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From Banking and Finance Law Daily, August 15, 2017

Failure to ensure accurate consumer information created standing to sue

By Richard A. Roth, J.D.

A consumer who claimed that an Internet company failed to assure the maximum possible accuracy of personal information the company provided about him described a concrete injury that gave him constitutional standing to sue for a Fair Credit Reporting Act violation, the U.S. Court of Appeals for the Ninth Circuit has decided. Resolving an issue put to it by the Supreme Court, the appellate court said the FCRA created a concrete, as opposed to a merely procedural, interest in accurate consumer reports and that the inaccurate information described by the consumer could have posed a real harm to his employment prospects (Robins v. Spokeo, Inc., August 15, 2017, O’Scannlain, D.).

Spokeo, Inc., operates what it calls a "people search engine" that provides information to users about other individuals. The consumer complained that Spokeo had provided a great deal of inaccurate information about his age, marital status, financial condition, education, and profession, finishing with a photograph of someone else. Claiming that the inaccuracies were interfering with his ability to find a job and causing him emotional distress, he sued Spokeo for violating the FCRA.

The U.S. district court judge dismissed the suit after deciding that the consumer had not described an injury-in-fact that would give him standing to sue. The Ninth Circuit reversed that decision, saying that the consumer had described a particularized and concrete injury.

The Supreme Court agreed to review that decision, but in the end decided not to make a decision. Dissatisfied with the Ninth Circuit’s analysis, the Court remanded the suit with instructions to consider specifically whether the injury was concrete, as opposed to being a "bare procedural violation" of the act that did not at least threaten concrete harm (Spokeo, Inc. v. RobinsBanking and Finance Law Daily, May 16, 2016).

Violation of statute as injury. According to the appellate court, the consumer argued that he did not need to claim any harm beyond Spokeo’s violation of the duty to assure the maximum possible accuracy of the information it reported about him. The FCRA "exists specifically to protect consumers’ concrete interest in credit-reporting accuracy." If the FCRA violation harmed that interest, it gave him standing to sue, he asserted.

The court agreed that the FCRA seemed to say a consumer can sue for a violation without describing any harm that resulted from the violation. "But the mere fact that Congress said a consumer like Robins may bring such a suit does not mean that a federal court necessarily has the power to hear it," the court pointed out. In the absence of a concrete injury, there would be no case or controversy over which a federal court could exercise jurisdiction.

On the other hand, an intangible harm can constitute a concrete injury, the court continued. Thus, some statutory injuries would suffice. History and Congress’s judgment were to be considered to decide whether that was the case.

Concrete interests. To decide whether the consumer had described a concrete injury, the court looked first at whether the FCRA provision on information accuracy had been created to protect consumers’ concrete interests rather than to establish purely procedural rights. The court said the act did protect concrete interests.

The FCRA had been enacted to see that consumer report information was accurate and that consumers’ privacy was protected, the court said. The act’s procedural requirements advanced those purposes, the court said; they were not "purely legal creations."

Consumer reports affected credit and employment prospects, the court noted, and the very existence of inaccurate information could cause harm. It was reasonable that Congress would choose to protect consumers from that harm without requiring possibly difficult proof of a specific injury. Some libelous statements are actionable without proof of specific harm, the court pointed out.

Material risk of harm. However, not every bit of inaccurate information would allow a consumer to sue, the court conceded. The consumer would have to show more than just that Spokeo did not follow FCRA-required policies; he had to show that the failure to follow the FCRA at least threatened a material risk of harm to his concrete interest in the accuracy of the information. In other words, returning to the Supreme Court’s example of an incorrect zip code, the appellate court said that a minor inaccuracy that did not present a material risk of real harm would not create standing.

This required a look at the nature of the specific inaccuracies the consumer claimed, the court then said. However, while the Supreme Court had given little instruction other than the zip code example on what errors should be considered harmless, the appellate court said it was clear that the inaccuracies claimed by the consumer would not be harmless.

"It does not take much imagination to understand how inaccurate reports on such a broad range of material facts about Robins’s life could be deemed a real harm," the court said. Information about age, marital status, education, and employment history would be of interest to prospective employers. Ensuring the accuracy of such information "seems directly and substantially related to FCRA’s goals," according to the court.

The case is No. 11-56843.

Attorneys: William S. Consovoy (Consovoy McCarthy Park PLLC) for Thomas Robins. Andrew J. Pincus (Mayer Brown LLP) for Spokeo, Inc. Daniel J. McLoon (Jones Day) for amicus curiae Experian Information Solutions, Inc. A. James Chareq (Hudson cook LLP) for amicus curiae Consumer Data Industry Association. Marcy McLeod, General Counsel, for amicus curiae Consumer Financial Protection Bureau.

Companies: Spokeo, Inc.

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