Reynolds v. Hartford Financial Services Group, Inc.

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

13753
13754 REYNOLDS v. HARTFORD FINANCIAL SERVICES
Filed October 3, 2005

Before: Stephen Reinhardt, Marsha S. Berzon, and
Jay S. Bybee, Circuit Judges.

Opinion by Judge Reinhardt;
Dissent by Judge Bybee
 REYNOLDS v. HARTFORD FINANCIAL SERVICES 13757

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 & McKen-
zie, Dallas, Texas; Christopher Van Gundy, Baker & McKen-
zie, San Francisco, California; Thomas Gordon, Gordon &
Polscer, LLC, Portland, Oregon, for Appellees GEICO Casu-
13758 REYNOLDS v. HARTFORD FINANCIAL SERVICES
alty Company, GEICO General Insurance Company, GEICO
Indemnity Company, and Government Employees Insurance
Company.

Lisa E. Lear, Douglas G. Houser, Loren D. Podwill, and
Andrew Grade, Bullivant Houser Bailey PC, Portland, Ore-
gon, 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 DeMille-
Wagman, 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 August 4, 2005, slip op.
10029, and appearing at 416 F.3d 1097 (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 and dissent in its place.
 REYNOLDS v. HARTFORD FINANCIAL SERVICES 13759
OPINION

REINHARDT, Circuit Judge:

Under the Fair Credit Reporting Act (“FCRA”), insurance
companies are required to send adverse action notices to con-
sumers whenever they increase the rates for insurance on the
basis of information contained in consumer credit reports. 15
U.S.C. §§ 1681a(k)(1)(B)(i), 1681m(a).1 The principal ques-
tion 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. Specifi-
cally, 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
1
Section 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 connec-
tion with the underwriting of insurance.”
13760 REYNOLDS v. HARTFORD FINANCIAL SERVICES
information or insufficient credit information is available con-
stitutes 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
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 lia-
ble. 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 oth-
ers.” 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 con-
sumers 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
2
We do not intend this list to be exhaustive.
 REYNOLDS v. HARTFORD FINANCIAL SERVICES 13761
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 per-
son shall provide “notice of the adverse action to the consum-
er.” Adverse action notices advise consumers that an adverse
action has been taken against them, and the nature of that
action, and alerts them that they may view a copy of the con-
sumer 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 receiv-
ing 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 insuffi-
cient 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 suffi-
cient 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 informa-
13762 REYNOLDS v. HARTFORD FINANCIAL SERVICES
tion 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 Reyn-
olds 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
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 viola-
tion 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 Com-
pany of Hartford (“PCIC Hartford”) issued Reynolds the
homeowners insurance policy and Hartford Insurance Com-
pany of the Midwest (“Hartford Midwest”) issued him the
automobile insurance policy. We refer to Hartford Fire, Hart-
ford PCIC, and Hartford Midwest as the “Hartford Compa-
nies.”

