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Financial Services Law Insights and Observations

Class certification granted in FCRA suit against credit reporting agency

Courts Class Action Ninth Circuit Appellate FCRA Credit Reporting Agency

Courts

On October 1, the U.S. District Court for the Central District of California granted a plaintiff’s motion for class certification in an action against a national credit reporting agency for allegedly failing to follow reasonable procedures to assure maximum possible accuracy in the plaintiffs’ credit reports, in violation of the FCRA. As previously covered by InfoBytes, the credit reporting agency allegedly failed to delete all of the accounts associated with a defunct loan servicer, despite statements claiming to have done so in January 2015. As of October 2015, 125,000 accounts from the defunct loan servicer were still being reported, and the accounts were not deleted until April 2016. The class action alleges that the credit reporting agency violated the FCRA by continuing to report the past-due accounts, even after deleting portions of the positive payment history on the accounts. After the district court initially granted summary judgment in favor of the credit reporting agency, the U.S. Court of Appeals for the Ninth Circuit revived the lawsuit, holding that a “reasonable jury could conclude that [the credit reporting agency’s] continued reporting of [the account], either on its own, or coupled with the deletion of portions of [the consumer’s] positive payment history on the same loan, was materially misleading.” 

In certifying a class of all persons whose credit report contained an account originated after January 21, 2015, from the defunct loan servicer, the district court concluded that the “Defendant’s failure to use maximum reasonable procedures to prevent the continued reporting of delinquent [loan servicer] accounts—presents a clear risk of material harm to Plaintiff’s concrete interest in accurate credit reporting.” The court rejected the credit reporting agency’s argument that the named plaintiff must prove standing on behalf of the entire class, determining that “for all the same reasons Plaintiff has standing, it’s at least possible that the unnamed class members also have standing.” Moreover, the court rejected the argument that damages should be an individual question because many class members “likely suffered no injury at all.” The court concluded that the fact that each class member may “collect slightly different amounts of statutory damages is insufficient, without more, to defeat a showing of predominance in this case.”

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