FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

JASON RAY REYNOLDS; MATTHEW 

RAUSCH,

Plaintiffs-Appellants,

No. 03-35695

v.  D.C. No.

HARTFORD FINANCIAL SERVICES CV-01-01529-AJB

GROUP, INC.; HARTFORD FIRE

INSURANCE COMPANY,

Defendants-Appellees. 

AJENE EDO, 

Plaintiff-Appellant,

v.

GEICO CASUALTY COMPANY, No. 04-35279

Defendant, D.C. No.

and  CV-02-00678-AJB

GEICO GENERAL INSURANCE ORDER AND

COMPANY; GEICO INDEMNITY OPINION

COMPANY; GOVERNMENT EMPLOYEES

INSURANCE COMPANY, Subsidiaries

of Geico corporation,

Defendants-Appellees. 

Appeal from the United States District Court

for the District of Oregon

Anna J. Brown, District Judge, Presiding

Argued and Submitted

March 8, 2005—Portland, Oregon

1037
Filed January 25, 2006

Before: Stephen Reinhardt, Marsha S. Berzon, and

Jay S. Bybee, Circuit Judges.

Opinion by Judge Reinhardt

1038 REYNOLDS v. HARTFORD FINANCIAL SERVICES
COUNSEL

Steve D. Larson and Scott A. Shorr, Stoll Stoll Berne Lokting

& Shlachter PC, Portland, Oregon, for appellants Edo,

Rausch, and Reynolds. 

Robert D. Allen and Meloney Cargil Perry, Baker & McKenzie, Dallas, Texas; Christopher Van Gundy, Baker & McKenzie, San Francisco, California; Thomas Gordon, Gordon &

Polscer, LLC, Portland, Oregon, for appellees GEICO Casualty Company, GEICO General Insurance Company, GEICO

Indemnity Company, and Government Employees Insurance

Company. 

REYNOLDS v. HARTFORD FINANCIAL SERVICES 1041
Lisa E. Lear, Douglas G. Houser, Loren D. Podwill, and

Andrew Grade, Bullivant Houser Bailey PC, Portland, Oregon, for appellees Hartford Financial Services Group, Inc.,

and Hartford Fire Insurance Company. 

William E. Kovacic, General Counsel, John F. Daly, Deputy

General Counsel for Litigation, and Lawrence DeMilleWagman, on behalf of the Federal Trade Commission as

amicus curiae in support of appellants Edo, Rausch, and

Reynolds. 

Gilbert T. Schwartz and Heidi S. Wicker, Schwartz & Ballen

LLP, on behalf of The American Insurance Association, The

Property Casualty Insurers Association of America, The

National Association of Professional Insurance Agents, and

The National Association of Mutual Insurance Companies, as

amicus curiae in support of appellees, Hartford Financial Services Group, Inc., and Hartford Fire Insurance Company. 

ORDER

The opinion and dissent filed on October 3, 2005, amended

on October 24, 2005, slip op. 14451, and appearing at 426

F.3d 1020 (9th Cir. 2005), is withdrawn. It may not be cited

as precedent by or to this court or any district court of the

Ninth Circuit. The clerk shall file the attached opinion in its

place. 

OPINION

REINHARDT, Circuit Judge: 

Under the Fair Credit Reporting Act (“FCRA”), insurance

companies are required to send adverse action notices to consumers whenever they increase the rates for insurance on the

1042 REYNOLDS v. HARTFORD FINANCIAL SERVICES
basis of information contained in consumer credit reports. 15

U.S.C. §§ 1681a(k)(1)(B)(i), 1681m(a).1 The principal question before us is straightforward: Does FCRA’s adverse action

notice requirement apply to the rate first charged in an initial

policy of insurance? We hold that the answer is yes: The Act

requires that an insurance company send the consumer an

adverse action notice whenever a higher rate is charged

because of credit information it obtains, regardless of whether

the rate is contained in an initial policy or an extension or

renewal of a policy and regardless of whether the company

has previously charged the consumer a lower rate. 

We also resolve five ancillary questions. First, we hold that

FCRA’s adverse action notice requirement applies whenever

a consumer would have received a lower rate for insurance

had his credit information been more favorable, regardless of

whether his credit rating is above or below average. Specifically, the requirement covers those whose credit information

is disregarded and replaced for purposes of a rate computation

by an average or neutral credit figure, so long as the insurance

rates would have been lower had the credit information been

more favorable. Second, we hold that charging more for

insurance on the basis of a transmission stating that no credit

information or insufficient credit information is available constitutes an adverse action based on information in a consumer

report and therefore requires the giving of notice under

FCRA. Third, we hold that, to comply with FCRA’s notice

requirement, a company must, inter alia, communicate to the

consumer that an adverse action based on a consumer report

was taken, describe the action, specify the effect of the action

1Section 1681m(a) provides that any person who “takes any adverse

action with respect to any consumer that is based in whole or in part on

any information contained in a consumer report” must provide “notice of

the adverse action to the consumer.” Section 1681a(k)(1)(B)(i) defines an

“adverse action” as “a denial or cancellation of, an increase in any charge

for, or a reduction or other adverse or unfavorable change in the terms of

coverage or amount of, any insurance, existing or applied for, in connection with the underwriting of insurance.” 

REYNOLDS v. HARTFORD FINANCIAL SERVICES 1043
upon the consumer, and identify the party or parties taking the

action. Fourth, we hold that when a consumer applies for

insurance with a family of companies and is charged a higher

rate for insurance because of his credit report, two or more

companies within that family may be jointly and severally liable. The notice requirement applies to any company that

makes a decision that a higher rate shall be imposed, issues

a policy at a higher rate, or refuses to provide a policy at a

lower rate, if the company’s action is based in whole or in

part on the consumer’s credit information.2 Finally, we adopt

the Third Circuit’s definition of “willfully,” as that term is

employed in FCRA, and hold that a company is liable for a

willful violation of FCRA if it “knowingly and intentionally

committed an act in conscious disregard for the rights of others.” Cushman v. Trans Union Corp., 115 F.3d 220, 226 (3d

Cir. 1997) (quoting Philbin v. Trans Union Corp., 101 F.3d

957, 970 (3d Cir. 1996) (as amended)). Like the Third Circuit,

we hold that conscious disregard means “either knowing that

policy to be in contravention of the rights possessed by consumers pursuant to the FCRA or in reckless disregard of

whether the policy contravened those rights.” Id. at 227. 

I. THE ACT AND THE APPEALS

The Fair Credit Reporting Act seeks to ensure the

“[a]ccuracy and fairness of credit reporting” through a variety

of means. 15 U.S.C. § 1681. Central to this goal, FCRA limits

the persons who may obtain consumer credit reports and

requires users of such reports to notify consumers when, in

reliance on a consumer report, “adverse action” has been

taken. 15 U.S.C. §§ 1681a, 1681b, 1681m. Specifically,

§ 1681m(a) provides: “If a person takes any adverse action

with respect to any consumer that is based in whole or in part

on any information contained in a consumer report,” the person shall provide “notice of the adverse action to the consumer.” Adverse action notices advise consumers that an adverse

2We do not intend this list to be exhaustive. 

