h a s y e t c o me fr om th e Feder a l Tr ade Comm iss i on . G i v e nth is d e ar thof g u ida n c e an d th e less-th an -pel l u c i d statu tor ytex t , Safec o’s r e adin gw a s n o t objec t iv ely unrea s onab l e, a n d s o fa lls well s h ortof ra is ing t h e “ unj us tifiab ly high ris k” of viola t i ng t h e s t at ut e neces s a ry for reckles s liab ilit y. Pp. 1 8– 21. No. 06–8 4, 14 0 Fed. Appx . 746; No. 0 6–1 00, 43 5 F. 3d 108 1, r e v e r s ed

a n d rema nded. S OUTER , J., delivered the opinion of the Court, in whi ch R OBERTS , C. J., and K ENNEDY an d B RE YER , JJ., joined, in which S CAL I A , J., joined as to all but footnote s 11 and15, in which T HOMAS an d ALITO , JJ., joined as to all but Part III–A, and in which S TEVENS an d G IN SB U R G , JJ., joined as to P a rts I, II, III–A, and IV–B. S TEVENS , J., filed an opinio n conc urri ng in pa rta n d concurrin gin t h e j u dgment , in w h ich G IN SB U R G , J., join ed. T HOMAS , J., filed a nopinion conc urri ng inpa rt , in whi c h ALITO , J., join ed._________________

_________________ 1 Cite as: 55 1 U

. S. ____ (2007) Opinion of t h eCourt
NOTICE: This op i n ion is subjec t to f o rmal revi si on bef o r e publicat ion in the p r eli m in ary p r in t of th e U n it edS t at es R e p o rts
. R e ad ers ar e r e qu es ted to n o tif yth e R e p o r t e rof D e c i s i on s , Su p r em e C o u r t of th e U n ited St at es , Wa s h

ington, D. C. 2054 3, of any typ o gra p hical or other f o rmal err o rs , in or der th atc o rr ect i on sm a y b e mad eb e f o r e th ep r e lim in aryp r in t go es t o p r es s . 

# SUPREME CO URT O F THE UNI TED STATES
Nos. 06– 84 an d 06–1 00 

### SAF E C O INSU RAN C E COM PA NY OF AM ERICA, ET AL 

### ., PETITION ERS 06–84 v. CHAR L E S BUR R ET AL


### . GEIC O GE NERAL IN SURA NC E COMPANY , ET AL 

### ., PETITION ERS 06–100 v. AJEN E EDO ON WRITS OF CERTIORARI TO THE UNITED STAT ES COURT OF APPEAL S FOR THE NINT H CIRCUIT [Ju n e 4, 2007] 

### J USTICE 

### S OUTER

### delivered the opinion of the C o urt.* The Fair C r edit Reporting Act (F CRA or Act) requires notice to any consum er subjected to “ad v er se action .

. . based in w h ole or inpart on any i n formation contained i n a consumer [credit] report.” 15 U. S. C. §1681m(a). Any

one who “willfully fai l s ” to provide notice is civilly liable to the consumer. §1681n(a). The questions in t h ese consol i

dated cases are wheth e r willful failure covers a violation committed in reckless disregard of the notice obligation, and, if so, whether petitioners Safeco and GEICO com m it

ted reckles s violations. We hold that rec k l e ss action is covered, th at GEICO did not violate the statute, and th at

——————

* J US TI CE S CALI A join s all bu tfootn o tes 11 a n d 15 of th is opin ion

.2 SAFECO IN S. CO. OF AM ERICA v. BUR R Opinion of t h eCourt 

### while Safeco might have, it did not act rec k lessly. I A Congress enacted FCRA in 197 0 to ensure fair and accurate c r e dit reporting, promot e efficiency in the bank

ing system, and protect consum er privacy. See 84 Stat. 1128, 15 U. S. C. §1681; TRW Inc

. v. Andrews , 534 U. S. 19, 23 (200 1). The Act requires, a m ong other things, tha t “any person [who] take s any adver s e action with respect t o any consumer that is based in whole or in part on a n y informationcontained in a co nsumer report” must notify the affected consumer. 1 

### 15 U. S. C. §1681m(a). The notice must point out the adverse action, explain how to reac h the agency that report ed on the consumer’s credit, and tell the consumer that he can get a free copy of the report and dispute its accurac ywi th the agency. Ibid

. As it applies to an insur ance company, “advers e action” is “a denial or cancellationof, an increase in any charge for, or a reduc

tion or other adverse or unfavorable change in the terms of coverage or amount of, any in surance, existin gor applied for.” §1681a(k)(1)(B)(i). FCRA provides a private right of action against busi

nesses thatuse consu m er reports but fail to comply. If a violation is negligent, the affected consumer is entitled to actual dam a ges. §1681 o (a) (2000 ed., Supp. I V). If willful, however, the consumer may have actual damages, or statutory damages ranging fr om $ 100 to $1,000, and even

——————

1 So faras it m atter s h e r e , th e Ac t defin e s “ c on su merr e por t” as “an y writ t e n, ora l , or ot hercommunica t i on of a n y info rma t i on b yac o ns umer report ing a g e ncyb e a r ing o nacons ume r ’s c r editwor t hines s , credit s t a n ding, [or] creditca pa cit y. . . whic his u s ed or expect e dt o b e us ed or collect ed in whole or in pa rtfor t h e purpos e of s e rving a s afa ct or in esta bli s hing t h e consumer ’s eligibility for .

. . credit or insurance to be used primarily for personal, family, or household purposes.” 15 U. S. C. §1681a(d)(1) ( footnote omitted). The sc op e of this definition is not at issu e.3 Cite as: 55 1 U

. S. ____ (2007) Opinion of t h eCourt 

### punitive damages. §16 81n(a) (2000 ed.). B Petitioner GEIC O 2 

### writes auto in surance through four subsidiaries: GEICO General, which sells “preferred” policies at low rates to low- risk customers; Government Employees, which also sells “preferred” policies, but onl y to governm e nt employees; GEICO Indemnity, which sells standard p o licies to moderate-risk customer s; and GEICO Casualty, which sells n o nstandard policies at higher rates to high-risk customers. Potential customers ca ll a toll-free number answered by an agent of the four affiliates, who takes information and, with per m ission, gets the appli

cant’s credi t score. 3 

### This information goes into GEICO’s computer system, which selects any appropri ate compan y and the particular rate at which a policy may be issued. For some time after FCRA we nt i n to effect, GEIC O sent adverse action notices to all applicants who were not offered “preferred” policies from GEICO Gene ral or Gov

ernment Employees. GEIC O cha n ged its pr actice, how

ever, after a method t o “neutralize” an applicant’s credi t score was devised: the applicant’s company and tier placement is comparedwith the c o mpany an d tier place

ment he would have been assigned with a “neutral” credi t score, that is, one cal c ulated without relian c e on credit history. 4

### Under this n e w scheme, it is only if using a

——————

2 The spec if ic p e titioner s are subs idiary compa n iesof th e GEICO Cor

poration; for th e sake of convenience, we c a ll the m“G EI CO ” coll ect ive ly.

