Court Finds “Emotional Harm” Satisfies Article III Standing in FCRA Lawsuit

 Fair Credit Reporting Act (FCRA)

Written By ESR News Blog Editor Thomas Ahearn

In May 2021, a federal court found the “emotional harm” suffered by the Plaintiff in MAGRUDER v. CAPITAL ONE, NAT’L ASS’N due to inaccurate information on his credit report was “barely enough” to establish standing under Article III of the U.S. Constitution in a lawsuit claiming violations of the Fair Credit Reporting Act (FCRA).

In May 2017, Plaintiff Stephon Magruder obtained his credit reports from the three major credit reporting agencies – Equifax, Experian, and TransUnion – and determined the reports contained several inaccuracies. He sent the agencies a dispute letter identifying the purported errors and requesting that they correct the errors.

However, more than a year since first discovering inaccuracies on his credit reports, and after contacting credit reporting agencies, the banks holding his accounts, a debt collector, and a debt-collection law firm, Magruder was no closer to resolving his dispute so he filed a lawsuit that, in part, alleged violations of the FCRA.

The lawsuit alleged violations of the FCRA for failing to investigate and remedy a dispute, failing to report the status of the disputed debt, failing to follow reasonable procedures to assure maximum possible accuracy, failing to conduct a reasonable investigation into a dispute, and failing to modify credit reports to remedy inaccuracies.

The court ordered Plaintiff to show that he had suffered an “injury in fact” sufficient to satisfy Article III standing. Plaintiff alleged the failure to follow reasonable procedures to assure maximum accuracy and failure to conduct a reasonable investigation caused him “embarrassment, humiliation, and other mental and emotional distress.”

The ruling in the United States District Court, District of Columbia found that “Magruder’s allegations of tangible injury are thin by any measure—he claims to have suffered economic loss, for instance, but neglects to explain how, when, where, or in what degree. For present purposes, however, that is (barely) enough.”

United States District Judge Randolph D. Moss, who wrote the Memorandum Opinion and Order, found that “Magruder’s failure to allege that he has sustained a tangible injury… does not doom his claim at this early stage of the proceeding because he does allege an emotional harm, which suffices for purposes of the FCRA.”

Judge Moss concluded that “Magruder’s allegations of harm fall within the scope of injuries that courts have found to be cognizable under the FCRA, even if intangible… And Magruder claims he suffered emotional harm as a result of those allegedly unlawful publications… The FCRA was enacted to deter just this.”

Enacted by Congress in 1970, the FCRA 15 U.S.C § 1681 promotes the accuracy, fairness, and privacy of consumer information contained in the files of CRAs and protects consumers from the willful and/or negligent inclusion of inaccurate information in their consumer reports, including consumer credit information.

FCRA lawsuits will continue to serve as legal compliance signposts for employers conducting background checks on job applicants, according to leading global background check provider Employment Screening Resources® (ESR), which compiled the 14th annual “ESR Top Ten Background Check Trends” for 2021.

Employment Screening Resources® (ESR) – which was named the number one background screening firm by HRO Today in 2020 – offers complimentary white papers on how employers may avoid FCRA lawsuits and how CRAs may avoid FCRA lawsuits. To learn more about ESR, visit www.esrcheck.com.

NOTE: Employment Screening Resources® (ESR) does not provide or offer legal services or legal advice of any kind or nature. Any information on this website is for educational purposes only.

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