1044 REYNOLDS v. HARTFORD FINANCIAL SERVICES
action has been taken against them, and the nature of that

action, and alerts them that they may view a copy of the consumer report that triggered the adverse action free of charge

and correct any errors affecting their economic well-being.

Even if reports are free from error, adverse action notices give

consumers important information about how improved credit

information may benefit them and how they can avoid receiving unfavorable credit ratings in the future. 

To resolve the various issues that have arisen regarding

FCRA’s notice of adverse action requirement in a set of

related cases, we have consolidated two appeals for purposes

of this opinion: Reynolds v. Hartford Financial Services

Group, Inc., No. 03-35695 and Edo v. GEICO Casualty Co.,

No. 04-35279. Reynolds presents the principal issue: May a

rate first charged in an initial policy of insurance constitute an

increased rate for purposes of the FCRA adverse action notice

requirement? Hartford Fire asserts that a rate cannot qualify

as increased unless a lower rate has previously been charged

to the customer. Reynolds also presents the issues whether a

communication stating that no credit information or insufficient credit information is available constitutes a “consumer

report” under the statute and whether an adverse action notice

that does not tell the consumer that an adverse action has been

taken against him, describe that action and its effect upon the

consumer, and identify the parties taking the action is sufficient under FCRA. Edo presents the issue whether an adverse

action occurs whenever a consumer would have received a

lower rate if his credit information had been more favorable;

or whether an insurance company’s practice of providing an

adverse action notice only if the consumer’s credit information is below average (or “neutral”) and that factor results in

the imposition of a higher rate than if his credit rating had

been average, is consistent with FCRA. Both Edo and Reynolds also require us to decide which companies are liable

under FCRA for the failure to give notice of an increased rate

when several affiliated companies are involved in the process

of rate-setting and policy issuance. Finally, defendants in both

REYNOLDS v. HARTFORD FINANCIAL SERVICES 1045
cases seek summary judgment on the alternative ground that

their actions were not willful as a matter of law. To address

this last contention, we must define the meaning of the term

“willfully” as it applies in FCRA. 

A. Reynolds v. Hartford Financial Services Group, Inc.

Jason Reynolds is the sole remaining named-plaintiff in this

class action against Hartford Fire Insurance Company

(“Hartford Fire”).3 He seeks statutory and punitive damages,

as well as reasonable attorneys fees for the company’s violation of FCRA’s adverse action notice requirement. Reynolds’

claims relate to two insurance policies he obtained, one for

automobile and the other for homeowners insurance. On the

record before us, Hartford Fire set the rates to be charged for

both policies. Hartford Property and Casualty Insurance Company of Hartford (“PCIC Hartford”) issued Reynolds the

homeowners insurance policy and Hartford Insurance Company of the Midwest (“Hartford Midwest”) issued him the

automobile insurance policy. We refer to Hartford Fire, Hartford PCIC, and Hartford Midwest as the “Hartford Companies.” 

Reynolds originally sued Hartford Fire and later sought to

amend his complaint to add PCIC Hartford and Hartford Midwest.4

 Hartford Fire sought summary judgment, which the district court granted on two grounds. First, it held that “the

entity contracting with the policyholder is the only possible

statutory taker of adverse action because only the contracting

entity is capable of increasing the premium for or changing

the terms of the insurance contract with the insured.” Second,

and in the alternative, it held that an insurance company that

issues a policy to a new policy-holder “cannot [be held to]

3Rausch is no longer pursuing his appeal. 

4Reynolds also named Hartford Financial Services Group, Inc., which

serves as a holding company, but is not pursuing his claims against that

entity. 

1046 REYNOLDS v. HARTFORD FINANCIAL SERVICES
‘increase’ a charge for insurance unless the insurer makes an

initial demand for payment of the insured and subsequently

increases the amount of that demand based on information in

the insured’s credit report.” The second and alternative holding relies on a previous decision by the same court, Mark v.

Valley Insurance Co., 275 F. Supp. 2d 1307, 1317 (D. Or.

2003). On the basis of that earlier decision, the district court

also denied Reynolds leave to amend, reasoning that he could

not “state viable FCRA claims against the proposed defendants,” PCIC Hartford and Hartford Midwest. In other words,

leave was denied on the ground that the policies were initial

issues and no previous charge had been made to the customer

at a lower rate. 

The Hartford Companies’ Use of Credit Information

During the relevant time period, Hartford Fire and the

American Association of Retired Persons (“AARP”) had an

agreement under which Hartford Fire or one of its subsidiaries

would issue automobile and homeowners insurance to AARP

members at a premium rate if those individuals enjoyed favorable credit ratings. While the procedures used for issuing the

two kinds of insurance varied slightly, they were the same in

most relevant respects. In both cases, employees of Hartford

Fire would make all of the decisions concerning AARP members’ insurance policies for all of its subsidiaries, including

Hartford Midwest, which issued automobile insurance, and

PCIC Hartford, which issued homeowners insurance. In doing

so, Hartford Fire’s employees would obtain credit information

from Trans Union, a consumer information bureau, through a

contract to which Hartford Fire and Trans Union were signatories. This information would be conveyed to Hartford Fire

through the risk assessment and data supply firm,

ChoicePoint, in the form of an “insurance score.” High insurance scores correlated with more favorable credit reports.

With regard to automobile insurance, if an AARP member

had a high enough insurance score, he would qualify for a ten

percent discount. With regard to homeowners insurance, only

REYNOLDS v. HARTFORD FINANCIAL SERVICES 1047
if the member obtained a top insurance score could he be

assigned to the top tier of insurance with the best rate. 

If, when Hartford Fire sent a request for an insurance score,

no credit information matched the name and address of the

consumer or if the information that did match was insufficient

to generate an insurance score, this information would be

transmitted to the company, and the consumer would be

labeled a “no hit” or a “no score” and would not be assigned

an insurance score. Without an insurance score, the consumer

could not qualify for the ten percent discount with Hartford

Midwest, nor could he be placed in the top insurance tier with

PCIC Hartford. As a result, a “no hit” or “no score” consumer

would in numerous instances pay more for insurance than if

he had received a high insurance score.5

The Hartford Companies’ Adverse Action Policy

Hartford Fire is the only one of the Hartford Companies to

have developed or sent adverse action notices. The parties dispute whether Hartford Fire actually sent an adverse action

notice to Reynolds, but that is a question of fact for the factfinder. Whether the notice Hartford Fire contends it sent was

adequate under FCRA is a question of law that we discuss

below. 

