On June 25, 2021, the U.S. Supreme Court issued its opinion in TransUnion v. Ramirez [1]. The issue in this Fair Credit Reporting Act case was whether Article III of the Constitution permits a class action where the vast majority of the class suffered no actual injury, let alone an injury anything like what the class representative suffered. The decision provides credit reporting agencies with a valuable tool to defeat “no injury” FCRA lawsuits.

Background

In 2002, TransUnion introduced a product called OFAC Name Screen Alert. When a business used the product TransUnion would conduct its ordinary credit check of the consumer, and it would also use third-party software to compare the consumer’s name against the U. S. Treasury Department’s Office of Foreign Assets Control (OFAC) list of terrorists, drug traffickers, and other serious criminals. If the consumer’s first and last name matched the first and last name of an individual on OFAC’s list, TransUnion would place an alert on the credit report indicating that the consumer’s name was a “potential match” to a name on the OFAC list. TransUnion did not compare any data other than first and last names. Sergio Ramirez was unable to purchase a car after his credit report included such an alert.

Ramirez brought a class action under the Fair Credit Reporting Act (FCRA) on behalf of 8,185 individuals with OFAC alerts in their TransUnion credit files, claiming that TransUnion had failed to use reasonable procedures to ensure the maximum possible accuracy of their credit files. Only 1,853 of those class members had reports containing misleading OFAC alerts provided to third parties as had Ramirez.

Decision

The Supreme Court held that only 1,853 class members, including Ramirez, had Article III standing to sue TransUnion for failing to use reasonable procedures to assure the accuracy of each report under the FCRA: “Article III confides the federal judicial power to the resolution of ‘Cases’ and ‘Controversies.’” “For there to be a case or controversy under Article III, the plaintiff must have a ‘personal stake’ in the case—in other words, standing.” Sufficiently establishing standing requires that a plaintiff show “(i) that he suffered an injury in fact that is concrete, particularized, and actual or imminent; (ii) that the injury was likely caused by the defendant; and (iii) that the injury would likely be redressed by judicial relief.”

Most Class Members Lacked “Concrete Injury”

The Supreme Court held that the 6,332 class members who did not have reports containing OFAC alerts provided to third parties lacked the “concrete injury” required for Article III standing: “The mere presence of an inaccuracy in an internal credit file, if it is not disclosed to a third party, causes no concrete harm.”

How CRAs Can Benefit

CRAs facing FCRA lawsuits where it can be argued that the plaintiff (or class members) experienced only hypothetical harm should consider moving to dismiss those lawsuits based on lack Article III standing. Even though the FCRA may afford plaintiffs a cause of action to sue over the CRA’s legal violation, Article III standing requires plaintiffs to have suffered a physical, monetary, or cognizable intangible harm traditionally recognized as providing a basis for a lawsuit in American courts. An uninjured plaintiff who sues under the FCRA not to remedy any harm to herself but to merely obtain statutory damages and attorneys’ fees may be said to lack Article III standing under TransUnion v. Ramirez.

Feel free to contact Joseph Messer at (312) 334-3440 or jmesser@messerstrickler.com for assistance in determining whether the TransUnion v. Ramirez decision can help you, or if you have questions regarding FCRA in general.

1 TransUnion LLC v. Ramirez, 594 U.S. ____ (2021)