3 Th e Ac t defines a “c r e dit sc or e” as “a n u m er ic al v a lu e ora c ateg o r i

zationder i v e dfr om a s t a t i s tic a ltool or modelin gsy st em u s ed by a pers on who ma kes or a rra nges aloa nt o predictt h e likelihood of cert a i n credit behaviors, including default. ” 15 U. S. C. §1681 g(f)(2)(A) (200 0 ed., S u pp. IV). Under it s cont ra ctwit hits creditinforma t i on providers , GEICO lea rned credits c ores a n d fa ct s in the creditreport s t h a ts i gnifi

ca nt ly influen c ed t h e s c ore s , b u tdid notha ve a cces s t o t h e credit report s t h emselves

.

4 A n u m berof Sta t es per m it th e u s e of su ch“n eu tr al” c r edit sc or es to4 SAFECO IN S. CO. OF AM ERICA v. BUR R Opinion of t h eCourt 

### neutral cre dit score would have put the applicant in a lower priced tier or c o mpany that GEICO sends an ad

verse action notice; the applicantis not otherwise told if h e would have gotten better terms wit ha better credit score. Respondent Ajene Edo applied forauto insur ance with GEIC O. Af ter obtaining Edo ’ s cred i t score, G E ICO offered him a standard policywith GEICO Indemnity (at rat e s higher than the mostfavorable), which he accepted. Be

cause Edo’ s company and tier placement would have been the same w i th a neutr a l score, G E ICO did not give Edo a n adverse act i on notice. Edo later filed this pr oposed class action against GEICO, alleging willful fail ure to give notice in vi olationof §1681m(a); he claimed no actual harm, but sought statutory and punitive damages under §1681n(a). The District Court gra n ted summ ary judgme nt for GEIC O, finding there was no adverse action when “th e premium charged to [Edo] .

. . would have been the sa me even if GEICO Indemn ity did not consider information in [his] consumer credit history.” Edo v. GEICO Ca sual ty Co. , CV 02–678–BR, 2004 U. S. Dist. LEXIS 28522, *12 (D. Ore., Feb. 23, 2004), App. to Pet. for Cert. in No. 06

– 100, p. 46a. Like G E IC O, petitioner Safeco 5

### relies on credit reports to set initi a l insurance premiums, 6

### as it did for respon

dents Charles Burr and Shannon Massey, who were of

fered higher rates than the best rates possible. Safec o

—————— ens ure t h a tc o ns umers wit ht h in or unid e nt ifiab l e credithis t ories a r e n o t tr eateddis a dv an tag eou sl y . See, e.g. , N. Y

. In s. LawAn n . §§2802(e) , (e)(1) (West 2 006) (generall yprohibitin g an insurer f r o m“consider[ing] anabsen c e of c r e dit in for m ation ,” bu t all o w i n git to do so if it “tr eat s t h e cons umer a s if t h e a p plica n tor ins ured ha d neut ra l creditinforma

tion, as defined by the insurer”).

5 Ag ain , th e ac t u al pe ti ti on er s ar e sub s id iary c o mp an ie s, of S afec o Cor

poration in th iscase; for conv enience, w ecall th em “Safeco ”co llec t ively.

6 Th e par t ies d o n o t dispu t e th at th e c r e di t sc or es an d c r edit r e por t s relied on b yGEICO a n d S a feco a r e “ c ons u mer repo rt s ” under 1 5 U. S. C. §1681 a(d)(1).5 Cite as: 55 1 U

. S. ____ (2007) Opinion of t h eCourt 

### sent them no adverse action notices, and they later joined a proposed class acti on against the company, allegin g willful violation of §1681m(a) and seeking s t atutory an d punitive damages under §1681n(a). The District Court ordered summary jud g ment for S a feco, on the understand

ing that offering a single, in itial ra te for insur ance cannot be “adverse action.” The Court of Appeals for the Ninth Circuit reversed both judgm e nts. In GEICO’s case, it held that whenever a consumer “ w ould have received a lower rate f o r his insur

ance had the informa t ion in his consumer report been more favorable, an adverse action has been taken agai nst him.” Reynolds v. Har t ford Finan c ial Se rvs. Group, Inc. , 435 F. 3d 1081, 1093 ( 2006). Since a better credit score would have placed Edo with G E IC O General, not GEIC O Indemnity, the appeals court held that G E IC O’s failure to give notice was an adv e rse action. The Ninth Circuit also held that an insurer “willfully” fails to comply with F CRA if it acts with “reckless disre

gard” of a consumer’s rights under the Act. Id. , at 1099. It explained that a com p any would not be acting recklessl y if it “diligently and in good faith attempted to fulfill it s statutory obligations” and came to a “tenable, albeit erro

neous, interpretation of the statu t e.” Ibid. Th e court went on to say th at “a deliberate failure to determine the extent of its oblig ations” would not ordinarily escape liabili ty under §168 1n, any mor e than “reli ance on creative lawyer

ing that provides indefensible an swers.” Ibid. Becaus e the court believed that the enquiryinto GEICO’s reckless disregard might tu rnon undisclosed circu mstances sur

rounding G E ICO’s rev i sion of its notification policy, th e Court of Ap peals remanded the company’s ca se for further proceedings. 7

——————

7 Prior to issui n g its fina l op inion in this case, the Court of Ap peal s ha d is s u ed, t h en wit h dra wn, t w o opinions in which ithel dt h a tGEICO6 SAFECO IN S. CO. OF AM ERICA v. BUR R Opinion of t h eCourt 

### In the acti on against Safeco, t h e Court of Appeals re

jecte d the D i stric tCou r t’s position, relyin g on its reasonin g in G E IC O ’ s case (w here ithadh e ld tha t th e notice re quirement applies to a single sta t e m ent of a ni n itial ch arge for a new p o licy). Sp anov. Saf e co Corp. , 14 0 Fed. Appx. 746 (2005). The Court of Appeal s also rejected Sa feco’s argu ment that its conduct was not willful, aga i n citin gth e GEI C O cas e , and rema nded fo r fu r t her procee dings. We consolidated the two matters and granted certiora r i to resolve a conflict in th e Circuits as to whether §1681n(a) reaches reckless di sregard of FCRA’s obliga

tions, 8

### and t o clarify the notice req u irement in§1681m(a). 548 U. S. ___ (2006). We now reverse in both c a ses. II GEICO and Safeco argue t hat liability under §1681n(a) for “willfull yfail[ing] to comply” with FCRA goes on ly to acts knownto violate the Act, not to reckless disregard o f statutory duty, but we think they are wrong. We hav e said before that “willfully” is a“word of many meanin g s whose construction is often dependent on th e context i n which it appears,” Bry a nv. Unit ed St at es , 5 24 U. S. 18 4, 191 (1998) (internal quotation marks omitte d); and whe r e willfulness is a statutory cond iti o n of civil liability, we have generally taken it to co ver not only kn owing viola

tions of astandard, but reckless on es as well, s e e McLaughlinv. Richland Shoe Co. , 486 U. S. 128, 132–133 (1988) (“wi llful,” as u s ed in a l i mitation provision for