Reynolds’ Insurance Policies

Reynolds applied for both automobile and homeowners

insurance by contacting the Hartford Companies. He had no

5

In connection with Reynolds’ request for automobile insurance, he was

labeled a “no hit” because his name and address did not match any person’s in the national database. In connection with his homeowners insurance request, he was labeled a “no score” because, while his name and

address did call up information in the database, the information was insufficient to generate an insurance score. As both a label of “no hit” and “no

score” have the same practical effect, for convenience’s sake we will hereafter refer in this opinion to a report in either category as a “no hit.” 

1048 REYNOLDS v. HARTFORD FINANCIAL SERVICES
existing policy with that group. An employee of Hartford Fire

collected personal information and attempted to obtain Reynold’s insurance score twice, once for each insurance application. The credit bureau reported both times that Reynolds was

a “no hit.” See n.5, supra. Although Hartford Midwest issued

him an automobile insurance policy and Hartford PCIC issued

him a homeowners insurance policy, as a result of his “no hit”

status Reynolds did not receive either of the AARP premium

rates. 

B. Edo v. GEICO Casualty Co.

The second of the consolidated cases relates to an automobile insurance policy obtained by Ajene Edo. Like Reynolds,

Edo seeks statutory and punitive damages, as well as reasonable attorney fees, on behalf of a class of consumers for violation of FCRA’s adverse action notice requirement. He, too, is

the sole remaining named-plaintiff. Edo appeals the district

court’s grant of summary judgment to defendants Government Employees Insurance Company (“Government Employees”), GEICO General Insurance Company (“GEICO

General”), and GEICO Indemnity Corporation (“GEICO

Indemnity”).6 These are affiliated companies, all of which are

subsidiaries of the GEICO Corporation and are referred to

collectively by the parties as the “GEICO Companies.” We

sometimes refer to that group of companies by that designation and sometimes simply as GEICO. 

Unlike Hartford Fire, the GEICO Companies concede that

adverse actions can occur with respect to the first rates

charged in an initial policy of insurance. They do not assert

that in order for an adverse action to occur there must be an

6Edo is not pursuing his appeal against GEICO Casualty Corporation

(“GEICO Casualty”), a company that writes insurance policies for high

risk consumers and charges the highest rates. GEICO Casualty did not

issue a policy of insurance to Edo, and Edo did not seek to obtain a policy

at the unfavorable rates the company charged. 

REYNOLDS v. HARTFORD FINANCIAL SERVICES 1049
increase to a rate that the consumer has previously been

charged. Nevertheless, the district court granted summary

judgment with respect to the various GEICO entities on a

number of different grounds. First, the court held that Edo did

not have standing to bring a FCRA claim against Government

Employees because he “was not eligible for insurance coverage from [that company] regardless of his consumer credit

score because Government Employees offers insurance coverage only to government employees or military personnel.”

Next, it granted summary judgment in favor of GEICO General because that company “did not contract with Plaintiff to

issue or to underwrite an insurance policy.” This ruling was

in accord with the district court’s previous holdings in other

related cases that only the company that issues the insurance

policy can be held to have taken an adverse action under

FCRA. See Ashby v. Farmers Group, Inc., 261 F. Supp. 2d

1213, 1222 (D. Or. 2003); Razilov v. Nationwide Mut. Ins.

Co., 242 F. Supp. 2d 977, 989-90 (D. Or. 2003). Finally, it

granted summary judgment to GEICO Indemnity because

“the premium charged to [Edo] by GEICO Indemnity would

have been the same even if GEICO Indemnity did not consider information in Plaintiff’s consumer credit history.” 

GEICO’s Use of Credit Information

The GEICO Companies are organized by risk. GEICO

General provides preferred policies with low rates for those

who are lesser insurance risks. Government Employees also

provides preferred policies, but only to government employees. GEICO Indemnity issues standard policies with mid-level

rates for moderate risk consumers. Finally, GEICO Casualty

issues non-standard policies with high rates for those who are

greater risks. The GEICO Companies began using consumer

credit reports in early 1999. 

In order to purchase insurance, consumers call a toll-free

number and talk to a GEICO sales counselor. The sales counselor is employed by Government Employees but works on

1050 REYNOLDS v. HARTFORD FINANCIAL SERVICES
behalf of all of the GEICO Companies. Indeed, all of the

work of the GEICO Companies is performed by Government

Employees workers, as the other companies do not have any

employees. Upon learning that a customer wishes to purchase

automobile insurance, the sales counselor elicits basic information and asks whether he may use the customer’s credit

information when arranging for his policy. If the customer

acquiesces, the sales counselor obtains the credit information

in the form of an insurance score calculated by the data analysis firm Fair Isaacs from information supplied by Trans

Union. Government Employees is the only GEICO company

that has a contract with Trans Union and Fair Isaacs to provide this information. Using a Government Employees computer system, the sales counselor converts the insurance score

to a credit weight and combines it with other weights assigned

to other insurance factors, such as age and number of accidents to arrive at a final total insurance weight. Based on that

final weight, the sales counselor assigns the customer to one

of the GEICO Companies and determines the appropriate

insurance tier. This determination serves to establish the rate

the consumer will be charged. After the information the customer has provided has been verified, he is issued an insurance policy at that rate. 

GEICO’s Adverse Action Policy

The GEICO Companies’ original FCRA policy, adopted in

1999, was to send adverse action notices to all consumers

whose credit reports were used in making insurance decisions.

Later that same year, GEICO changed its policy, at least in

part to reduce costs. Instead of sending adverse action notices

to everyone, GEICO developed a system for determining

which actions it deemed adverse by comparing the rate

charged to the rate that it would have charged had the credit

information been “neutral.” 

GEICO’s new system, however, did not comply with

FCRA’s requirements. The GEICO Companies’ policy during

REYNOLDS v. HARTFORD FINANCIAL SERVICES 1051
the period relevant to this case was to compare the consumer’s actual company and tier placement (which, as described

above, was based in part on his credit rating) with the company and tier to which he would have been assigned had a

“neutral” credit weight been substituted for his actual credit

weight when calculating the final total insurance weight. The

GEICO Companies’ “neutral” credit weight was defined, generally speaking, as the weight that reflected the average credit

rating of all consumers. The GEICO Companies would calculate two final total insurance weights, using only one variable

—the actual credit weight in one case, and the “neutral” credit

weight in the other. Only if the final total insurance weight

using the “neutral” credit weight would have resulted in the

consumer’s placement with a different company or in a different tier than that to which the consumer was actually

assigned, and only if such different placement would have

resulted in the consumer’s being charged a lower rate, would

GEICO Companies issue an adverse action notice. In other

words, the GEICO Companies’ policy was to refrain from

sending a statutory notice if use of the consumer’s actual

credit information caused the applicant to be placed with an

entity and in a tier that resulted in the charging of the same

or a lower rate than the rate that he would have been charged

had the calculation and the ensuing assignment been based on

a “neutral” or average credit rating. Under this policy, even if

the rate ultimately charged was higher than the rate to which

the consumer would have been entitled had he had a more

favorable credit rating, the statutory notice was not sent if use

of the “neutral” and the actual credit data would have led to

an assignment to the same entity and tier. Thus, it was not

GEICO’s policy to send adverse action notices to all consumers who would have been charged lower rates had they

enjoyed a more favorable credit rating. 

