The U.S. Court of Appeals for the Eleventh Circuit recently affirmed the dismissal of a complaint filed by a consumer who was only an authorized user of a credit card account against two credit reporting agencies ("CRAs") alleging willful violations of the federal Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq. ("FCRA") for supposedly inaccurately reporting the account as delinquent on her credit reports.
In so ruling, the Court concluded that the CRAs did not willfully violate the FCRA because their interpretation of the "maximum possible accuracy" requirement under FCRA subsection 1681e(b) to require only that it report information that is technically accurate was an objectively reasonable interpretation of the FCRA.
A copy of the opinion is available at: Link to Opinion
A consumer was designated as an authorized user on her parents' credit card account after her parents became ill. She alleged that, as an authorized user, "she never assumed and had no financial responsibility for any debts on that card."
After her parents died, the account went into default. As a result, the consumer's credit scores with two CRAs fell drastically.
The creditor agreed to remove the consumer from the account, but one of the CRAs did not remove the account from her credit report, instead notating that the account relationship was terminated. The creditor eventually requested that the account be deleted from the consumer's credit reports, and the CRAs complied, returning the consumer's credit score to her alleged "prior excellent level."
The consumer filed suit against the CRAs alleging a willful violation of the subsection 1681e(b) by failing to "follow reasonable procedures to assure maximum possible accuracy" of the credit reports of authorized users of credit card accounts. 15 U.S.C. §§ 1681e(b), 1681n. More specifically, the consumer alleged that listing the account on her credit report inaccurately implied that she was liable on the account when she was not, thereby causing her credit report and score to be inaccurate.
The trial court dismissed the complaint, holding that the consumer failed to state a cause of action because it was not unreasonable for the consumer reporting agencies to read subsection 1681e(b) to permit them to report information about accounts for which the consumer is an authorized user. See Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47, 69 (2007).
The consumer appealed the lower court's ruling to the Eleventh Circuit, but first requested that the Appellate Court dismiss her appeal as to the CRA who removed the account from her report without further request from the creditor. The Eleventh Circuit complied.
On appeal, the remaining CRA argued that the consumer lacked standing to the jurisdiction of the federal courts under Article III of the Constitution of the United States, because she failed to prove that she suffered an injury in fact. As you may recall, "[a]n injury sufficient for standing purposes is 'an invasion of a legally protected interest which is (a) concrete and particularized, and (b) actual or imminent, not conjectural or hypothetical." Common Cause/Ga. v. Billups, 554 F.3d 1340, 1350 (11th Cir. 2009) (quoting Lujan, 504 U.S. at 560). A concrete injury "must actually exist," meaning it must be "real and not abstract." Spokeo, Inc. v. Robbins, 136 S. Ct. 1540, 1548 (2016) (citations and internal quotation marks omitted). An intangible injury, like a violation of the right to free speech, can be concrete. Id. at 1549.
Here, the Eleventh Circuit concluded that the consumer alleged an injury in fact and had standing to pursue her complaint because (i) the harm caused by the alleged FCRA violation is closely related to the harm caused by publication of defamatory information; (ii) she alleged that she "lost time.. attempting to resolve the credit inaccuracies" and; (iii) her alleged injuries affected her personally by dropping her score 100 points. See, e.g., Restatement (First) of Torts § 569 cmt. g (Am. Law Inst. 1938) (explaining that it is "actionable per se" to publish a false statement that another has "refus[ed] to pay his debts"); Cf. Palm Beach Golf Center-Boca, Inc. v. John G. Sarris, D.D.S., P.A., 781 F.3d 1245, 1252–53 (11th Cir. 2015) (explaining that the occupation of a fax machine during the transmission of an unwanted fax constituted a concrete injury).
Next, the Eleventh Circuit examined whether or not the consumer's complaint stated a cause of action under the FCRA.
To establish a willful violation with section 1681e(b), a consumer must establish that the reporting agency either knowingly or recklessly violated that section. Levine v. World Fin. Network Nat'l Bank, 554 F.3d 1314, 1318 (11th Cir. 2009); see also Safeco, 551 U.S. at 56–57. A defendant recklessly violates the FCRA if it takes an action that "is not only a violation under a reasonable reading of the statute's terms, but shows that the company ran a risk of violating the law substantially greater than the risk associated with a reading that was merely careless." Safeco, 551 U.S. at 69. A defendant that adopts an objectively reasonable reading of the FCRA does not knowingly violate the FCRA. Id. at 70 n.20.
Courts have offered two definitions of "maximum possible accuracy" under subsection 1681e(b). Some have ruled that the standard requires only that the information reported is "technically accurate" and not false. See Heupel v. Trans Union LLC, 193 F. Supp. 2d 1234, 1240 (N.D. Ala. 2002); see Grant v. TRW, Inc., 789 F. Supp. 690, 692 (D. Md. 1992); accord McPhee v. Chilton Corp., 468 F. Supp. 494, 497–98 (D. Conn. 1978). Other courts interpreted the "maximum possible accuracy" requirement to require CRAs to report information that is both "technically accurate" and not misleading or incomplete. See Dalton v. Capital Associated Indus., Inc., 257 F.3d 409, 415 (4th Cir. 2001); Pinner v. Schmidt, 805 F.2d 1258, 1261, 1263 (5th Cir. 1986); Koropoulos v. Credit Bureau, Inc., 734 F.2d 37, 40 (D.C. Cir. 1984).
Although the Eleventh Circuit preferred the interpretation requiring credit reports be both accurate and not misleading, it could not conclude that reading subsection 1681e(b) to require only technical accuracy was objectionably unreasonable.
Because the CRA adopted an interpretation of the FCRA that was not objectively unreasonable, the Eleventh Court determined that the CRA's reporting did not willfully violate the FRCA's requirement "follow reasonable procedures to assure the maximum possible accuracy of reported information" under subsection 1681e(b).
Accordingly, dismissal of the consumer's complaint was affirmed.
Ralph T. Wutscher
Maurice Wutscher LLP
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