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6th Cir. Rejects FCRA ‘Credit File Disclosure’ Claim for Lack of Spokeo Standing

The U.S. Court of Appeals for the Sixth Circuit recently held that a plaintiff lacked Article III standing to sue a consumer reporting agency under the federal Fair Credit Reporting Act (FCRA) for allegedly failing to disclose all information in his file.

In so ruling, the Sixth Circuit held that the alleged deprivation of information had no consequences for the consumer and imposed no real risk of harm to establish injury in fact.

A copy of the opinion in Huff v. TeleCheck Services, Inc. is available at:  Link to Opinion.

The consumer reporting agency (CRA) advises merchants on whether it should accept a check from a retail customer.  The merchant sends the bank account number on the check and the customer’s driver’s license number, called identifiers, to the CRA to run each identifier through the CRA’s system.

The merchant refuses the customer’s check if the CRA recommends a decline.  On the other hand, if the CRA approves the transaction, the merchant accepts the check.

The customer requested a copy of his file from the CRA under the federal FCRA and provided a copy of his driver’s license.

As you may recall, the FCRA creates a cause of action that has three elements: (1) duty – a consumer agency must disclose “[a]ll information in the customer’s file” upon request; (2) breach of duty – any consumer agency that fails to meet this requirement is liable to the affected individual; and (3) damages – the affected individual may recover statutory damages of $100 to $1,000 for a willful violation.  15 U.S.C. §§ 1681g(a)(1), 1681n(a)(1)(A).

The CRA’s report contained 23 transactions in which the customer presented his driver’s license alongside the check.  The report did not contain two transactions because those checks were not presented with the customer’s license.

The report contained a disclaimer indicating that the CRA had additional information not included in the report, and invited the customer to contact the CRA for more information.  Although the CRA had never advised a merchant to decline any of the customer’s checks, the customer filed a complaint alleging that the CRA violated FCRA and moved for class certification.

The CRA moved for summary judgment based on lack of Article III standing.  The trial court dismissed the case for lack of standing.  This appeal followed.

As you may recall, Article III standing requires the customer to show that he suffered an injury caused by the CRA that a judicial decision can redress.  Lujan v. Defs. of Wildlife, 504 U.S. 555, 560-61 (1992). The Sixth Circuit began its analysis by observing that “standing requires a concrete injury even in the context of a statutory violation,” and “a bare procedural violation” would not “satisfy the injury-in-fact requirement of Article III.”  Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1549 (2016).

In the Sixth Circuit’s view, there were three possible ways in which the customer could establish Article III standing based on his cause of action.

First, the statutory violation created an injury in fact because the violation led to a traditional injury.

The Sixth Circuit noted that the customer did not allege that the CRA’s conduct caused a declined check or a denied rental application.  The customer even acknowledged that the incomplete report did not “have any effect on [him] whatsoever.”  All in all, the Sixth Circuit found no tangible injury as applied to the customer.

Second, the statutory violation did not injure the customer in any traditional way, but the risk of injury was so imminent that it satisfied Article III.

As you may recall, “threatened injury must be certainly impending to constitute injury in fact,” and “[a]llegations of possible future injury”  are not sufficient.  Clapper v. Amnesty Int’l USA, 568 U.S. 398, 409 (2013).

The Sixth Circuit found nothing in the record indicating that the CRA created a risk that the customer would suffer a check decline, or any other harm covered by FCRA.

In the Sixth Circuit’s view, the risk of incomplete disclosure causing the customer to suffer a check decline was highly speculative because the customer had not suffered a check decline in the five years since he requested his file from the CRA.

As the Sixth Circuit explained, the customer offered no evidence of what he would have done differently with a report containing the missing information and what he did with the report he received.  Under these circumstances, full disclosure by the CRA would not have reduced the risk a merchant would decline the customer’s check.

The Sixth Court also noted that the CRA alleviated any risk of harm by including a disclaimer warning the customer that the report did not contain all linked information and instructed the customer to call to get his information.  According to the Sixth Circuit, if the customer contacted the CRA he could have learned which accounts were linked to him and asked the CRA to delete any inappropriate links.

The Sixth Circuit concluded that the CRA’s failure to disclose information created only a negligible risk that the customer would suffer a check decline.

Third, “the statutory violation did not create a tangible injury in any traditional sense, but Congress used its authority to establish the injury in view of its identification of meaningful risks of harm in this area.”

The customer argued that the CRA’s failure to provide the two missing transactions violated FCRA and the breach of that duty created “a procedural or intangible injury.”

However, the Sixth Circuit found that the alleged statutory violation did not harm the customer’s interests under FCRA because there were no adverse consequences. Specifically, “the undisclosed information was irrelevant to any credit assessment about [the customer].”

The customer argued that the possible risk of a check decline established standing under Macy v. GC Services Ltd., 897 F.3d 747 (6th Cir. 2018).

In Macy, two debtors received a letter from a debt collector notifying them that their credit card accounts had been referred to the company for collection.  Macy, 897 F.3d at 751.  The debtors argued that the letter violated section 1692g(a) of the Fair Debt Collection Practices Act (FDCPA) because it failed to state that the debtors could dispute their debt “in writing” within 30 days.  Id. 

The Sixth Circuit in Macy concluded that the debtors had standing because the debt collector’s letter created a material risk that the debtors might forfeit other protections for their concrete economic interests.  Id., at 758 (“an oral inquiry or dispute of a debt’s validity has different legal consequences than a written one”).

The Sixth Circuit explained that the difference between Macy and this case came down to a difference in how Congress exercised its power.

Congress enacted the FDCPA to curb abusive debt collection activities by providing a shield from imminent economic harm.  Because an oral dispute would forfeit the right to force the debt collector to verify the debt and block collections until the debt is verified, the debt collector’s conduct in Macy created a greater risk of future harm that did not exist here.

Thus, the Sixth Court concluded that the type of incomplete disclosure the customer received did not constitute an injury in fact to confer Article III standing.

Accordingly, the Sixth Circuit affirmed the trial court’s dismissal order.

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Eric Tsai practices in Maurice Wutscher’s Commercial Litigation and Consumer Credit Litigation groups, and in its Regulatory Compliance group. He concentrates his practice primarily on the defense of consumer and commercial financial services companies, including mortgage lenders and servicers, mortgage loan investors, third party debt collectors, and other financial services providers. He also counsels clients on regulatory compliance, licensing, and other consumer protection matters. Eric earned his undergraduate degree from the University of California, Irvine. Prior to attending law school, he worked as a loan officer for national direct lenders. He earned his Juris Doctor from California Western School of Law and thereafter obtained a Master of Laws (LLM) in Taxation from the University of San Diego School of Law. Eric publishes extensively on various issues affecting consumer lending and litigation, including both federal and California-specific developments. He is licensed to practice law in California, Nevada, and Oregon, and is admitted in all United States District Courts in the State of California, the United States District Court for the District of Oregon, the United States District Court for the District of Nevada, the U.S. Tax Court, and the Ninth Circuit Court of Appeals. He is also a licensed real estate broker in the State of California.

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