Edo’s Insurance Application

Following Edo’s call to GEICO’s toll-free number, the

sales counselor used the credit information he obtained to

1052 REYNOLDS v. HARTFORD FINANCIAL SERVICES
place its new customer with GEICO Indemnity. The GEICO

Companies then applied its policy for determining whether an

adverse action had occurred. GEICO calculated that, had the

neutral credit weight been used instead of Edo’s actual credit

weight, the resulting final total weight would still have

resulted in Edo’s being placed with GEICO Indemnity. That

Edo’s placement, and the rate charged for his insurance, did

not improve when the “neutral” weight was used is not surprising, as Edo’s actual credit weight was better than average.

Under its policy, however, the GEICO Companies did not

issue him an adverse action notice. 

It is uncontested that if the GEICO Companies had used the

highest credit weight that a consumer could receive rather

than the neutral credit rate to determine Edo’s alternate placement, GEICO would have placed Edo with GEICO General,

a preferred company, and offered him a lower insurance rate.

In short, if Edo’s credit information had been more favorable

(even though it was already above average), he would have

been charged less for his insurance. In 2002, the GEICO

Companies changed its policy and began to issue adverse

action notices whenever a report with more favorable credit

information would have resulted in a lower insurance rate.

Under the new policy, Edo would have received the statutory

notice.

II. ANALYSIS

A. Initial Policies of Insurance

[1] The principal question in this and a number of related

cases7 constitutes a matter of first impression: Does FCRA’s

adverse action notice requirement apply to the rates first

charged in an initial policy of insurance or is it limited to an

increase in a rate that the consumer has previously been

7The related cases are resolved by memoranda of disposition filed concurrently herewith. 

REYNOLDS v. HARTFORD FINANCIAL SERVICES 1053
charged? As with all statutory interpretation, we begin with

the text of the statute. See, e.g., Hartford Underwriters Ins.

Co. v. Union Planters Bank, N.A., 530 U.S. 1, 6 (2000). An

adverse action with respect to insurance is defined by 15

U.S.C. § 1681a(k)(1)(B)(i) as “a denial or cancellation of, an

increase in any charge for, or a reduction or other adverse or

unfavorable change in the terms of coverage or amount of,

any insurance, existing or applied for, in connection with the

underwriting of insurance.” 

Specifically, we must decide whether charging a higher

price for initial insurance than the insured would otherwise

have been charged because of information in a consumer

credit report constitutes an “increase in any charge” within the

meaning of FCRA. First, we examine the definitions of “increase” and “charge.” Hartford Fire contends that, limited to

their ordinary definitions, these words apply only when a consumer has previously been charged for insurance and that

charge has thereafter been increased by the insurer. The

phrase, “has previously been charged,” as used by Hartford,

refers not only to a rate that the consumer has previously paid

for insurance but also to a rate that the consumer has previously been quoted, even if that rate was increased before the

consumer made any payment. Reynolds disagrees, asserting

that, under the ordinary definition of the term, an increase in

a charge also occurs whenever an insurer charges a higher rate

than it would otherwise have charged because of any factor—

such as adverse credit information, age, or driving record8 —

regardless of whether the customer was previously charged

some other rate. According to Reynolds, he was charged an

increased rate because of his credit rating when he was com8An adverse action under FCRA can, of course, only occur if the

increase in charge was due to “information contained in a consumer

report.” 15 U.S.C. § 1681m(a). The consumer reports at issue in these

cases are credit reports. While increases in charges may occur because of

many factors, plaintiffs contest only the increases due to unfavorable

credit information. 

1054 REYNOLDS v. HARTFORD FINANCIAL SERVICES
pelled to pay a rate higher than the premium rate because he

failed to obtain a high insurance score. Thus, he argues, the

definitions of “increase” and “charge” encompass the insurance companies’ practice. Reynolds is correct. 

[2] “Increase” means to make something greater. See, e.g.,

OXFORD ENGLISH DICTIONARY (2d ed. 1989) (“The action, process, or fact of becoming or making greater; augmentation,

growth, enlargement, extension.”); WEBSTER’S NEW WORLD

DICTIONARY OF AMERICAN ENGLISH (3d college ed. 1988)

(defining “increase” as “growth, enlargement, etc[.]”).

“Charge” means the price demanded for goods or services.

See, e.g., OXFORD ENGLISH DICTIONARY (2d ed. 1989) (“The

price required or demanded for service rendered, or (less usually) for goods supplied.”); WEBSTER’S NEW WORLD DICTIONARY

OF AMERICAN ENGLISH (3d college ed. 1988) (“[T]he cost or

price of an article, service, etc.”). Nothing in the definition of

these words implies that the term “increase in any charge for”

should be limited to cases in which a company raises the rate

that an individual has previously been charged. 

[3] While no court has considered whether an increase

requires a previous charge within the meaning of FCRA, the

Sixth Circuit has employed the term “increase” in an analogous circumstance, stating, “An increase in the base price of

an automobile that is not charged to a cash customer, but is

charged to a credit customer, solely because he is a credit customer, triggers [the Truth in Lending Act’s] disclosure

requirements.” Cornist v. B.J.T. Auto Sales, Inc., 272 F.3d

322, 327 (6th Cir. 2001). Defined in this manner, an increased

charge is a charge that is higher than it would otherwise have

been but for the existence of some factor that causes the

insurer to charge a higher price. 

Second, the statutory definition of “adverse action,” as it is

made applicable to insurance, explicitly encompasses “any

insurance, existing or applied for.” 15 U.S.C. § 1681a(k)(1)

(B)(i) (emphasis added). Congress’ use of the latter phrase

REYNOLDS v. HARTFORD FINANCIAL SERVICES 1055
demonstrates its intent that “adverse actions” apply to all

insurance transactions—from an initial policy of insurance to

a renewal of a long-held policy. The text of the statute does

not permit the imposition of any temporal limitation. Hartford

has suggested no sensible alternative reading of “existing or

applied for.” Thus, reading the terms “increase” and “charge”

in the context of the provision as a whole, particularly the

“existing or applied for” phrase, supports affording them their

ordinary meaning. 

Third, our interpretation of the terms at issue best comports

with the stated purpose of FCRA: to ensure the “[a]ccuracy

and fairness of credit reporting.” 15 U.S.C. § 1681. FCRA’s

adverse action notice requirement is an important tool that

Congress created, using broad, encompassing language.

Through this requirement, Congress sought to promote the

rights of consumers by giving them essential information

about how their credit report is used, information that they

could obtain in no other way. The information Congress mandated serves two important ends. First and foremost, once

consumers possess this information they can check and correct any errors in their credit reports. This increases the

chances that a consumer’s financial stability will not be hampered by faulty credit information. It also improves the overall

accuracy of credit reports, which facilitates the operation of

our markets. Second, even when credit reports are accurate,

informing consumers when their credit rating is hurting them

in the marketplace gives them important information about

the benefits of improving their credit rating in the future and

may even assist them in learning how to do so. 

