The Ninth Circuit Court of Appeals has reversed a lower court’s decision that obtaining an individual’s credit report without a permissible purpose is enough under Article III of the Constitution to confer standing to file a lawsuit, even if the plaintiff is not able to allege a nefarious reason for doing so.
A copy of the ruling in the case of Nayab v. Capital One can be accessed by clicking here.
The plaintiff found that the defendant had made several inquiries on her credit report without her permission. She alleged in her lawsuit that the inquiries were a violation of the Fair Credit Reporting Act and had caused her credit score to drop. A District Court judge had dismissed the plaintiff’s claim, which she appealed to the Ninth Circuit.
The Appeals Court ruled that the plaintiff only needs to allege that her credit report was obtained for a purpose not authorized by the FCRA to survive a motion to dismiss, and that the defendant bears the burden of pleading it obtained the report for a permissible purpose. The plaintiff does not have the burden of pleading the actual purpose behind the procurement of her credit report, the Appeals Court ruled.
Section 1681b(f)(1) of the FCRA, which says that a person may not obtain a credit report unless “the consumer report is obtained for a purpose for which the consumer report is authorized to be furnished under this section,” “is the central provision protecting the consumer’s privacy interest: every violation invades the consumer’s privacy right that Congress sought to protect in passing the FCRA,” the Appeals Court wrote.
The District Court judge also erred when the burden of proving the defendant’s reason for obtaining the credit report was on the shoulders of the plaintiff, the Appeals Court ruled.
“A plaintiff need allege only facts giving rise to a reasonable inference that the defendant obtained his or her credit report in violation of §1681b(f)(1) to meet their burden of pleading,” the Appeals Court wrote in its ruling. “Requiring otherwise would create an often insurmountable legal barrier to the protection of the interests the FCRA sought to protect. Notably, this question centers around whether the plaintiff must plead facts which establish the defendant’s actual purpose
