On October 12, the U.S. District Court for the Northern District of Illinois denied certification of a putative class action asserting that TransUnion violated the Fair Credit Reporting Act (FCRA) and the Missouri Merchandising Practices Act (MMPA) by allegedly misleading consumers about the accuracy and popularity of VantageScore 1.0, TransUnion’s proprietary credit scoring model. The court held that the plaintiff was an inadequate class representative due to his lack of credibility, and the asserted class claims failed both the commonality and predominance prongs of Federal Rule of Civil Procedure (FRCP)23.

In Sgouros v. TransUnion Corp., the plaintiff alleged that he purchased a 3-in-1 credit report, credit score & debt analysis from TransUnion, which included his VantageScore. That same day, the plaintiff was allegedly denied an auto loan because his credit score was too low. The plaintiff alleged that the credit score provided to the lender was 100 points lower than his VantageScore. The plaintiff claimed that VantageScore is inferior to the FICO credit score used by most lenders, and that he would not have purchased his VantageScore if he knew it was different than his FICO score.

The plaintiff filed suit claiming TransUnion violated § 1681g(f)(7)(A) of the FCRA by providing a credit score that does not assist consumers in understanding their credit scoring assessment and predicting the future of their credit behavior. He also asserted a claim under the MMPA, claiming TransUnion’s marketing of VantageScore was a deceptive sale practice under that Act. The plaintiff then moved to certify a nationwide FCRA class and a Missouri sub-class.

The court denied certification of both classes, based on the plaintiff’s failure to demonstrate commonality, adequacy, or predominance as required under FRCP 23.

First, the court found that the plaintiff failed to establish that the class members suffered a common injury. Although the plaintiff asserted there were several “common questions” at issue, including primarily whether VantageScore is misleading, the court held that the plaintiff’s “common questions” were nothing more than restatements of the core elements of the alleged statutory violations. The court also noted that “the core liability questions” asserted did not speak to whether the class suffered a common injury. Since “[t]he purpose of common questions is to determine whether the class has suffered the same injury,” the plaintiff’s failure to show a common injury doomed his certification bid.

Second, the court held the classes could not be certified because the plaintiff was an inadequate representative. The court found that the plaintiff’s deposition revealed inconsistent testimony that significantly undermined his credibility. For instance, the plaintiff testified that he had learned his VantageScore was “useless” months before he made the VantageScore purchase at issue in this case. He also admitted in his deposition that he purchased the VantageScore after the denial of his auto loan. Finally, he admitted that he did not read any of the explanatory materials provided by TransUnion along with his VantageScore or on its website, undermining his claim that he was misled. Recognizing that his inconsistent testimony and credibility issues threatened to compromise the class, the court held that the plaintiff was inadequate.

Third, the court held that the plaintiff failed to establish predominance. Similar to its commonality analysis, the court held that determining whether any consumer was or was not assisted in understanding their credit scoring assessment by receiving their VantageScore would be fact-intensive and individualized, precluding class treatment.

This case is a reminder that FRCP 23 sets a high bar for class certification and should be invoked only when a case truly presents a common injury that can be adjudicated based on common evidence. Mere recitation of the core elements of statutory liability does not suffice. The case is also a reminder that a proposed class action is only as good as its representative: if the class representative is subject to his own unique defenses, factual weaknesses, and credibility issues, a class should not be certified.

Photo of David N. Anthony David N. Anthony

David Anthony handles litigation against consumer financial services businesses and other highly regulated companies across the United States. He is a strategic thinker who balances his extensive litigation experience with practical business advice to solve companies’ hardest problems.

Photo of Noah DiPasquale Noah DiPasquale

Noah helps clients in the consumer finance industry navigate national class-action litigation by employing rigorous advocacy skills to pursue client goals.

Photo of Ronald I. Raether, Jr. Ronald I. Raether, Jr.

Ron leads the firm’s Privacy + Cyber team. Drawing from nearly 30 years of experience, he provides comprehensive services to companies in all aspects of privacy, security, data use, and risk mitigation. Clients rely on his in-depth understanding of technology and its application

Ron leads the firm’s Privacy + Cyber team. Drawing from nearly 30 years of experience, he provides comprehensive services to companies in all aspects of privacy, security, data use, and risk mitigation. Clients rely on his in-depth understanding of technology and its application to their business to solve their most important challenges — from implementation and strategy to litigation and incident response. Ron and his team have redefined the boundaries of typical law firm privacy and cyber services in offering a 360 degree approach to tackling information governance issues. Their holistic services include drafting and implementing bespoke privacy programs, program implementation, licensing, financing and M&A transactions, incident response, privacy and cyber litigation, regulatory investigations, and enforcement experience.

Photo of Tim J. St. George Tim J. St. George

Tim defends institutions nationwide facing class actions and individual lawsuits. He has particular experience litigating consumer class actions, including industry-leading expertise in cases arising under the Fair Credit Reporting Act and its state law counterparts, as well as litigation arising from data breaches.

Photo of Ethan G. Ostroff Ethan G. Ostroff

Ethan Ostroff’s practice focuses on financial services litigation and consumer law compliance counseling. Ethan is part of the firm’s national practice representing consumer-facing companies of all types in defense of individual and class action claims and counseling them on compliance with federal and

Ethan Ostroff’s practice focuses on financial services litigation and consumer law compliance counseling. Ethan is part of the firm’s national practice representing consumer-facing companies of all types in defense of individual and class action claims and counseling them on compliance with federal and state laws.