Hartford Fire’s contention that FCRA does not apply to the

rate charged in initial insurance policies would seriously

undermine Congress’s clear purpose. The use of credit reports

to help determine the rates to be charged for initial insurance

policies is common. Moreover it is these policies that the economically unsophisticated are most likely to purchase. Congress did not create such strong protections for consumers

1056 REYNOLDS v. HARTFORD FINANCIAL SERVICES
only to render them inapplicable in so critical a circumstance.

Furthermore, as FCRA is a consumer protection statute, we

must construe it so as to further its objectives. Guimond v.

Trans Union Credit Info. Co., 45 F.3d 1329, 1333 (9th Cir.

1995). While our interpretation is the plain one, this canon

supports our result. 

[4] We hold that whenever because of his credit information a company charges a consumer a higher initial rate than

it would otherwise have charged, it has increased the charge

within the meaning of FCRA. Therefore, the fact that Reynolds’ policy was an initial one, and his rate was the initial rate

charged, is of no consequence. Reynolds’ rate was increased

above that which it would have otherwise been because of his

credit report. As the statute’s text is clear, we need not resort

to either the agency’s interpretations9 or the statute’s legislative history. The district court erred in granting summary

judgment to Hartford Fire on the ground that FCRA does not

apply to the rate first charged in an initial policy.10

B. What Constitutes An Adverse Action

The GEICO Companies contend that their method of determining which consumers were entitled to receive adverse

action notices comported with FCRA, while Edo asserts that

under GEICO’s procedure numerous consumers who were

9We note that our holding is consistent with the Federal Trade Commission’s interpretation of the statute. Because we find FCRA unambiguous,

however, we reach our decision independently of, and do not defer to, the

agency’s interpretation. See Chevron U.S.A., Inc. v. Natural Res. Def.

Council, 467 U.S. 837, 842 (1984). 

10Although our discussion has principally related to initial insurance

policies, our interpretation of “increase in any charge” is obviously not

limited to a consumer’s first policy. As we have explained, an increased

charge is a charge that is higher than it would otherwise have been but for

the existence of some factor that causes the insurer to charge a higher

price. This definition applies equally to initial issues, amendments, and

renewals of insurance policies. 

REYNOLDS v. HARTFORD FINANCIAL SERVICES 1057
charged increased rates because of their credit rating failed to

receive the statutorily required notice. At the time Edo sought

an initial insurance policy, it was GEICO’s practice to send

an adverse action notice to a consumer only if the use of his

actual credit information resulted in his placement with an

entity and tier that provided a higher insurance rate than the

entity and tier to which he would have been assigned if “neutral” or average credit information had been used instead. In

short, it was GEICO’s policy to send adverse action notices

only to some of the consumers who would have received

more favorable rates had they enjoyed a better credit rating.

Specifically, notices were sent only to those with belowaverage credit who would have been charged a lower rate for

insurance had they received an average credit rating. GEICO

contends that only in such circumstance has an adverse action

occurred. GEICO is incorrect. 

[5] FCRA does not limit its adverse action notice requirement to actions that result in the customer paying a higher rate

than he would otherwise be charged because his credit rating

is worse than the average consumer’s. Instead, it requires such

notices whenever a consumer pays a higher rate because his

credit rating is less than the top potential score. In other

words, if the consumer would have received a lower rate for

his insurance had the information in his consumer report been

more favorable, an adverse action has been taken against him.11

Such is the case with Edo. Because Edo would have been

placed with GEICO General instead of GEICO Indemnity and

thus would have been charged a lower rate if his credit rating

had been higher, an adverse action occurred and an adverse

action notice was required under FCRA.12 Under the GEICO

11We note that the statute does not require an insurance company to

issue an adverse action notice simply because a consumer does not get the

best possible rate. If a better credit report would not have reduced the consumer’s insurance rate, his credit report is not the cause of the higher price

and therefore no adverse action based on a credit report has occurred. 

12Making a slightly different argument, at least rhetorically, the GEICO

Companies also argue that the action they took against Edo was not

1058 REYNOLDS v. HARTFORD FINANCIAL SERVICES
formula, the fact that the credit rating Edo actually received

was higher than the average rating did not mean that Edo

would not be charged a higher rate than he would have been

charged had he had an even better credit report, but it ensured

that he would not receive an adverse action notice when he

was charged that increased rate. The district court erred in

granting GEICO Indemnity summary judgment on the ground

that Edo’s rate was not increased on the basis of his credit

report. 

C. “No Hit” Adverse Actions

Hartford Fire makes a separate argument as to why in

Reynolds’ case no adverse action was taken. Specifically, the

company argues that no adverse action was taken against

Reynolds “based in whole or in part on any information contained in a consumer report” within the meaning of 15 U.S.C.

§ 1681m(a). When Hartford Fire requested credit information

about Reynolds, Trans Union did not possess the necessary

information to generate an insurance score and transmitted

this finding to the insurer. Reynolds was therefore considered

a “no hit.” See n.5, supra. Because he was so designated,

Reynolds was rendered ineligible for the premium rates available to AARP members with qualifying credit ratings, and, as

a result, was charged a higher rate in his initial policies. Hartford Fire argues, however, that these were not adverse actions

because, it contends, an “adverse action” occurs only if it is

based on “information contained in a consumer report” and no

adverse because he was placed in the same company that he would have

been placed in had his credit information not been used. While this is a

true statement, it is only so because if the consumer refuses to allow his

credit information to be used, the sales counselor assigns the consumer the

“neutral” credit weight. Therefore, the GEICO Companies’ argument that

the action was not adverse because it was the same as if no credit information had been used is functionally identical to its argument that the action

was not adverse because it was not detrimental when compared to the

result using a “neutral” credit rating. Thus, this argument fails as well. 

REYNOLDS v. HARTFORD FINANCIAL SERVICES 1059
such report was received with respect to Reynolds. We reject

Hartford Fire’s argument. 

[6] FCRA’s definition of “consumer report” is broad. It

unquestionably encompasses a credit reporting agency’s communication to an insurance company that a consumer does not

have enough information on file for an insurance score to be

calculated. Specifically, 15 U.S.C. § 1681a(d)(1) explains that

“[t]he term ‘consumer report’ means any written, oral, or

other communication of any information by a consumer

reporting agency bearing on a consumer’s credit worthiness,

credit standing, [or] credit capacity . . . .” (emphasis added).