—————— had “willfully” violated FCRA as a ma tter of law. R e yn ol ds v. Ha rtford Financial Se r v s. G r oup, Inc

. , 416 F. 3d 1097 (C A9 2 0 0 5 ); Reynolds v. Hartford Fina ncial Se rvs . G r oup, I nc. , 426 F. 3d 1020 (C A9 20 05). 8 Compare, e. g. , Cushmanv. T r an s Un ion Cor p ., 115 F. 3d 220, 22 7 (CA3 19 97) (a doptin gth e “rec kless disr eg ar d” stan d a r d), w i th Wa ntz v. Experian Info rmation Solut ions , 386 F. 3d 829, 834 (C A7 2 004) (c on struing “willf ully” to requ ir e thatauser “knowingly and intentional l y v i olate th e Ac t”); Phillips v. Gre ndahl , 312 F. 3d 357, 3 68 (CA 820 02) (same).7 Cite as: 55 1 U

. S. ____ (2007) Opinion of t h eCourt 

### actions und er the Fair Labor Stan dards Act, c o vers claims of reckless violation); Tr ans W o rld Airlin es, Inc. v. Thurston , 469 U. S. 1 11, 125–126 (1985) (same, as to a liquidated damages provision of the Age Discrimination in Employment Act of 1967); cf

. United Statesv. Illinois Central R. Co. , 303 U. S. 239, 242–243 (1938) (“willfully,” as used in a civil pe nalty pro v ision, inclu d es “ ‘co n du c t marked by careless disregard whe t her or not one has the right so to act’ ” (quoting United Sta t esv. Mu r d o c k , 290 U. S. 389, 3 95 (1933))). This construction reflects common law usage, which treat ed actions in “rec k less disregard” of the law as “willful” violations. See W. Keeton, D. Dobbs, R. Keeton, & D. Owen, Prosser and Keeton on Law o f Torts §34, p. 212 (5thed. 1984) (hereinafter Prosser an d Keeton) (“Although efforts have be en made to distinguish” the terms “willful,” “wanton,” and “reckless,” “such distinc

tions have consistently been ignor e d, and the three terms have been treated as meaning the same thin g, or at least as coming out at the sa me legal exit”). The standard civil usage thus counsels reading the phrase “willfully fails to comply” in§1681n(a) as reachi ng reckless FCRA viola

tions, 9

### and t h is is so both on the i n terpretive assumption

——————

9 It is different in the criminal law. When the term “willful” or “will

fully” ha s b e en us ed in acrimina l s t a t u t e , we have regu la rly rea dt h e modifier as l i m iting lia bili t y to knowing violations. See Ratzlaf v. United S t ate s , 510 U. S. 13 5, 137 (1 994); Bryanv. Uni t ed Stat es , 524 U. S. 184, 191 –19 2 (199 8); Cheekv. Uni t ed Stat es , 498 U. S. 192, 200– 201 (19 91). T h is r e adin gof th e ter m , h o w e v e r , is tai lor e d to th e c r i mi

na l la w, whe r e itis cha ra ct eris t i ca lly us ed t o req u irea crimina l int e n t beyond the purpose otherwise required for guilt, Ratzlaf , supra , at 136– 137; oranad dition al “ ‘badpurpose,’ ” Bryan , sup ra , at 191; orspec ifi c intent to violate a known legal du ty created by highly t e chnical stat

ut es , Cheek , su pr a , at 200– 201. Th u s w e h av e c o n s isten t lyh e ld th at a defendant cannot harbor such c r imin al intent unless he “acted with knowledge t h a this condu c t wa s unla w ful. ” Bryan , su pra , at 193. Civ i l us e of t h e t e r m , howeve r, t y pica lly pres ent s neit her t h e t e xt ua l nor t h e su bst a n t iv e r e ason s forpeg g i n gth e th r e sh old of li abi lityat kn ow ledg e of wrongdoing. Cf. Farmerv. Bre nnan , 511 U. S. 82 5, 836 –8 37 (1 99 4)8 SAFECO IN S. CO. OF AM ERICA v. BUR R Opinion of t h eCourt 

### that Congress knows how we construe statutes and ex

pects us to run true to form, see Commissioner v. Keyst o ne Consol. Industries, Inc. , 508 U. S. 152, 159 (1993), and under the g e neral rule that a com m on law term in a stat

ute comes with a common law meaning, absent anythin g pointing an other wa y, Beckv. Pru p is , 529 U. S. 494, 500 – 501 (2000). GEIC O an d Safeco a r gue that Congress d i d point to something different in FCRA, by a drafting history of §1681n(a) said to show that liability was supposed to attach only to knowing violations. The original version of the Senate bill that turned out as FCRA h a d two sta n dards of li ability to victims: grossly negligent violation (supporting actual damages) and willful vi olation (su p porting actual, statutory, and pun i tive damages). S. 823, 91st Cong., 1st Sess., §1 (1969). GEICO and Safeco argu e that since a “gross negligence” standard is effectively the same as a “reckless disregard” sta n dard, the original bill ’s “willfulness ” standard must have meant a level of culpa

bility higher than “reckless dis r egard,” or there would have been no requirement to show a different state of mind as a condition of the potentially much greater liabil

ity; thus, “willfully fai l s to comply” must have referred to a k n owing violation. Al though the gross negligence stan

dard was re duced later in the l e gisl ative process to simpl e negligence (as it now appears in §1681 o ), the provision for willful liabi lity remains unchange dand so must require knowing a c tion, just as it did originally in the draft o f §1681n. Perhaps. But Congre ss may have scaled th e standard for actual damages down to simple negligence because it thought g r oss negligence, bein g like reckless action, wa s covered by willfulness. Because t h is alternative reading is

—————— (contrasting the different uses of the ter m“reckl essne ss” in civil an d crimina l cont ext s ).9 Cite as: 55 1 U

. S. ____ (2007) Opinion of t h eCourt 

### possible, a n y inference from the drafting sequence is shaky, and certainly no match for t h e following clue in th e text as fin a lly adopted, which p o ints to the traditional understanding of willfulness in the civil sphere. The phrase in question appears in the preamble sen

tence of §1681n(a): “Any person who willfully fails to comply with any requirement i m posed under this sub

chapter wit hrespect t o any cons umer is liable to that consumer . . . .” Then come the details, in paragraph s (1)(A) and (1)(B), spelling out two distinct measures of damages chargeable against the willful vi olator. As a general matter, the co nsumer may get eitheractual da m ages or “da m ages of not less than $100 and n o t more tha n $1,000.” §1 681n(a)(1)(A). But wh ere the offender is liable “for obtaining a consumer report under falsepretenses or k n owingly without a permissible purpose,” the statute sets liability higher: “actualdamages .

