The Court of Appeals for the Second Circuit has reversed a ruling against a defendant that was found to have violated the Fair Credit Reporting Act, ruling the defendant did not place an “impossible condition” on the plaintiff to provide additional documentation that it requested. In a significant decision for companies operating in the tenant screening and background reporting space, the court held that the defendant did not violate the FCRA when it declined to accept a conservatorship certificate that was facially invalid and initially requested a power of attorney. The court also affirmed the dismissal of Fair Housing Act claims, concluding the screening platform did not proximately cause the denial of housing.
The background: The case arose after a housing provider denied a rental application based on a criminal history report generated through the defendant’s screening platform. The applicant’s mother, who served as conservator following a traumatic brain injury, sought a copy of the consumer report.
- The defendant’s authentication policies required proper identification before releasing a file. The plaintiff submitted a copy of a probate court conservatorship certificate. However, the document expressly stated it was “NOT VALID WITHOUT COURT OF PROBATE SEAL IMPRESSED,” and the copy provided did not display an impressed seal.
- Internal notes initially reflected a request for a notarized power of attorney. The plaintiff later explained that a power of attorney was not possible because her son lacked capacity.
- The issue was escalated internally, and the company ultimately advised that a conservatorship certificate would suffice if a valid copy with a visible seal were provided. The plaintiff resubmitted the certificate, but again without a visible seal.
- A district court judge found that while the document was facially invalid, the company had nevertheless violated the FCRA by making it “impossible” for the plaintiff to obtain the file during the period in which it requested a power of attorney. It awarded statutory and punitive damages.
The ruling: The Second Circuit reversed that portion of the judgment. The court emphasized that the FCRA allows consumer reporting agencies to require “proper identification” before disclosing a file. Because the plaintiff never provided a facially valid conservatorship certificate, the court held she could not show that the company’s documentation requirements prevented access to the report.
- The appellate panel rejected the “impossible condition” theory, noting that once the issue was escalated, the company informed the plaintiff that a properly sealed conservatorship certificate would be accepted.
- The court concluded there was no basis to impose FCRA liability where the consumer failed to provide valid documentation even after being informed of what was required.