Reynolds originally sued Hartford Fire and later sought to
amend his complaint to add PCIC Hartford and Hartford Mid-
west.4 Hartford Fire sought summary judgment, which the dis-
3
Rausch is no longer pursuing his appeal.
4
Reynolds also named Hartford Financial Services Group, Inc., which
serves as a holding company, but is not pursuing his claims against that
entity.
 REYNOLDS v. HARTFORD FINANCIAL SERVICES 13763
trict 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]
‘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 hold-
ing 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 defen-
dants,” 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 favor-
able 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 mem-
bers’ 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 signa-
13764 REYNOLDS v. HARTFORD FINANCIAL SERVICES
tories. 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 insur-
ance 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
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 dis-
pute whether Hartford Fire actually sent an adverse action
notice to Reynolds, but that is a question of fact for the fact-
finder. Whether the notice Hartford Fire contends it sent was
5
In connection with Reynolds’ request for automobile insurance, he was
labeled a “no hit” because his name and address did not match any per-
son’s in the national database. In connection with his homeowners insur-
ance request, he was labeled a “no score” because, while his name and
address did call up information in the database, the information was insuf-
ficient 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 here-
after refer in this opinion to a report in either category as a “no hit.”
 REYNOLDS v. HARTFORD FINANCIAL SERVICES 13765
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
existing policy with that group. An employee of Hartford Fire
collected personal information and attempted to obtain Reyn-
old’s insurance score twice, once for each insurance applica-
tion. 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 automo-
bile insurance policy obtained by Ajene Edo. Like Reynolds,
Edo seeks statutory and punitive damages, as well as reason-
able attorney fees, on behalf of a class of consumers for viola-
tion 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 Govern-
ment Employees Insurance Company (“Government Employ-
ees”), 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
6
Edo 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.
13766 REYNOLDS v. HARTFORD FINANCIAL SERVICES
sometimes refer to that group of companies by that designa-
tion 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
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 cover-
age from [that company] regardless of his consumer credit
score because Government Employees offers insurance cover-
age only to government employees or military personnel.”
Next, it granted summary judgment in favor of GEICO Gen-
eral 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 con-
sider 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 employ-
ees. GEICO Indemnity issues standard policies with mid-level
rates for moderate risk consumers. Finally, GEICO Casualty
 REYNOLDS v. HARTFORD FINANCIAL SERVICES 13767
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 coun-
selor is employed by Government Employees but works on
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 infor-
mation 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 analy-
sis 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 pro-
vide this information. Using a Government Employees com-
puter 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 acci-
dents 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 cus-
tomer has provided has been verified, he is issued an insur-
ance 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
13768 REYNOLDS v. HARTFORD FINANCIAL SERVICES
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
the period relevant to this case was to compare the consum-
er’s actual company and tier placement (which, as described
above, was based in part on his credit rating) with the com-
pany 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, gen-
erally speaking, as the weight that reflected the average credit
rating of all consumers. The GEICO Companies would calcu-
late 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 differ-
ent 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 consum-
 REYNOLDS v. HARTFORD FINANCIAL SERVICES 13769
ers 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
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 sur-
prising, 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 place-
ment, 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.
13770 REYNOLDS v. HARTFORD FINANCIAL SERVICES
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
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 “in-
crease” and “charge.” Hartford Fire contends that, limited to
their ordinary definitions, these words apply only when a con-
sumer 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 previ-
ously 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
7
The related cases are resolved by memoranda of disposition filed con-
currently herewith.
 REYNOLDS v. HARTFORD FINANCIAL SERVICES 13771
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 com-
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 insur-
ance companies’ practice. Reynolds is correct.

[2] “Increase” means to make something greater. See, e.g.,
OXFORD ENGLISH DICTIONARY (2d ed. 1989) (“The action, pro-
cess, 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 usu-
ally) 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 analo-
gous circumstance, stating, “An increase in the base price of
an automobile that is not charged to a cash customer, but is
8
An 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.
13772 REYNOLDS v. HARTFORD FINANCIAL SERVICES
charged to a credit customer, solely because he is a credit cus-
tomer, 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 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 limita-
tion. 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, par-
ticularly the “existing or applied for” phrase, supports afford-
ing 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 man-
dated serves two important ends. First and foremost, once
consumers possess this information they can check and cor-
rect any errors in their credit reports. This increases the
chances that a consumer’s financial stability will not be ham-
pered 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,
 REYNOLDS v. HARTFORD FINANCIAL SERVICES 13773
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 eco-
nomically unsophisticated are most likely to purchase. Con-
gress did not create such strong protections for consumers
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 informa-
tion 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 Reyn-
olds’ 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 legisla-
tive 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
9
We note that our holding is consistent with the Federal Trade Commis-
sion’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).
10
Although our discussion has principally related to initial insurance
policies, our interpretation of “increase in any charge” is obviously not
13774 REYNOLDS v. HARTFORD FINANCIAL SERVICES
B. What Constitutes An Adverse Action

The GEICO Companies contend that their method of deter-
mining which consumers were entitled to receive adverse
action notices comported with FCRA, while Edo asserts that
under GEICO’s procedure numerous consumers who were
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 “neu-
tral” 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 below-
average 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 require-
ment 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

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.
11
We note that the statute does not require an insurance company to
issue an adverse action notice simply because a consumer does not get the
 REYNOLDS v. HARTFORD FINANCIAL SERVICES 13775
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
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 con-
tained 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

best possible rate. If a better credit report would not have reduced the con-
sumer’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.
12
Making a slightly different argument, at least rhetorically, the GEICO
Companies also argue that the action they took against Edo was not
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 informa-
tion 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.
13776 REYNOLDS v. HARTFORD FINANCIAL SERVICES
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 avail-
able to AARP members with qualifying credit ratings, and, as
a result, was charged a higher rate in his initial policies. Hart-
ford 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
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 com-
munication 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 appli-
cant 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 communi-
cation 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
 REYNOLDS v. HARTFORD FINANCIAL SERVICES 13777
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 informa-
tion 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.