. . or $1,000, whichever is greater.” §1681n(a)(1)(B). If the companies were right tha t“willfully” limits liabil

ity under § 1681n(a) to knowing violations, t h e modifier “knowingl y” in §1681n(a)(1)(B) wo uld be superfluous and incongruous; it would have made no sense f o r Congress to condition the higher damages under §1681 n(a) on know

ingly obtaining a report without a permissible purpose if the general threshold of any liability under the section were knowing misconduct. If, onthe other hand, “will

fully” cover s both kno w ing andr e ckless disregard of th e law, knowi n g violations are sensib ly understood as a mor e serious s u b c ategory of willful on es , and both t h e preambl e and the subsection have distinct jobs to do. See United Sta t esv. Menasch e , 348 U. S. 528, 538–539 (1 955) (“ ‘[G]i v e effect, if possible, to every clause and word of a statute’ ” (quoting Montclairv. Ramsdell , 107 U. S. 147, 1 5 2 (1883))). The companies make other textu a l and structural ar

guments for their vie w , but non e is persuasive. Safeco10 SAFECO IN S. CO. OF AM ERICA v. BUR R Opinion of t h eCourt 

### thinks our reading wo uld lead to the absurd result that one could, with reck less disregard, k n owingly obtain a consumer r e port witho u t a permissible purpose. Butthi s is not s o ; a ction fallin g within the knowing subcategory does not simultaneously fall within the reckless alterna

tive. Thenboth G E IC O andSafe co argue th at the refer

ence to acti ng “ k nowin gly andwil l fully” in F CRA’s c r imi

nal enforcement provi s ions, §168 1q and §1681r, indicates that “willfu lly” cannot include recklessness. But we are now on the criminal side of the law, where the paired modifiers a r e often fou n d, see, e.g. , 18 U. S. C. §1001 (200 0 ed. and Supp. IV) (false statements to federal investiga

tors); 20 U. S. C. §1097(a) (embezzlement of student loan funds); 18 U. S. C. §1542 (2000 ed. and Supp. IV) (false statements in a passport applicati o n). As we said before, in the criminal law “willfully” typically narrows the oth

erwise sufficient intent, makin gthe go ver n ment pro v e something extra, in contrast to its civil-law us age, giving a plaintiff a choice of mental states to show in making a case for liability, see n. 9, supra . The vocabulary of the crimi

nal side of FCRA is consequently beside the point in con

struing the civil side. III A Before gett ing to the claims thatthe compa n ies acted recklessly, we have the antecedent ques t ion whether either company violat ed the ad verse action notice r e quirement at all. In both cases, respondent-plaintiffs’ claims are premised on initial ra tes charged for new in

surance policies, which are not “adverse” actions unl e ss quoting or charging a first-time premium is “an increase in any cha r ge for .

. . any insura nce, existing or applied for.” 15 U. S. C. §1681a(k)(1)(B)(i). In Safeco’s case, the Distri ct Cour t held that the initial rate for a new insurance po licy cannot be an “increas e”11 Cite as: 55 1 U

. S. ____ (2007) Opinion of t h eCourt 

### because there is no prior dealing. The phrase “increase in any charge for .

. . in suranc e” is readily understood to mean a change in treatment for an insured, which a s sumes a previous charge for com p arison. S ee Webster’s New International Dictionary 1260 (2d ed. 195 7) (defining “increase” as “[a]dditi on or enlargement in size, extent, quantity, number, intensity, value, substan c e, etc.; au g mentation; growth; multiplicat ion”). Sinc e the Distr i ct Court unde r stood “increase” to s p eak of ch ange just as much as of comparative size orqu antity, it reasoned that the statute’s “increase” never touc hes the initial rate offer, where there is no change. The Govern ment takes the part of the Court of Appeals in construing “increase” to reac h a first-time rate. It says that regula r usage of the term is not as narrow as th e District Co urt thought : the point from which to measur e difference can just as easily be understood without ref e r ring to pri o r individu al dealing. The Gover n ment give s the example of a gas station owner who cha r ge s more than the posted price for gas to customers he doesn’ t lik e; it mak e s sens e to say that the owner increases t h e price and that the d r iver pays a nincreas ed price, even if he never pulled in there for gas before. See Brief for United State s as Amicus Curiae 26. 10 

### The Government implies, then, that readin g “inc rease” requires a choice, and the chosen reading should be the broad one in order to conform to what Congress had in mind. We think the Government’s reading has the better fit with the a m bitious objective set o u t in the Ac t’s stateme n t

——————

10 Sin c e th e posted pr ic e see m s to be addr essed to th e w o r l d ing e n era l , one coul d a r guet h a tt h e increa s ed ga s price is nott h e init ia l qu ote. Bu t th e same u s ag e poin t c a nbe made w i thth e ex ample of th e clot hing model who get s aca ll from arit z y s t ore a f t e r pos i ng for a dis c ountret a i ler. If s h e q u o t es ahigher fe e, itwould b e na t ura l t o s a y that the uptown store will have to pay the “increase” to have he r in its ad.12 SAFECO IN S. CO. OF AM ERICA v. BUR R Opinion of t h eCourt 

### of purpose, which uses expansive terms to describe the adverse effects of unfair and inaccurate c r edit reportin g and the responsibiliti e s of consu m er reporting agencies. See §1681( a) (inaccurate reports “directly impair the efficiency of the banking syst em”; unfair reporting meth

ods undermine public confidence “essential to the contin

ued functioning of the banking s y stem”; need to “insure” that reporti ng agencies “exerci se their grave responsibili

ties” fairly, impartially, and with r e spect for privacy). Th e descriptions of systemic pr oblem and systemic need as Congress saw them d o nothing t o suggest t hat remedies for consumers placed at a disadvantage by unsound credit ratings should be denied to first-time victims, and the legislative histories of FCRA’ s original enactment and of the 1996 amendment reveal no reason to conf ine attention to customers and businesses with prior dealings. Quite the contrar y . 11 

### Finally, there is n o thing about insurance contracts t o suggest t hat Congre ss might h a ve meant to differentiate applicants from exis ting customers when it set the not i ce requirement; the newly insured who gets charged mo re owing to an erroneous report is in the same boat with the renewal applicant. 12 

### We therefore hold that

——————

11 See S. Rep. No. 91–5 17, p. 7 (196 9) (“Th os e w h o . . . ch arg e a h i gh er ra t e for creditor ins ura nc e wholly or p a rt ly b e ca us e of acons umer reportmus t , upon writ t e n req u es t , s o a dvise t h e cons umer . . .” ); S

. Rep. No. 103– 20 9, p. 4 (1993) ( a dv er se ac tionn o tic e is r e qu ir ed “an ytim e t h e permiss ible us e of areportres u lt s in a nout c ome a dvers e t o the in ter e sts of t h e c o n s u m er” ) ; H. R. Rep. No. 10 3– 486 , p. 26 ( 199 4 ) (“[W]henever a consumer re port is obtain e d for a permissible purpose

. . . , anyactiontakenbased onth atr e por tth at is adv e r s e to th e in ter e sts of th e c o n s u m ertr igg e r s th e adv e r s e ac tionn o tice requirements”).

