U.S. Supreme Court Rules “Concrete Harm” Needed to Sue for FCRA Violations

Fair Credit Reporting Act (FCRA)

Written By ESR News Blog Editor Thomas Ahearn

On June 25, 2021, the Supreme Court of the United States (SCOTUS) ruled in the case of TransUnion LLC v. Ramirez that a plaintiff must suffer a “concrete harm” resulting from a defendant’s statutory violation of federal law such as the Fair Credit Reporting Act (FCRA) to have sufficient standing to sue under Article III of the United States Constitution and that plaintiffs in a class action lawsuit must prove that every class member has standing.

“To have Article III standing to sue in federal court, plaintiffs must demonstrate, among other things, that they suffered a concrete harm. No concrete harm, no standing,” Justice Brett M. Kavanaugh wrote in the majority opinion that reversed and remanded the case in a narrow 5 to 4 vote. Justice Kavanaugh was joined by Chief Justice John G. Roberts Jr., Justice Samuel A. Alito Jr., Justice Neil M. Gorsuch, and Justice Amy Coney Barrett.

In the case of TransUnion LLC v. Ramirez, a man named Sergio Ramirez could not buy a car after TransUnion mistakenly stated on a credit report that his name was found on the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) list of suspected terrorists and criminals. Ramirez sued TransUnion on behalf of 8,185 class members for not following “reasonable procedures to assure maximum possible accuracy” under the FCRA.

“No concrete harm, no standing. The 1,853 class members whose credit reports were provided to third-party businesses suffered a concrete harm and thus have standing as to the reasonable-procedures claim. The 6,332 class members whose credit reports were not provided to third-party businesses did not suffer a concrete harm and thus do not have standing as to the reasonable-procedures claim,” Justice Kavanaugh wrote in the opinion.

“The mere existence of inaccurate information, absent dissemination, traditionally has not provided the basis for a lawsuit in American courts. The plaintiffs cannot demonstrate that the misleading information in the internal credit files itself constitutes a concrete harm. The mere presence of an inaccuracy in an internal credit file, if it is not disclosed to a third party, causes no concrete harm,” Justice Kavanaugh concluded in the opinion.

In March 2021, SCOTUS heard oral arguments in the case that involved alleged FCRA violations to consider whether Article III permitted damages in class action lawsuits when most of the class suffered no actual injury or any similar to the class representative. Some justices suggested the 8,000-member class action lawsuit “should be significantly narrowed – but not tossed out entirely,” according to an Argument Analysis on SCOTUSblog.com.

The class action lawsuit against TransUnion has a long history. In 2017, a federal jury in California awarded a record $60 million in damages after finding that TransUnion violated the FCRA by awarding each of the 8,185 class members $984.22 in statutory damages and $6,353.08 in punitive damages. In 2020, an appeals court held that the punitive damages award was excessive and reduced the award to $3,936.88 per class member. 

In May 2016, the Supreme Court ruled in a related case on whether consumers must prove a “concrete” injury in class action lawsuits. The ruling in the case of Spokeo, Inc. v. Robins found that consumers must prove “an injury in fact” in class action lawsuits for alleged “bare” violations of a federal statute such as the FCRA. The case involved a man who filed a lawsuit against an online “people search engine” for alleged FCRA violations.

The FCRA 15 U.S.C § 1681 was enacted by Congress in 1970 to promote the accuracy, fairness, and privacy of consumer information contained in the files of consumer reporting agencies (CRAs), protect consumers from the willful and/or negligent inclusion of inaccurate information in their consumer reports, and regulate the collection, dissemination, and use of consumer information, including consumer credit information.

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