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 Compa-
nies did send were sufficient to meet its FCRA responsibili-
ties. 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 com-
municate 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
13
The notice must also contain information regarding the consumer
reporting agency. It must provide the name, address, and telephone num-
ber 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 con-
sumer, a statement setting forth the consumer’s right to obtain a free dis-
closure 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.
14
We do not decide whether a fuller description of what specific infor-
mation was adverse is required as this question is not before us.
13778 REYNOLDS v. HARTFORD FINANCIAL SERVICES
Acceptance Corp., 708 F.2d 143, 150 (5th Cir. 1983) (requir-
ing disclosure of “reliance on data contained in [a consum-
er’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
that “[t]he Hartford’s eligibility and pricing decisions are
based in part on consumer report(s) from a consumer report-
ing 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 informa-
tion 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 insur-
ance rate and that it did adversely affect his rate, and requires
notice of the latter. We therefore reject Hartford Fire’s alter-
native 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 identifi-
cation”). With regard to insurance transactions, liability
attaches whenever an adverse action is taken “in connection
with the underwriting of insurance.” 15 U.S.C.
 REYNOLDS v. HARTFORD FINANCIAL SERVICES 13779
§ 1681a(k)(1)(B)(i). This broad “in connection with” lan-
guage 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 Con-
gress intended 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 Compa-
nies did not interpret his telephone call as requesting a policy
with that company in particular, as evidenced by the evalua-
tion 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 person-
nel, 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 “ap-
plied 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
13780 REYNOLDS v. HARTFORD FINANCIAL SERVICES
insurance has not, by definition, issued a policy, adverse
action notices would never be required for denials of insur-
ance. 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
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 “ad-
verse 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 issu-
ance 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 fur-
thers FCRA’s objectives. For example, joint responsibility
 REYNOLDS v. HARTFORD FINANCIAL SERVICES 13781
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 liabil-
ity, Congress also improved the quality of information con-
sumers receive, because each of the companies that takes an
adverse action against the consumer must say so in the notice.
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 insur-
ance 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
15
While 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.
13782 REYNOLDS v. HARTFORD FINANCIAL SERVICES
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.

[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 inten-
tionally.” 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
16
“Any person who willfully fails to comply with any requirement
imposed under this title with respect to any consumer is liable to that con-
sumer” for actual or statutory damages, punitive damages, and reasonable
attorney’s fees. 15 U.S.C. § 1681n (emphasis added).
 REYNOLDS v. HARTFORD FINANCIAL SERVICES 13783
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 perfect consistent interpretation, it is generally under-
stood to refer to conduct that is not merely negligent.”). Addi-
tionally, we adopt the position of four of the five other 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 pur-
poses of willfulness we distinguish civil from criminal liabil-
ity. See Bryan v. United States, 524 U.S. 184, 191 (1998)
(“Most obviously [willfulness] differentiates between deliber-
ate and unwitting conduct, but in the criminal law it also typi-
cally 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 disre-
gard” of the law, which means “either knowing that policy [or
action] to be in contravention of the rights possessed by con-
sumers 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 con-
sistently 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
13784 REYNOLDS v. HARTFORD FINANCIAL SERVICES
Co. v. Biggins, 507 U.S. 604, 614 (1993) (quoting Thurston
and holding that, for an alleged civil violation of the Age Dis-
crimination in Employment Act (ADEA), “willful” requires
only a “ ‘reckless disregard for the matter of whether its con-
duct 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
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 proceed-
ings. 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 con-
duct 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 “de-
fendant knew of the duty purportedly imposed by the provi-
sion of the statute or regulation he is accused of violating”).17