Reporting that an agency cannot obtain any information

regarding a consumer or that a consumer has insufficient

credit information on file conveys a message regarding the

consumer’s creditworthiness, standing, and capacity that

makes his obtaining of credit far more difficult. Such a report

suggests that the consumer cannot show that he pays debts in

a timely manner. That information may be false: The credit

agency may have used the wrong name or searched the wrong

records, missing data that would have shown that the applicant is indeed creditworthy. Providing notice therefore serves

the statutory purpose of allowing the consumer to correct

errors in credit reports. Accordingly, we hold that a communication that a consumer has no information available or an

insufficient credit history to permit the calculation of a credit

rating qualifies as “a consumer report” within the meaning of

FCRA. Because it is uncontested that Reynolds would have

been charged lower insurance rates had he received qualifying

credit ratings and because the application of the “no hit” rule

precluded him from receiving such ratings, we hold that an

adverse action was taken against him on the basis of information contained in a credit report. Accordingly, the district

court’s order of summary judgment may not be affirmed on

the ground that its actions with respect to Reynolds were not

based on such information. 

1060 REYNOLDS v. HARTFORD FINANCIAL SERVICES
D. Adequacy Of The Notice 

[7] Hartford Fire also urges us to affirm the district court’s

grant of summary judgment on the alternative ground that,

although (in its view) it was not required under FCRA to send

adverse action notices, the notices that the Hartford Companies did send were sufficient to meet its FCRA responsibilities. We reject this argument because the notices were

inadequate as a matter of law. Under 15 U.S.C.

§ 1681m(a)(1), a company that takes adverse action on the

basis of a consumer report must “provide oral, written, or

electronic notice of the adverse action to the consumer” as

well as meet a number of other specific requirements.13 While

the term “notice of an adverse action” is not defined in the

statute, we hold that, at a minimum, such a notice must communicate to the consumer that an adverse action based on a

consumer report was taken, describe the action, specify the

effect of the action upon the consumer, and identify the party

or parties taking the action.14 See Fischl v. General Motors

Acceptance Corp., 708 F.2d 143, 150 (5th Cir. 1983) (requiring disclosure of “reliance on data contained in [a consumer’s] credit report” when providing notice of an adverse

action). 

The notices Reynolds received did not comply with any of

the above requirements. They did not tell him that any

adverse action had been taken against him. They simply stated

13The notice must also contain information regarding the consumer

reporting agency. It it must provide the name, address, and telephone number of the agency that provided the report, a statement that the agency did

not make the adverse decision and is not able to explain it to the consumer, a statement setting forth the consumer’s right to obtain a free disclosure of the consumer’s file from the agency, and a statement setting

forth the consumer’s right to dispute directly with the agency the accuracy

or completeness of any information in the report. See 15 U.S.C.

§ 1681m(a)(2)-(3); 16 C.F.R. § 698, App. H. 

14We do not decide whether a fuller description of what specific information was adverse is required as this question is not before us. 

REYNOLDS v. HARTFORD FINANCIAL SERVICES 1061
that “[t]he Hartford’s eligibility and pricing decisions are

based in part on consumer report(s) from a consumer reporting agency” and allowed him to make a written request in

order to find out more. Reynolds was entitled to be informed

that his rate for insurance was increased because of information in his credit report. He was also entitled to be told that

Hartford Fire made the pricing decision and that Hartford

PCIC and Hartford Midwest issued him policies at those

higher rates. FCRA recognizes the difference between telling

a consumer that his credit information could affect his insurance rate and that it did adversely affect his rate, and requires

notice of the latter. We therefore reject Hartford Fire’s alternative argument for upholding the district court’s order. 

E. Who Is Liable 

The defendants all contend that only one company can be

liable when an insurance policy contains an increase in rates

—the issuing company. The plain text of the statute, as well

as its purposes, are to the contrary. Here, we hold that all of

the defendants are potentially liable under the statute. 

[8] FCRA requires that “any person” who takes an adverse

action is liable. 15 U.S.C. § 1681m(a). The definition of

“any” includes the plural. See, e.g., WEBSTER’S NEW WORLD

DICTIONARY OF AMERICAN ENGLISH (3d college ed. 1988) (“one,

a, an, or some; one or more without specification or identification”). With regard to insurance transactions, liability

attaches whenever an adverse action is taken “in connection

with the underwriting of insurance.” 15 U.S.C. § 1681a(k)(1)

(B)(i). This broad “in connection with” language confirms

that a variety of entities may be liable. No provision in the

statute nor comment in the legislative history suggests that

Congress intended that only a single company be responsible

under FCRA when a consumer is charged an increased rate

for insurance. Therefore, the defendants find themselves in

the difficult position of persuading us that Congress intended

1062 REYNOLDS v. HARTFORD FINANCIAL SERVICES
something different from what it wrote. We analyze their

three arguments separately. 

First, GEICO argues that the words “applied for” in the

definition of adverse action, § 1681a(k)(1)(B)(i), demonstrate

that only the issuing company is liable under the statute. On

that basis, GEICO asks us to hold that Edo “applied for”

insurance only with GEICO Indemnity because that was the

company that issued him a policy. The argument is frivolous,

both factually and legally. As a matter of fact, Edo did not

apply to one company but instead requested insurance from

the GEICO family of companies. He did not specifically ask

to be placed with GEICO Indemnity, and the GEICO Companies did not interpret his telephone call as requesting a policy

with that company in particular, as evidenced by the evaluation by Government Employees of his eligibility for a policy

from several of the GEICO affiliates. That he was placed with

GEICO Indemnity and not another GEICO entity was the

result of a decision made by Government Employees personnel, not the result of a limited application by Edo. Thus,

GEICO’s argument has no basis in fact. Furthermore, as a

matter of law, we refuse to turn the words “applied for” into

a legal term of art that refers only to the issuing company. The

clearest indication that Congress did not intend the words “applied for” to be used in such an unusual manner is that this

interpretation would eliminate all potential FCRA liability for

denials of insurance. No one disputes that FCRA defines the

term adverse action to include denials. 15 U.S.C. § 1681a(k)

(1)(B)(i). However, under GEICO’s interpretation, because a

consumer has not “applied for” insurance unless a policy has

been issued and because a company that denies insurance has

not, by definition, issued a policy, adverse action notices

would never be required for denials of insurance. This is manifestly contrary to the statute, as it would eliminate from its

coverage an important set of actions that Congress clearly

intended to subject to FCRA’s requirements. 

Second, all the defendants argue that “takes any adverse

action” limits FCRA’s adverse action notice requirement to

REYNOLDS v. HARTFORD FINANCIAL SERVICES 1063
companies that actually issue an insurance policy. We find no

such limitation in the statute by virtue of Congress’s use of

the word “takes” or otherwise. 15 U.S.C. § 1681m(a). To the

contrary, adverse action is defined far more broadly than just

“issuance.” 15 U.S.C. § 1681a(k). The statutory definition

specifically includes denials and cancellations as well as

increases in rates, and other unfavorable changes, whenever

and by whomever made. The word “takes” neither adds to nor

detracts from that definition. It describes the act of engaging

in the conduct that gives rise to the notice requirement. As

discussed below, all of the companies at issue here took “adverse actions,” as that term is defined in the statute. 

