In order for a plaintiff to have standing in a Fair Credit Reporting Act case, a third party must have read, understood, or otherwise considered the inaccurate information. In other words, if a credit report falls in the forest and nobody is around to hear it, it doesn’t make a sound. The Court of Appeals for the Fourth Circuit last week vacated a class certification order in an FCRA case involving alleged inaccurate Office of Foreign Assets Control (OFAC) alerts on tenant screening reports. The appeals court ruled that the plaintiff failed to demonstrate concrete injury necessary for Article III standing and vacated a class certification that was approved by a District Court judge.
The background: The lawsuit stemmed from a 2018 incident where the plaintiff, a U.S. Navy veteran, applied to rent an apartment in Maryland. The defendant, a consumer reporting agency, provided a tenant screening report to the property owner that incorrectly indicated the plaintiff was a “possible match” to someone on the OFAC list of specially designated nationals who threaten America’s national security.
- The plaintiff filed a lawsuit against the defendant, alleging willful failure to “follow reasonable procedures to assure maximum possible accuracy” of OFAC information in tenant screening reports, as required by the FCRA. The plaintiff sought to represent a class of similarly situated individuals and pursued statutory and punitive damages.
- The district court certified a class of individuals who were the subject of consumer reports furnished by the defendant between April 2017 and May 2019, which reported possible OFAC matches without corresponding identifying information.
The ruling: The Fourth Circuit vacated the class certification order, finding that the plaintiff lacked Article III standing to pursue the OFAC claim. The court emphasized that to demonstrate concrete injury for standing purposes, the plaintiff needed to show that a third party read and understood, or otherwise considered, the misleading OFAC information in his screening report.
- The court rejected the argument that mere dissemination of an inaccurate report to a third party is always sufficient to establish concrete injury. Instead, it held that the fundamental nature of reputational harm requires evidence that the defamatory information was actually read and understood by a third party.
- In this case, the evidence showed that the property manager who reviewed the plaintiff’s report did not know what OFAC was and could not recall ever looking at the OFAC section of any screening report. The court found no evidence suggesting that anyone at the property management company read or understood the defamatory significance of the OFAC alert in the plaintiff’s report.
- The Fourth Circuit distinguished this case from the Supreme Court’s ruling in TransUnion LLC v. Ramirez, where there was clear evidence that third parties had read and acted upon the misleading OFAC information. Here, the court concluded that the plaintiff failed to demonstrate the publication necessary to support a concrete reputational injury analogous to defamation.
