Recently, the U.S. District Court for the Eastern District of Pennsylvania denied a national credit reporting agency’s (CRA’s) motions for class decertification and summary judgment in a case involving allegations that the CRA willfully violated FCRA’s reinvestigation provision.
The class asserts that the CRA diminished their credit scores by not reinvestigating disputed hard credit inquiries. The CRA contested certification on the grounds that the class could not establish that they had a concrete injury traceable to the CRA’s actions to confer constitutional standing, and that the class did not have statutory standing under FCRA because they did not show that the reports in question were inaccurate, among other arguments. The CRA also moved for summary judgment asserting that the class had failed to show that the CRA “willfully” violated FCRA.
The court held that the class could establish standing under two theories of harm, and that a showing of actual inaccuracy was not required under Third Circuit Court of Appeals precedent. The court found that the plaintiffs could demonstrate two “concrete” harms for constitutional standing. The first was the “diminution” of the plaintiffs’ credit scores, a recognized harm in the Third Circuit regardless of publication of the scores. The second harm was the waste of time and expense filing a dispute with the CRA, a “traditional monetary harm,” caused by the CRA’s allegedly blanket practice of ignoring such claims.
The CRA also asserted that plaintiffs lacked statutory standing under FCRA because Third Circuit precedent required them to demonstrate that the “item of information which they complained of in their dispute letter is in fact inaccurate.” The district court found that precedent did not apply because the CRA conceded that no reinvestigation took place. Thus, the class had constitutional and statutory standing sufficient to survive the decertification motion.
The court also denied the CRA’s motion for summary judgment. The CRA asserted that because it complied with the “prevailing practice in the industry” of not reinvestigating disputes of hard inquires to minimize reinvestigation costs that it could not “willfully” violate FCRA. The court disagreed. The CRA’s reading of the statute was unreasonable because it improperly limited FCRA’s broad language, without textual support. In addition, Third Circuit authority “warned” the CRA against its interpretation because it required the CRA to “verify the accuracy of its initial source information” during a reinvestigation. Finally, the court found that the lack of regulatory guidance regarding the reinvestigation procedure did not make its interpretation reasonable because FTC’s 40 Years Report, a non-binding opinion that stated that disputes over hard inquires had to be investigated, provided the CRA enough guidance on the scope of its reinvestigation duties to render its interpretation unreasonable.