12 In fact, notice in the context of an initially offered rate may be of grea t e r s i gnifi c a nce t h a nno t i ce in t h e con t extof are ne wa l ra t e ; if, for instance, insurance is offere don the basis of a single , lo ng-term guar

a n t eed ra t e , acons umer who is not given not i ce du ring t h einit ia l a pplicat ion pr oces s ma y never have a nopport unit yt o lea rn of a n y adverse treatment.13 Cite as: 55 1 U

. S. ____ (2007) Opinion of t h eCourt 

### the “increase” required for “adve r se action,” 15 U. S. C

. §1681a(k)(1)(B)(i), speaks to a dis a dvantageo us rate even with no pri o r dealing; the te rm reaches initial rates for new applicants. B Although offering the initia l rate for new insurance ca n be an “adve r se action,” respondent-plaintiffs have another hurdle to clear, for §1681m(a) calls for notice only whe n the adverse action is “based in whole or in part on” a credit report. GE ICO argues that in order to have adverse ac

tion “based on” a c r editreport, con s ideration of the repor t must be a necessary condition for the increased rate. The Government and respondent-plaintiffs do n o t explicitly take a position on this point. To the exte nt there is any disagre e ment on the issue, we accept GEI C O’s reading. In common talk, the phra se “based on” indicates a but-for causa lrelationsh ip and thus a necessary logical condition. Under this most natural reading of § 1681m(a), then, an increased rate is not “based in whole or in part on” the credit report unless the report was a necessary conditi o n of the increase. As before, there are textual argu ments pointing another way. The statute speak s in terms of basing the action “in part” as w e ll as wholly on the credit repo rt, and thi s phrasing could mean t hat adverse action is “based on” a credit report whenever the re port was considered in the rate-settingprocess, even wi thout being a necessary condi

tion for the rate increase. But there are good reasons to think Con gress preferred G E IC O’s necess ary-conditio n reading. If the statu t e has any claim to luc i dity, not al l “adverse actions” require notice, only those “based

. . . on” informa

tion in a credit report. Since the statute does not explicitly call for notice when a business act s adversely merely after consulting a report, conditioning the req u irement on14 SAFECO IN S. CO. OF AM ERICA v. BUR R Opinion of t h eCourt 

### action “based .

. . on” a report suggests thatthe duty to report arises from some pra ctical consequenc e of reading the report, not merely some subsequent adverse occu r rence that would have happened anyway. If the credit report has no identifiable effe ct on the rate, the consumer has no immediately practicalre ason to wo rry about i t (unless he has the po wer to cha n ge everyother fac tth at stands between himself and the best possible deal); both the company and the consumer are just where they would have been if the company had never seen the report. 13 

### And if exa m ining reports that make no difference was supposed to trig g er ar e portingre quirement, it would be hard to find any practical point in imposing th e “based .

. . on” restrict ion. So it make s more sense to suspect tha t Congress meant to require noti ce and prompt a challenge by the consumer only when the consumer would gain something i f the challe nge succeeded. 14

——————

13 For ins t a nce, if acons umer’s driving reco rd is s o poor t h a tno in

s urer wo uld give him a n yt hi ng b u tt h e high es tpos s i b l e ra t e rega rdles s of his creditr e port , whet h e ror nota nin s urer ha ppene d t o look athis creditreport s h ould have n o b e a r ing on whet h er t h e c o ns umer must receive not i ce, s i nce he ha s n o tb e en t r ea t e d different ly a s ares u ltof it

.

14 The his t ory of t h e Actprovides furt her s u pportfor t h is rea d ing. Th e or ig in ally en ac ted v e r s ionof th e n o tic er e qu ir emen t stated: “Wh e n ever . . . the ch arge for

. . . i n suranceis increased either wholly or partly b e ca us e of informa t i on conta i ned in acons umer report
. . . , t h e us er of t h e cons umerreports h a ll s o a dvis e t h e cons umer . . . .” 1 5 U. S

. C. §168 1m(a) ( 1 9 76 ed.). Th e “bec a u s e of” la n g u a g e in th e or ig in al statu t e empha s ized tha tt h e cons u m er reportmus ta c t u a lly ha ve ca us ed t h e adv e r s e ac tio nforth e n o ti c e r e qu ir ement to apply

. Wh enCon gr e ss amen ded FC RA in1 9 9 6 , it sou gh tto defin e “adv e r s e ac tion” w i t h grea t e r pa rt icula r it y, a n d t hus s p litt h e not i ce provis ion int o t w o separ ate su bs ec tion s. See 110 Sta t . 300 9–4 26 to 3 0 0 9 –42 7, 300 9– 44 3 to 30 09 –44 4. Inth e r e v i sed v e r s ionof §1681m( a), th e or ig in al “bec a u s e of” ph r a sin gc h a n g ed to “ba sed on ,” bu t t h er e w a s n o in dic ationth at th is c h a n g e was mean t to b e a su bstan tiv e alter ationof th e statu te’ s scope.15 Cite as: 55 1 U

. S. ____ (2007) Opinion of t h eCourt 

### C To sum up, the differe nce required for an in crease can be understood without referenc e to prior dealing (allowin g a first-time applicant to sue), and considering the cred i t report mus tbe a necessary co ndi t ion for th e difference. The remaining step in determining a duty to notify i n cases like these is identifying the benchmark for determin

ing whether a first-time rate is a disadvantageous in

crease. And in dealing with th is issue, the pragmati c reading of “based .

. . on” as a con d ition neces s ary to make a practical difference carries a helpful suggestion. The Government and respondent-plaintiffs argue th a t the baselin e should be the rate that the applicant wou l d have receiv ed withth e best possible credit score, while GEICO con t ends it is what the applicant would have h a d if the company had not taken his credit score into accoun t (the “neutr al score” ra te GEIC O used in Ed o’s case). We think G E IC O has the better position, primarily because its “increase” baseline is more comfortable wit hthe under

standing of causation just discussed, which requires noti ce under §1681m(a) only when the effect of the credit report on the initial rate offered is necessary to pu t t h e consumer in a worse position than other relevant facts would have decreed anyway. If Congress was this concerned with practical consequences when it a d opted a “b ased .

