On May 11, 2017, the Fourth Circuit Court of Appeals vacated a $12 million judgment against Experian Information Solutions, Inc. (“Experian”) in a class action against the credit reporting bureau alleging violations of the Fair Credit Reporting Act (“FCRA”). Relying on the standard set forth by the U.S. Supreme Court in Spokeo, Inc. v. Robins, the circuit court held the named plaintiff lacked constitutional standing because he suffered no “concrete” injury from the alleged statutory violation.
The claims in the lawsuit involved the FCRA requirement that credit reporting agencies must, upon request, clearly and accurately disclose to a consumer the “sources of the information” in the consumer’s file at the time of the request. 15 U.S.C. § 1681g(a)(2). As part of a background check in connection with obtaining security clearance, the lead plaintiff, Michael Dreher, obtained a series of credit reports from Experian which listed a delinquent credit card account identified as Advanta associated with his name. Unbeknownst to Dreher, Advanta has been closed since 2010 and a company named CardWorks had been appointed as a servicer for the company acquiring Advanta’s receivables.
In the lawsuit, Dreher alleged Experian’s decision to list the defunct credit card company (Advanta) instead of the debt’s servicer (CardWorks) as a “source of information” on his credit report was inaccurate and violated FCRA. The district court certified a class and granted summary judgment in favor of Dreher on his claim that Experian willfully violated FCRA. The parties then stipulated to a damages award of $170 per class member and the district court entered judgment on August 26, 2015 in favor of the 69,000 class members totaling $11.7 million.
On appeal, the Fourth Circuit considered whether Dreher suffered a “concrete” invasion of a legally protected interest sufficient to establish the “injury in fact” perquisite to constitutional standing under the standards set forth in Spokeo. Acknowledging that “informational injury” can be the type of intangible harm sufficient to establish standing, the circuit court concluded that the alleged statutory violation was “divorced from any real world effect.” The listing of Advanta instead of CardWorks did not affect Dreher’s security clearance or prevent Dreher from reaching customer service representatives and clearing the report of the Advanta account. Because he was not adversely affected by the alleged error on the credit report, Dreher failed to establish a concrete injury sufficient to satisfy Article III standing. Accordingly, the court vacated the judgment and remanded to the district court with instructions to dismiss the case.