Second, the Third Circuit’s approach best furthers the pur-
poses and objectives of the Act. It is fair and balanced; it is
practical as well. It avoids the two extremes of excusing non-
compliance even though the answer to a previously undecided
question is objectively apparent and imposing liability not-
withstanding a truly excusable inability to predict future
developments in the evolving construction of a statute by the
17
The 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 suf-
fices to defeat willfulness liability under FCRA). The Eighth and Sixth
Circuits, however, ignore Thurston and the cases that follow its reasoning.
 REYNOLDS v. HARTFORD FINANCIAL SERVICES 13785
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 con-
sumers are notified when their credit information has been
used against them. Unlike the defendants’ preferred defini-
tion, the Third Circuit’s standard does not create perverse
incentives for companies covered by FCRA to avoid learning
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 vio-
lates 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 statu-
tory obligations and to determine the correct legal meaning of
the statute and has thereby come to a tenable, albeit errone-
ous, interpretation of the statute. In contrast, neither a deliber-
ate failure to determine the extent of its obligations nor
reliance on creative lawyering that provides indefensible
answers to issues of first impression is sufficient to avoid a
conclusion that a company acted with willful disregard of
FCRA’s requirement.18 We hold that reliance on such implau-
18
Consulting with attorneys is evidence of lack of willfulness, but is not
dispositive. Baker v. Delta Air Lines, Inc., 6 F.3d 632, 645 (9th Cir. 1993);
accord 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]”). Thus, consultation with attorneys who
then produce an implausible legal opinion that purports to relieve the
insurance companies of their clear statutory responsibilities does not serve
automatically to avoid a charge of reckless disregard.
13786 REYNOLDS v. HARTFORD FINANCIAL SERVICES
sible interpretations constitutes reckless disregard for the law
and therefore amounts to a willful violation of the law.

[14] Here, Hartford Fire, GEICO General, GEICO Indem-
nity, and Government Employees’ interpretation of the statute
was untenable. Indeed, the companies’ exceedingly narrow
interpretations of their obligations under FCRA were counter
to the statute’s plain text as well as its purpose. Relying on
reasoning that was plainly unmeritorious, these companies
sought to benefit from the privilege of using consumers’ pri-
vate credit information and yet be free of the attendant obliga-
tions. Specifically, Hartford Fire’s contention that FCRA’s
adverse action notice requirement does not apply when a
company charges a higher price for an initial insurance policy,
but only when it has previously charged the consumer a lower
rate, finds no basis in the statute. Likewise, its argument that
adverse action notices are not required when a credit trans-
mission reports that a consumer does not have adequate credit
information to generate a score is clearly contrary to FCRA’s
language and to the purpose of the statute. Furthermore, Hart-
ford Fire’s argument that an adverse action notice sufficiently
complies with FCRA’s requirement even if it does not dis-
close that an adverse action was taken or the nature of that
action is nonsensical. The GEICO Companies’ argument that
they are free to send adverse action notices only to those con-
sumers whose credit rating is below average and not to those
with a higher rating also finds absolutely no support in the
statute. Likewise, GEICO General does not make even a col-
orable argument that it did not take adverse action against Edo
when, acting in conjunction with the other affiliated compa-
nies, it failed to provide him with a policy at a preferred rate;
denials are clearly covered by the adverse action definition.
Finally, Hartford Fire and Government Employees’ argument
that they are not liable because, even though they may have
made the decision to increase the consumers’ rates, they did
not issue the policies is not colorable as the statute on its face
is not limited to issuers. We therefore hold that on the record
before us the defendants all acted in reckless disregard of the
 REYNOLDS v. HARTFORD FINANCIAL SERVICES 13787
consumers’ statutory rights.19 Accordingly, defendants’ argu-
ment for summary judgment on the basis that they did not act
willfully also fails.
19
The dissent argues that we should not decide the question whether the
companies wilfully failed to comply with FCRA’s requirements because
the district court did not reach the issue. We disagree. The district court
did rule directly on all of the principal issues on which we hold the compa-
nies’ positions to be untenable and necessarily found their actions not to
be willful as a result of their reliance on an untenable interpretation of the
statute. For example, as to Hartford Fire’s contention that FCRA’s adverse
action notice requirement does not apply to an initial charge, the district
court concluded that Hartford Fire was correct and that the initial setting
of an insurance premium at a rate higher than the best rate available does
not constitute an “adverse action” under FCRA. Rausch v. Hartford
Financial Services Group, Inc., 2003 WL 22722061, at *2 (D. Or. 2003).
As to the GEICO Companies’ argument that they are free to send adverse
action notices only to consumers whose credit rating is below average, as
we have explained in the text at footnote 12, this claim is functionally
identical to GEICO’s argument that the action was not adverse because the
charge was the same as if no credit information had been used. See n.12,
supra. With respect to this issue, the district court ruled that GEICO was
correct when it concluded that, because the premium charged to Edo
would have been the same regardless of the information contained in
Edo’s credit history, there was no genuine issue of material fact as to
whether GEICO Indemnity took an adverse action against Edo. Edo v.
Geico Casualty Co., No. 02-678, slip op. at 11 (D. Or. February 23, 2004).
As to GEICO’s argument that denials of coverage are not covered by the
adverse action definition, the district court again held that GEICO was
correct and that Edo had “failed to establish that GEICO Casualty’s failure
to offer him automobile insurance was an adverse action.” Id. at 12.
Finally, as to both Hartford Fire and Government Employee’s argument
that they are not liable because they did not issue the policies, the district
court once again agreed, holding that only the entity that issues the insur-
ance policy can be held to have taken an adverse action under FCRA.
Rausch, 2003 WL at *1; Edo, slip op. at 10-11.
Because the district judge has already ruled that the companies’ posi-
tions on all of the principal issues were correct as a matter of law, she has
also held, a fortiori, that the companies’ reliance on these positions did not
amount to reckless disregard for the law. Under these circumstances and
because the question of willfulness as applied to a legal contention is
essentially a question of law, it is not necessary, and indeed would be
futile, to remand to the district court the question whether the companies
willfully failed to comply with FCRA.
13788 REYNOLDS v. HARTFORD FINANCIAL SERVICES
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 insur-
ance, in initial policies or otherwise, because of the consum-
er’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 infor-
mation 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 pro-
vide 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 suffi-
cient.