. . on” causation standard, i tpresuma b ly though t in equall y practical te rms when it spoke of an “increase” that must be defined by a baseli n e to meas ure from. Congress was therefore more likely concernedwiththe practicalq u es tion whether the consumer’s rate actually suffered when the company took his credit report into account than th e theoretical question whether the consumer would ha ve gotten a better rate wit hperfect cr edit. 15

——————

15 While itmights e em odd, under t h e currents tat ut ory st ruct ure, t o i n t e rpret t h e defi nit i on of “ a dver s e a c t i on” (i n §16 81a(k)(1 )(B)(i)) i n16 SAFECO IN S. CO. OF AM ERICA v. BUR R Opinion of t h eCourt 

### The Government objects that this reading leaves a loophol e , si nce it keeps first-time applicants who actuall y deserve better-than-n e utral credit scores from gettin g notice, even when er rors in c r edit reports saddle th em with unfairrates. Thi s is true; th e neutral-score baseline will leave some consu m ers without a notice that might lead to discovering errors. But we do not k n ow how ofte n these cases will occur, whereas we see a more demonstra

ble and serious disadvantage inhering in the Govern

ment’s position. Since the b e st rates (t he Govern ment’s pref erred base

line) presu m ably go only to a minority of consumers, adopting th e Government’s vieww o uld require insurers t o send slews of adverse action notices; every young appl i

cant who h a d yet to establish a gilt-edged c r edit report, f o r example, would get anotice tha this charge had been “increased” based on his credit rep o rt. We think that the consequenc e of sending out notices on this scale would undercut t h e obvious policy behind the notice require

ment, for notices as common as these would take on the character o f formalities, and formalities tend to be ig

nored. It would get around tha tnew insurance usually

—————— conj unct ion w i t h§1 681 m(a) , which s i mply a p plies t h e not i ce requ ire

men t to a p a r t ic u l arsu bs et o f “a dv er se ac t i on s,” th er e ar e str o n gin d i c a t i ons t h atCongres s int e nded t h ese provis ion s t obe cons t rued in tan

dem. When F CRA wa s ini t i a lly en ac te d, the link betwee n the defin i tio n of “adv e r s e ac t i on” an d th e n o tic er e qu ir e m en t w a s c l ear , sin c e“a dv er s e ac tion” w a s d e fin e d w i th in§ 1 6 8 1 m ( a). Se e 15 U. S. C. §1681m( a) (1976 ed.). Though Congress eve n tually sp lit t h e provision i n to two p a rt s (with th e defi n iti on of “a dv er s e ac ti on”nowl o c at e d at§1681a (k)(1)(B)(i)), th e legi sl a t iv e h i s t or ysu g g e st s th atth is c h an g ew a s n o tme an t to al te r Congres s ’ s intentt odefine “ a dver s e a c tion” in lightof t h e not i ce re qu ir emen t. S ee S. Re p. No . 10 3– 20 9, a t4 (“Th e Com m it tee bi ll .

. . defin e s an‘adv er se ac ti on ’ a s an yac t i ont h at i s adv e r s e to th e in ter e s t s of t h e cons umer a n d is ba s e d in whole or in pa rton acons umer report” ) ; H. R

. R e p. No. 1 0 3–4 86 , at 2 6(“ [A ]ny act i on ba s e d on [acons um er] reportt h atis a dvers e t othe int e rest s of t h e cons umer t r iggers t h e adv e r s e ac ti onn o tic er e qu ir e m en t s ”).17 Cite as: 55 1 U

. S. ____ (2007) Opinion of t h eCourt 

### comes with an adverse action notice, owing t o some legal quirk, and i n stead of piquing an applicant’s interest about the accura c yof his cre dit record, t h e commonplace notices would mean just about nothing and go the way of jun k mail. Assuming that Congress m e ant a noti ce of adverse action to get some attention, we think the co st of closing the loophol e would be too high. While on the subject of hypernotification, we s h ould add a word onanother point of practical significance. Al

though the rate initially offered for new insurance is an “increase” calling for n o tice if it exceeds the neutral rate, did Congre ss intend the same baseline to apply if th e quoted rate remains t h e same over a course of dealing, being repeated at each renewal date? We cannotbeli eve so. Once a c o nsumer h a s learned that his credit report led the insurer to charge more, he has no need to be told over again with each renewal if his rate has not changed. For that matter, any other con

struction would probably stretch the word “increase” more than it co uld bear. Once the gas statio n owner h a d charged the customer the above-market price, it would be strange to speakof the same price as an increase every time the cu stomer pulled in. On c e buyer an d seller have begun a cou r se of dea l i n g, customary usage does demand a change for “increase” to make sen s e. 16

### Thus, a f ter initial dealing bet w een the c o nsumer a n d the insu rer, the bas e line f o r “in crease” is t h e previous rate or charge, not the “neutral” b a seline thatapplies at the start.

——————

16 Con s ider , too, a c o n s u m erw h o , at th e in iti a l ap plic at ionstag e, h a d a per fec t c r e dit sc or e an d th u s obt a in ed th e bes tin su r a n c e r ate, bu t, a t t h e rene wa l s t a g e, wa s cha rged a tahigh er ra t e (b uts t ill lower t h a n t h e ra t e he w o uld ha ve re c e ived ha d his creditreport notb e en t a k en int o a ccount) s o lely b e ca us e his credits c ore fell durin gt h e int e rim. Although the consumer clearly suffer ed an “increase” in his insurance r ate th a tw a s “ba sed on” h i s c r e dit sc or e, h e w o u l d n o t be en tit l ed to an adv e r s e ac tionn o tic e un dert h e baselin e u s ed forin itial applic ation s.18 SAFECO IN S. CO. OF AM ERICA v. BUR R Opinion of t h eCourt 

### IV A In GEICO’s case, the initial rate offered to Edo was the one he woul d have received if his credit score had not been taken into account, and GEICO owed him no adverse action notice under §16 81m(a). 17 

### B Safeco did not give Bu rr andMas s ey any notice because it thought §1681m(a) did not apply to initialapplications, a mistake that left the companyinviolation of the statute if Burr an dMassey received high er rates “ba s ed in whole or in part” on their credit reports ; if they did, Safeco would be liable to them on a showing of reckless conduct ( o r worse). T h e first issue we canforget, ho wever, for al

though the record does not reliably indicate what rat e s they wouldhave obtained if their credit rep o rts had not been consid ered, it is clear enough that if Safeco did vio

late the sta t ute, the company was not reckless infallin g down in its duty. While “the term reckl e ssness is not self-defining,” the common la w has generally understood it in the sphere of civil liabilit y as condu ct violating an objecti ve standard:

——————

17 We reject Edo ’ s alternative argu ment that GEICO’s offe r of a stan

da rd ins ura nc e policy wit hGEICO Indemnit y wa s a n“a dvers e a c t i on ” req u iringnot i ce b e ca us e ita m ount ed t o a“ d enia l” of ins ura nce t h rou gh alower cos t , “ p referred” policy wit hGEICO Genera l. S ee §1681a(k)(1)(B)(i) (defining “adverse acti on ” to in c l u d e a “den ial .