Third and finally, all the defendants argue that we should

hold liable only the issuing company because holding several

companies liable for FCRA violations arising out of the issuance or denial of a single application will result in multiple,

confusing adverse action notices, which would thwart rather

than further FCRA’s purpose. Such is not the case. Joint and

several liability simply imposes the obligation on all of the

affiliated companies responsible for taking an adverse action

to ensure that the affected consumer receives a statutory

notice describing the adverse affect of his credit report within

that family of companies. Multiple notices are not required;

a single notice from the companies involved identifying those

companies and their respective roles will suffice. 

[9] Holding all the companies that take adverse action

against a consumer jointly responsible for issuing a notice furthers FCRA’s objectives. For example, joint responsibility

substantially increases the prospect that an adverse action

notice will be sent and that a customer who seeks to obtain

insurance from a group of affiliated companies will be

informed as to the manner in which his credit information

adversely affected him. By imposing joint and several liability, Congress also improved the quality of information consumers receive, because each of the companies that takes an

adverse action against the consumer must say so in the notice.

1064 REYNOLDS v. HARTFORD FINANCIAL SERVICES
We doubt that many consumers understand how a group of

affiliated insurance companies operates or how consumers are

assigned to specific entities within their overall structure. By

having the organizations explain the actions each affiliated

company took, Congress made it more likely that consumers

would comprehend what transpired with respect to the

increased cost of their policy. 

[10] On the basis of the record before us all three GEICO

Companies and Hartford Fire may be held liable under FCRA,

as may the two other Hartford entities as to which leave to

amend was denied.15 Two of the GEICO Companies, working

together, are responsible for increasing Edo’s charge for

insurance: Government Employees, which made the decision

as to which of the GEICO family of companies would issue

the insurance to Edo and, in so doing, determined that he

would be charged at an increased rate, and GEICO Indemnity,

which then issued the insurance policy at that increased rate.

GEICO General is responsible because it denied Edo insurance for the reason that his credit rating was not sufficiently

high. Hartford Fire, like Government Employees, made the

critical rate-to-be-charged decision. It determined that, on the

basis of Reynolds’ credit report, he was not eligible for the

lower rates afforded by its affiliates to the qualifying AARP

members and that he would be charged for his insurance at a

higher rate. Hartford Fire may therefore be held liable for

increasing Reynolds’ charges for insurance on the basis of his

credit rating. Hartford PCIC and Hartford Midwest issued the

policies to Reynolds at the increased rates determined by

Hartford Fire, and may, accordingly, be held liable as well. 

15While the parties do not agree on every issue of fact, we hold that on

the record before us there is no issue of material fact as to whether (1)

Government Employees and Hartford Fire made the decisions that

increased Edo’s and Reynolds’ rates, respectively, (2) GEICO General

denied Edo a policy, and (3) GEICO Indemnity issued Edo a policy at an

increased rate. All of these actions were taken by the companies involved

and all constituted “adverse actions” within the meaning of FCRA. 

REYNOLDS v. HARTFORD FINANCIAL SERVICES 1065
[11] In sum, Government Employees, GEICO General, and

GEICO Indemnity may be held jointly and severally liable for

failing to issue an adverse action notice to Edo. Likewise,

Hartford Fire may be held liable for failing to issue a notice

to Reynolds, and Reynolds may also properly state claims

against Hartford PCIC and Hartford Midwest. Thus, Reynolds

should be permitted to amend his claims on remand. 

F. Meaning Of Willfully

Each of the defendants asks that we affirm the district

court’s grant of summary judgment on the alternative ground

that, as a matter of law, its conduct was not willful. We must

first define “willfully” as it appears in FCRA.16 Interestingly,

there is no legislative history to explain what Congress

intended by the use of that term. 

[12] We begin by following all five of the other circuits

that have addressed the issue of the mens rea that is required

with regard to the act that allegedly violates FCRA and hold

that the act must have been performed “knowingly and intentionally.” See Phillips v. Grendahl, 312 F.3d 357, 370 (8th

Cir. 2002); Dalton v. Capital Associated Indus., Inc., 257 F.3d

409, 418 (4th Cir. 2001); Cousin v. Trans Union Corp., 246

F.3d 359, 372 (5th Cir. 2001); Duncan v. Handmaker, 149

F.3d 424, 429 (6th Cir. 1998); Cushman v. Trans Union

Corp., 115 F.3d 220, 226 (3d Cir. 1997). An act that is merely

negligent is not willful. See McLaughlin v. Richland Shoe

Co., 486 U.S. 128, 133 (1988) (“The word ‘willful’ is widely

used in the law, and, although it has not by any means been

given a perfectly consistent interpretation, it is generally

understood to refer to conduct that is not merely negligent.”).

Additionally, we adopt the position of four of the five other

16“Any person who willfully fails to comply with any requirement

imposed under this title with respect to any consumer is liable to that consumer” for actual or statutory damages, punitive damages, and reasonable

attorney’s fees. 15 U.S.C. § 1681n (emphasis added). 

1066 REYNOLDS v. HARTFORD FINANCIAL SERVICES
circuits and hold that, although the act must be intentional, it

need not be the product of “malice or evil motive.” See, e.g.,

Dalton, 257 F.3d at 418 (holding that a plaintiff need not

show malice or evil motive); Cousin, 246 F.3d at 372 (same);

Bakker v. McKinnon, 152 F.3d 1007, 1013 (8th Cir. 1998);

Cushman, 115 F.3d at 226 (same). But see Duncan, 149 F.3d

at 429 (requiring “ ‘a motivation to injure’ ”). In this respect,

for purposes of willfulness we distinguish civil from criminal

liability. See Bryan v. United States, 524 U.S. 184, 191 (1998)

(“Most obviously [willfulness] differentiates between deliberate and unwitting conduct, but in the criminal law it also typically refers to a culpable state of mind.” (emphasis added)).

[13] Next, we address the more difficult question: What is

the nature of the mens rea that is required with respect to the

law? Here, we follow the Third Circuit. Specifically, we hold

that as used in FCRA “willfully” entails a “conscious disregard” of the law, which means “either knowing that policy [or

action] to be in contravention of the rights possessed by consumers pursuant to the FCRA or in reckless disregard of

whether the policy [or action] contravened those rights.”

Cushman, 115 F.3d at 227. We adopt this holding for two

principal reasons. 

First, we believe that the Third Circuit’s definition best

comports with Supreme Court precedent. The Court has consistently stated that willfulness for civil liability requires

either knowledge or reckless disregard with respect to

whether an action is unlawful. See Trans World Airlines, Inc.

v. Thurston, 469 U.S. 111, 128 (1985); see also Hazen Paper

Co. v. Biggins, 507 U.S. 604, 614 (1993) (quoting Thurston

and holding that, for an alleged civil violation of the Age Discrimination in Employment Act (ADEA), “willful” requires

only a “ ‘reckless disregard for the matter of whether its conduct was prohibited by the ADEA’ ”); McLaughlin, 486 U.S.

at 134 n.13 (using the Thurston definition of “willful” in

interpreting the Fair Labor Standards Act); United States v.