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 pol-
icy do not constitute adverse actions, and in denying Reyn-
old’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 judg-
ment to GEICO Indemnity on the basis that the actions it took
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. Finally, we hold that summary judgment may not be
 REYNOLDS v. HARTFORD FINANCIAL SERVICES 13789
granted on the alternative grounds that a transmission that a
consumer has insufficient credit information to generate a
score is not a credit report, that Hartford Fire’s adverse action
notices were sufficient, or that the defendants’ actions were
not willful. 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 Mid-
west, and remand to the district court for further proceedings
consistent with this opinion.

REVERSED and REMANDED.

BYBEE, Circuit Judge, dissenting in part:

I join the majority opinion except so much of Section II.F
that concludes that GEICO and Hartford insurance companies
willfully violated FCRA. The district court awarded judgment
to the insurance companies on summary judgment without
reaching the question whether the companies “willfully fail-
[ed] to comply” with the requirements of FCRA. 15 U.S.C.
§ 1681n(a). The insurance companies urged the district court,
as an alternative ground, to hold that the companies did not
act willfully as a matter of law. They urged the same position
to us on appeal as an alternative ground for affirming the
judgment. The appellants did not brief the question of willful-
ness until the reply briefs, and in each case the appellants
requested that we decline to rule for the insurance companies
and remand the case to the district court for further proceed-
ings.

I would not decide as a matter of fact that the insurance
companies behaved willfully on the basis of their lawyers’
arguments on appeal. I cannot conclude on the basis of the
record before us that the companies’ actions here were so “in-
defensible,” “implausible,” “untenable,” “plainly unmeritor-
ious,” “clearly contrary to FCRA’s language,” “nonsensical,”
and without “colorable argument” that we can conclude that
13790 REYNOLDS v. HARTFORD FINANCIAL SERVICES
the companies’ “reliance on such implausible interpretations
constitutes reckless disregard for the law” and decide their
willfulness ourselves without the benefit of findings of fact or
full briefing. Maj. Op. at 13785-86.

If I thought our record was complete, I would not find that
the companies willfully failed to comply with FCRA as a mat-
ter of law. The majority holds that we can reach the question
because the district “necessarily found their actions not to be
willful as a result of their reliance on an untenable interpreta-
tion of the statute.” Maj. op. at 13787 n.19. The reason the
district court “necessarily found their actions not to be will-
ful” is because the district court agreed with their legal posi-
tion, a position the majority now declares to be “nonsensical”
and “untenable.” While I agree with the majority that the dis-
trict court’s understanding of FCRA was wrong, I cannot go
so far as to conclude that the district court’s conclusion, like
the companies’ position, was also untenable.

Accordingly, I would remand the question of whether the
companies willfully failed to comply with FCRA to the dis-
trict court for further proceedings. I respectfully dissent as to
that portion of the opinion.