. . of

. . . insurance”). An applicant ca lling GEIC O for insurance talks wi th a sale s r e pr esen tativ e w h o ac t s fora ll th e G E ICO c o mpan i e s. Th e r e c o r d h a s n o in dic ationth at G E ICO tells ap plic an ts abou tits c o r p or ate s t ruct ure, or t h a ta pplica n ts req u es tins u r a nce from o n eof t h e s e ve ra l companies or even know of their se parate existence. The salesperso n takes in for ma tionfr om th e applic an t an d obtain s h i s c r e dit sc or e, th en eit h er denies a n y ins ura nceor a s signs him to one of the companies willing to provide it; the ot her comp anies receive no application and t a k e no s e pa r a t e a c t i on. This wa y of a ccept ing new b u s i nes s is clea r l y ou tside th e n atu r a l mean in g of “denial” of insurance.19 Cite as: 55 1 U

. S. ____ (2007) Opinion of t h eCourt 

### action entailing “an unjustifiably high risk of harm that i s either k n own or so o b vious that it shou ld be k n own.” 18 

### Farmer v. Brennan , 5 11 U. S. 825, 836 (199 4); see Pros ser and Keeton §34, at 213–214. The Restatement, for exam

ple, defines reckless disregard of a person’s physical safety this way: “The actor’s conduct i s in reckless disregard of the safety of a n other if h e does an act or intentionally fails to do an act whichit is his dut yto the oth e r to do, k n owing or having re ason to k n ow of facts which would lead a reasonabl e man to realize, not only th a t his conduct creates anunreasonable risk of physical harm to another, but also that s u ch risk is substan

tially greater than that which is necessary to make his conduct negligent.” Restatement (Second) of Torts §500, p. 587 (1963–1964). It is this high risk of harm, objectively assessed, that is the essenceof reck lessness at common law. See Prosser and Keeton §34, at 213 (recklessness requires “a known o r obvious risk that was so great as to make it highly pro b

able that harm would follow”). The r e bein g no indica ti on tha tCo ngress ha d somethin g diffe ren tinmind, we have no re ason to deviate from the commo n la w u n de rs ta ndin g i na p plyi n g the sta t u t e. Se e Prup is , 529 U. S., a t50 0–501

. Thu s , a com p an y subj e c t to FCRA does not act inreckless di sre g a r d of i tunless th e action is no t onl y a viol ation u n de r a reasonab l e readi n g of the s t a t u t e ’ s te rms, bu t shows tha tthe com p a n y ran a ris k of vio l a t in g the la w s ubstan t iall y grea ter th an the ris k associ ate dwi th a readi n g th atwas merel y ca re less. Here, there is no need to pinpoint the negli

gence/reckl e ssness line, for Safeco’s reading of the statu t e,

——————

18 Un like c i v il rec k lessn ess, c r i min a l r e c k lessn ess also r e qu ir es su b

jective knowle dge on th e pa rt of the offender. Brenna n , 511 U. S., at 836 –8 37; ALI, M o del Pen a l Code §2.02(2)(c ) (1985).20 SAFECO IN S. CO. OF AM ERICA v. BUR R Opinion of t h eCourt 

### albeit erroneous, was not objectively unreasonable. As we said, §1681 a(k)(1)(B)(i) is s ilent onthe point fr om which to measure “increase.” On the ra tionale that “increase ” presupposes prior dealing, Safe co took the definition as excluding initial rate offers for new insuranc e, and so sen t no adverse action notices to Burr and Massey. While w e disagree with Safeco’s analysis, we recognize that i t s reading has a foundati o n in the st atutory text, see supra , at 11, and a sufficiently convincing justifica t ion to have persuaded the Distric tCourtto adopt it and rule in Safeco’s favor. This is not a case in which the business subj ect to th e Act had the benefit of gu idance from the courts of appeals or the Fede ral Trade Commission (FTC) that might have warned it away from the view it took

. Beforethese cases , no court of appeals ha d spoken on the issue, and no a u thoritative guidance has yet come from the FTC 19

### (which in any case has only enforcement responsibil i ty, not sub

stantive rulemaking authority, for the provisions in qu es tion, see 1 5 U. S. C. §§1681s(a)( 1), (e)). Cf. Saucierv. Katz , 533 U. S. 194, 202 (2001) (assessing, for qualified immunity purposes, whether an a ction was reasonabl e in light of legal rules that were “cl early established” at t h e time). Giv e n this dearth of guid ance and t h e less-than

pellucid statutory text, Safe co’s reading wa s not objec

tively unreasonable, a n d so fal l s well short of raising the “unjustifiably high risk” of violatin g the statute necessary

——————

19 Respon den t -plain tiffs poin t to a letter , w r i ttenbyan FTC staf f member to anin su r a n c e c o mpan ylaw y er , th at su g g e sts th a t an“a d

verse action” occurs whe n “the applicantwill have to pay more for ins ura nce a tt h e incept ion o f t h e policy t h a nhe or s h e w o uld have b e en cha rged if t h econs umer rep o rtha d b e en more fa vorab l e.” Let t e r from Han n a hA. Stir es to Jame s M

. Ball (M a r . 1, 2000 ), h ttp://w w w .ftc.g ov/os/statu te s/fc r a/ball.h t m (as v i sited M a y17, 200 7, an d av aila ble inCler k of Cou r t ’s c a se file). Bu t th e letterdid n o t canvas the i s sue, and ite x plicitlyin dic ated th atit w a s mer e ly “ a n informal staff opinion . . . not binding on t h e Commiss io n.” Ibid.21 Cite as: 55 1 U

. S. ____ (2007) Opinion of t h eCourt 

### for reckless liability. 20 

### * * * The Court of Appeals correctlyheld that rec k less disre

gard of a requirement of FCRA would qualif y as a willf ul violation wi thin the meaning of §1 681n(a). B u t there was no need for that cour t to remand the cases for factu al development. GEIC O’s decision to issue no adverse action notice to Edo was n o t a violation of §16 81m(a), and Safeco’s misreading of the statut e was not r e ckless. The judgments of the Court of Appeals are therefore reversed in both cases, which are remanded for further proceedings consistent with this opinion. It is so orde red.

——————

20 Respondent-plaintiffs ar gue that evidence of su bj ec tiv e badfa ith mu st be take nin to ac c o u n t indeter m in i n gw h e th era c o mpan yac ted kn ow in g l yorr e c k lesslyforpu r p oses of §1 681n (a). To t h e ex ten tth at they argue that evidence of subjective ba d fait h can support a willful

n e ss fin d in gev en w h e n th e c o mpan y ’ s r e adin gof th e s tatu te is objec

t i vely rea s onab le, t h eir a r gumentis unsound. Where , a s here, t h e s t at ut ory t e xta n d releva nt courta n d a g e ncy guida nce a llow for more th anon e r e ason able in ter p r e tation , it w o u l d defy h i stor yan d c u r r e n t thinking to tr eat a defendant who merel yadopts one such interpret a t i on as a knowing or reckl e s s viola t o r. Congres s could nothave in

t e nded s uch a res u ltfor t h ose who followed a nint e rpret a t i on t h a tcould r e ason ablyh a v e fou n dsu ppor t inth e c o urts, w h atev e rth eirsu bjec tiv e int e ntma y have b een.

