The U.S. Supreme Court recently decided to hear a case brought under the Fair Credit Reporting Act (“FCRA”) to determine whether individual consumers have standing to sue a consumer reporting agency for statutory violations of the FCRA when no “actual damages” were suffered by the consumer.
The FCRA, like other privacy laws, imposes monetary damages against consumer reporting agencies for statutory violations. When Congress enacted the FCRA, it also created a private cause of action for “consumers” against “consumer reporting agencies” for statutory violations, but it did not require a consumer to allege that the violation caused any harm as a result of the violation.
The Supreme Court will likely approach the issue within the context of analyzing Congressional authority to confer Article III standing. The resolution of this separation of powers argument could have significant consequences for companies and employers covered by the FCRA and other privacy laws.
In Spokeo, Inc. v. Robins, the plaintiff consumer alleged that Spokeo, a website that aggregates personal data from public records and other online sources, failed to maintain procedures to assure the “maximum possible accuracy” of any consumer report it creates. According to the complaint, the consumer report for the plaintiff that was produced by Spokeo was not accurate and interfered with the plaintiff’s ability to obtain employment. The Ninth Circuit determined that while there may not be any consequential damages resulting from the inaccurate information, the harm to the plaintiff is inferred by the FCRA’s creation of a private cause of action for such violation.
This case could have a significant impact on class action lawsuits because those plaintiffs who may have otherwise been excluded for failing to allege actual damages would be included as class members.