The Fair Credit Reporting Act (FCRA) is a major piece of consumer legislation going all the way back to 1970 and amended many times since. The Act came into being because of widespread complaints about errors in credit bureau files and the difficulties people were having getting those errors corrected. The FCRA now governs the activities of all “consumer reporting agencies” and contains detailed rules about how consumer information is acquired, stored and used, and how errors are resolved.

Over the past decade, the FCRA has gained greatly in importance because of the proliferation of data available on the Internet, and an expanding use of that data to include not just credit but also insurance, employment, property rentals, debt collection, check cashing, child support, government licensing, medical records, family history, cellphone contracts, utility services, spying on neighbors, finding old girlfriends and a host of other activities. This explosion of easily accessible data has led to a growing number of companies that assemble and sell information about people, including names, addresses, phone numbers, income, religion, marital status, criminal records, value of houses owned, favorite football team, favorite ice cream flavor, etc. These companies get their information from online public and social media sources.

The FCRA defines a consumer reporting agency as anyone assembling or evaluating information about consumers for purposes of preparing and selling consumer reports. Consumer reports are reports bearing not just on creditworthiness but also “general reputation, personal characteristics or mode of living” that are expected to be used for credit, insurance, employment and certain other purposes identified in the Act.

The Consumer Financial Protection Bureau lists 45 companies as consumer reporting agencies governed by the FCRA. However, there are many other data-assembly companies out there trying to avoid this classification by making self-serving statements that they are not consumer reporting agencies and that anyone acquiring information from them cannot (wink, wink) use the information for purposes that would cause them to fall into the consumer reporting agency box. A good number of these “not us” companies do, in fact, come within the FCRA’s definition of a consumer reporting agency, and lawyers have been quick to pounce on this and file lawsuits alleging violations of the Act. The FCRA is fertile ground for class-action lawyers because it allows private lawsuits with damages of not less than $100 or more than $1,000 per violation.

One such action, Spokeo Inc. v. Robins, has now made it to the U.S. Supreme Court, with a decision expected next year. Spokeo claims it is not a consumer reporting agency, but that’s not the issue before the court. The issue is whether Congress can pass a law like the FCRA allowing for private lawsuits with monetary sanctions without plaintiffs needing to prove actual injury. Thomas Robins claims Spokeo assembled and was selling a consumer report about him that contained false information. He claims that possibly, sometime in the future, this report might impair his ability to find a job. But he has not alleged any actual (to date) injury caused by the report.

Robins and his lawyers want this to be a class action, brought on behalf of millions of other individuals whose Spokeo reports contain inaccurate information. Spokeo argues the case must be dismissed because Article III of the U.S. Constitution requires proof of actual injury, and Congress can’t pass a law eliminating this requirement. The case has huge implications for many Internet companies that, one way or another, assemble data about consumers.

–

Attorney Jim Flynn with Flynn Wright & Fredman LLC is the author of three law-related novels. Email him at moneylaw@jtflynn.com.