Illinois Cent. R.R. Co., 303 U.S. 239, 242-43 (1938) (holding

REYNOLDS v. HARTFORD FINANCIAL SERVICES 1067
civil defendant’s failure to unload a cattle car was “willful”

because it showed a disregard for governing statute and an

indifference to its requirements). The Court’s rule with

respect to civil cases differs from its rule in criminal proceedings. In criminal cases, actual knowledge of illegality is

required for a willful violation of a criminal statute. See

Bryan, 524 U.S. at 196 (requiring “knowledge that the conduct is unlawful” in a criminal case); Ratzlaf v. United States,

510 U.S. 135, 149 (1994) (requiring proof that the criminal

defendant “knew the structuring [of financial transactions] in

which he engaged was unlawful”); Cheek v. United States,

498 U.S. 192, 201 (1991) (requiring proof that a criminal “defendant knew of the duty purportedly imposed by the provision of the statute or regulation he is accused of violating”).17

Second, the Third Circuit’s approach best furthers the purposes and objectives of the Act. It is fair and balanced; it is

practical as well. It avoids the two extremes of excusing noncompliance even though the answer to a previously undecided

question is objectively apparent and imposing liability notwithstanding a truly excusable inability to predict future

developments in the evolving construction of a statute by the

courts. It encourages companies that use consumer credit

reports to make the necessary effort to inform themselves

fully and fairly as to their statutory obligations and, as a

result, to carry out the statutory mandate of ensuring that consumers are notified when their credit information has been

used against them. Unlike the defendants’ preferred definition, the Third Circuit’s standard does not create perverse

incentives for companies covered by FCRA to avoid learning

17The Eighth Circuit has rejected the reckless disregard standard and

requires actual knowledge with regard to the law. Phillips, 312 F.3d at 370

(“[W]ilful noncompliance under section 1681n requires knowing and

intentional commission of an act the defendant knows to violate the

law.”). The Sixth Circuit has implied that actual knowledge is necessary.

Duncan, 149 F.3d at 429 (suggesting that an actual belief of legality suffices to defeat willfulness liability under FCRA). The Eighth and Sixth

Circuits, however, ignore Thurston and the cases that follow its reasoning.

1068 REYNOLDS v. HARTFORD FINANCIAL SERVICES
the law’s dictates by employing counsel with the deliberate

purpose of obtaining opinions that provide creative but

unlikely answers to “issues of first impression.” Because a

reckless failure to comply with FCRA’s requirements can

result in punitive damages, insurance and other companies

will more likely seek objective answers from their counsel as

to the true meaning of the statute. 

In sum, if a company knowingly and intentionally performs

an act that violates FCRA, either knowing that the action violates the rights of consumers or in reckless disregard of those

rights, the company will be liable under 15 U.S.C. § 1681n

for willfully violating consumers’ rights. A company will not

have acted in reckless disregard of a consumers’ rights if it

has diligently and in good faith attempted to fulfill its statutory obligations and to determine the correct legal meaning of

the statute and has thereby come to a tenable, albeit erroneous, interpretation of the statute. In contrast, neither a deliberate failure to determine the extent of its obligations nor

reliance on creative lawyering that provides indefensible

answers will ordinarily be sufficient to avoid a conclusion that

a company acted with willful disregard of FCRA’s requirement. Reliance on such implausible interpretations may constitute reckless disregard for the law and therefore amount to

a willful violation of the law. 

[14] Where, as here, at least some of the interpretations are

implausible, consultation with attorneys may provide evidence of lack of willfulness, but is not dispositive. See Baker

v. Delta Air Lines, Inc., 6 F.3d 632, 645 (9th Cir. 1993);

Uffelman v. Lone Star Steel Co., 863 F.2d 404, 409 (5th Cir.

1989) (stating that “seeking legal advice [does not] ipso facto

establish[ ] the appropriate intent [willfulness]”). Whether or

not there is willful disregard in a particular case may depend

in part on the obviousness or unreasonableness of the erroneous interpretation. In some cases, it may also depend in part

on the specific evidence as to how the company’s decision

was reached, including the testimony of the company’s execuREYNOLDS v. HARTFORD FINANCIAL SERVICES 1069
tives and counsel. Because the parties did not have an adequate opportunity to explore the issue in the district court, we

remand for further proceedings. 

III. CONCLUSION

In conclusion, we hold that FCRA applies, inter alia, to the

first rates charged in initial insurance policies. We also hold

that FCRA requires insurance companies to send adverse

action notices whenever they charge a higher rate for insurance, in initial policies or otherwise, because of the consumer’s credit information, not simply when the consumer’s

credit rating is below average. Furthermore, we hold that a

communication that there is a lack of sufficient credit information regarding a consumer is a credit report within the

meaning of FCRA. In addition, we hold that adverse action

notices must communicate to the consumer that an adverse

action based on a consumer report was taken, describe the

action, specify the effect of the action upon the consumer, and

identify the party or parties taking the action. With respect to

which companies in a group may be liable under FCRA, we

hold that a company that makes the rate-setting decision, a

company that issues the insurance policy, and any company

that denies insurance at a more favorable rate may be held

jointly and severally liable, and that such companies may provide a single adverse action notice to consumers containing

all of the requisite information. Finally, we adopt the Third

Circuit’s definition of “willfully”: Reckless disregard is sufficient. 

As a consequence of these rulings, we hold that the district

court erred in granting summary judgment to Hartford Fire on

the basis that increased charges for insurance in an initial policy do not constitute adverse actions, and in denying Reynold’s request for leave to amend his complaint to add Hartford

PCIC and Hartford Midwest for that same reason. Likewise,

we hold that the district court erred in granting summary judgment to GEICO Indemnity on the basis that the actions it took

1070 REYNOLDS v. HARTFORD FINANCIAL SERVICES
were not adverse and granting summary judgment to Hartford

Fire, Government Employees, and GEICO General on the

basis that only the issuer of insurance can be liable under

FCRA. Next, we hold that summary judgment may not be

granted on the alternative grounds that a transmission that a

consumer has insufficient credit information to generate a

score is not a credit report, or that Hartford Fire’s adverse

action notices were sufficient. In sum, we reverse the district

court’s grant of summary judgment with respect to all defendants in both Edo and Reynolds, reverse its denial of Reynolds’ request to amend his complaint to add Hartford PCIC

and Hartford Midwest, and remand to the district court for

further proceedings consistent with this opinion.18

REVERSED and REMANDED.

18We note that on appeal, plaintiffs seek only a reversal of the grant of

summary judgment to defendants, and do not request such a judgment on

their own behalf. Although “a court has the power sua sponte to grant

summary judgment to a non-movant when there has been a motion but no

cross-motion,” we decline to do so here. Kassbaum v. Steppenwolf Prod.,

Inc., 236 F.3d 487, 494 (9th Cir. 2000). 

REYNOLDS v. HARTFORD FINANCIAL SERVICES 1071