BothSafec o an d G E ICO ar g u e th at good-faithr e lian c e onleg a l a dvice s h ould render compa n ies immune t o cla i ms ra is ed under §1 6 8 1 n (a). While we do notforeclos e t h is pos s i b ility, we need n o t a ddres s t h e iss u e here i nlightof ou r pres e n tholdings

._________________

_________________ 1 Cite as: 55 1 U

. S. ____ (2007) Opinion of S TE VENS , J. 

# SUPREME CO URT O F THE UNI TED STATES
Nos. 06– 84 an d 06–1 00 

### SAF E C O INSU RAN C E COM PA NY OF AM ERICA, ET AL 

### ., PETITION ERS 06–84 v. CHAR L E S BUR R ET AL


### . GEIC O GE NERAL IN SURA NC E COMPANY , ET AL 

### ., PETITION ERS 06–100 v. AJEN E EDO ON WRITS OF CERTIORARI TO THE UNITED STAT ES COURT OF APPEAL S FOR THE NINT H CIRCUIT [Ju n e 4, 2007] 

### J USTICE 

### S T EVEN S 

### , wit hwhom J USTICE 

### G IN SBURG

### joins, concurring i npart and concurring i nthe judgm e nt. While I jointhe Court’s judgment and Parts I, II, I II–A, and IV–B of the Court’s opinion, I disagree with the rea

soning in P a rts III–B and III–C, as well as with Part I V

– A, which rel i es on that reasoning. An adverse action ta ken after rev i ewing a cr edit repor t “is based in whole or in part on” that report within t h e meaning of 15 U. S. C. §1681m(a). That is true even if th e company w o uld have made the same decision without looking at the report, b e cause what the company actuall y did is more relevant th an what i t might have done. I find nothing in the statute making the examination of a credit report a “n ecessary condition” of any resulting increase. Ante , at 13. The more natural rea d ing is that reviewing a report is only a sufficient condition. The Court’s contrary p o sition leads to a serious anom

-2 SAFECO IN S. CO. OF AM ERICA v. BUR R Opinion of S TE VENS , J. 

### aly. As a matter of federal law, companies are free to adopt wha t ever “neutr al” credit s c ores they want. That score need not (and probably will not) reflect the median consumer credit score. More likely, it will reflect a com

pany’s assessment of the creditwo rthiness of a run-of-the

mill applicant who la cks acredi t report. Because th ose who have y e t to develop a credit h i story are unlikely to be good credit risks, “neutral” credit s c ores will inmany cases be quite low. Yet under the Court’ s reasonin g, only thos e consumers with credit scores even lower than what may already be a very low “neutral” score will ever recei v e adverse acti on notices. 1 

### While the Court a c kn owledges t hat “the ne utral-score baseline will leave some consumers withouta notice th at might lead to discovering errors,” ante , at 16, it finds thi s unobjectionable becaus e Congress was likely uninterested in “the theoretical q u estion of whether the consumer would have gotten a better rate wi th perfect c r edit.” Ante , at 16. 2 

### The Court ’ s de cision, however, disserves not only those consumers with “ gilt-edged c r edit report [s],” ante , a t 16, but also the much larger ca tegory of con s umers wit h better-than -“neutral” s c ores. I find it difficult to believe

——————

1 Stranger still, companies t h at au tom atic a lly dis q ualifyconsumers who la ck cre ditreport s will never needt o s e nd a n y a dvers e a c t i on n o tic e s. Afte rall, th e Cou r t ’s ba selin e i s “w h a tth e a pplic an t w o u l d have ha d if t h e compa n y ha d nott a k en h i s credit s c ore int o a ccount ,” ante , at 15, bu t fr om su c h c o mpan ies, w h at th e applic an t “w ou ld h av e had” is no insurance at all. An offer of insurance at anyprice, howev e r inflated by a poor and perhaps inco rrect credit score, will therefore n e v e r c o n s titu te anadv e r s e ac tion

.

2 Th e Cou r tals o ju stif ies its dev i ationfr om th e s t a t u t e’s tex t byr e a s o ning t h a tfr eq uenta dverse a c t i on not i ces would b e ignored. S e e ante , at 16 –17. To b o rrowas e nt ence from t h e Court ’s opin ion: “ Perha ps . ” Ante , at 8. B u t r ath erth anspec u l ate a b o u t th e likelye ffec tof “h y p er n o tific ation ,” ante , a t1 7 , I would defer t o t h e S o licit or Genera l’s pos i

tion , in for med byth e Feder a l Tr ad e Co mmis s ion’s expert judgment, th at c o n s u m e r s byan d la r g e ben efit fr om adv e r s e ac tionn o tic e s , h o w e v e rc o m m on . See Br ief forUn ited States a s Amicus Curia e27–2 9.3 Cite as: 55 1 U

. S. ____ (2007) Opinion of S TE VENS , J. 

### that Congress could h a ve intended for a company’s unre

strained adoption of a “neutral” score to k eep many (if not most) consumers from ever heari n g tha tthe i r creditre ports are costing them money. In my view, the statute’ s text is amenable to a more sensib le interpretation._________________

_________________ 1 Cite as: 55 1 U

. S. ____ (2007) T HOMAS , J

. , co ncu rrin gin pa rt 

# SUPREME CO URT O F THE UNI TED STATES
Nos. 06– 84 an d 06–1 00 

### SAF E C O INSU RAN C E COM PA NY OF AM ERICA, ET AL 

### ., PETITION ERS 06–84 v. CHAR L E S BUR R ET AL


### . GEIC O GE NERAL IN SURA NC E COMPANY , ET AL 

### ., PETITION ERS 06–100 v. AJEN E EDO ON WRITS OF CERTIORARI TO THE UNITED STAT ES COURT OF APPEAL S FOR THE NINT H CIRCUIT [Ju n e 4, 2007] 

### J USTICE 

### T HOMAS 

### , with whom J USTICE 

### ALITO 

### joins, concurring i npart. I agree with the Cou rt’s disposition and most of its reasoning. Safeco didnot se nd notices to new customer s because it tookthe position t hat the initial in surance rate it offered a customer could not be an “increase in an y charge for

. . . insurance” under 15 U. S. C. §1681a(k)(1)(B)(i). The Court properly holds that rega rd

less of the merits of this interpretation, it is not an unrea

sonable on e, and Safeco therefore did not act willfully. Ante , at 18–21. I do not join Part III–A of the Court’s opinion, however, beca use it re solves the merits of Safeco’s interpretati on of §1681a(k)(1)(B)( i)—an issue not neces

sary to the Court’s conclusion and not briefed or argued by the parties.