Banking and Finance Law Daily Does procedural FCRA violation confer standing: high court review sought
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Friday, December 20, 2019

Does procedural FCRA violation confer standing: high court review sought

By J. Preston Carter, J.D., LL.M.

A Sixth Circuit decision that a procedural violation of the Fair Credit Reporting Act resulted in insufficient harm to confer standing is being challenged in a petition for certiorari arguing that the lower court should have evaluated risk.

A consumer has asked the Supreme Court to review a May 2019 decision by the U.S. Court of Appeals for the Sixth Circuit that held that a check verification company's procedural violation of failing to include all information in the consumer's file on request did not result in a concrete injury sufficient to create Article III standing (see Banking and Finance Law Daily, May 6, 2019). The consumer obtained a copy of his file from a check verification company, and the report failed to list all checking accounts linked to his driver's license. The consumer alleged no other injury; he never had a check declined, was not at imminent risk of having a check declined, and did not allege that he would have done anything with the missing information had he received it. The Sixth Circuit held that Congress's ability to create standing through intangible injury does not extend to defining harmless procedural violations as injuries in fact. The consumer suffered no adverse consequences of the procedural violation, and Congress provided no guidance as to why the type of incomplete disclosure the consumer received constitutes an injury in fact (Huff v. Telecheck Services, Inc.).

The consumer’s petition for certiorari states that in the years since the Spokeo decision (Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016), "lower court have struggled" to differentiate between bare procedural violations on the one hand and violations that are sufficiently concrete on the other. The consumer contends that his Fair Credit Reporting Act "rights and those of thousands of others have been eviscerated in favor of" the check verification company’s "quest to profit." He argues that, given the split among appellate courts regarding the "risk of harm" inquiry, "the outcome would have been different had the issue been decided by most other Court of Appeals or another Sixth Circuit panel. That makes this case an ideal vehicle for the Court to correct a specific injustice while also offering much-needed guidance on the limits of Congress’ authority to create intangible injuries."

The consumer contends that the decision below is plainly wrong because it cannot be reconciled with the standing precedent set in Spokeo. Under Spokeo, the consumer states, courts must assess alleged intangible harm by evaluating risk: the question is whether the violation "entail[s] a degree of risk sufficient to meet the concreteness requirement." But here, he says, the Sixth Circuit did not analyze risk; it analyzed harm. The lower court stated that the alleged statutory violation did not harm the consumer’s interests under the FCRA because it had "no adverse consequences." The consumer argues that the lower court should have asked whether the company’s failure to disclose substantive information to him, including bank accounts the company relies on but that are not his, created a risk of harm of the type that Congress sought to prevent. The "obvious answer" to that question, the consumer concludes, is yes. "[T]he violation trounces upon the very purpose of the FCRA, which is to reduce the risk of harm associated with inaccurate credit reporting."

Attorneys: Martin D. Holmes (Yetter Coleman LLP) for James Huff.

Companies: Telecheck Services, Inc; Telecheck International Inc.; First Data Corp.

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