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  • District Court sides with bank in class-action suit against foreign currency swap overcharges

    Courts

    On March 5, the U.S. District Court for the Eastern District of Virginia dismissed a purported class action complaint in which plaintiffs alleged the defendant banks used “fictional” foreign exchange rates that deviated from those incorporated into plaintiffs’ agreements with the defendants. Specifically, the plaintiffs asserted that defendants charged the plaintiffs “fictional” rates imposed by credit card companies, and in so doing, breached their relevant contracts with the plaintiffs and violated several state consumer protection laws.

    In dismissing the complaint, the court concluded that although the plaintiffs had standing to sue, their breach of contract claim failed as a matter of law because the complaint failed to identify any specific promises regarding exchange rates in the relevant contracts, and a singular reference to credit card companies’ rules did not incorporate such rules into the relevant contracts. The court further rejected the plaintiffs’ argument that an agency relationship existed between the credit card companies and defendants, reasoning that the plaintiffs failed to plausibly demonstrate defendants had any ability to control the rates. 

    The court similarly dismissed all the plaintiffs’ consumer protection law claims, concluding that the relevant laws did not permit for a breach of contract to serve as the basis for an unfair or deceptive trade practice.

    Courts Virginia Standing Consumer Protection Data Breach

  • District Court finds “negative emotions” alone do not establish standing under the FDCPA

    Courts

    Recently, the U.S. District Court for the Eastern District of Missouri granted a debt collector’s motion to dismiss, finding that the plaintiff’s allegations of injury after receiving one letter that violated the FDCPA did not establish standing. The plaintiff sued the debt collector under Sections 1692e and 1692g of the FDCPA, alleging that the defendant (i) made false and misleading representations, and (ii) continued to collect the debt without proper validation by sending the plaintiff a collection letter with the wrong account number and purporting the plaintiff is personally liable for her deceased husband’s medical debt. The plaintiff asserted her injuries because of receiving the letter included expending time and money to mitigate the risk of future financial harm and fear, anxiety, and stress, which “manifested physically in the form of increased heartrate.”

    The court found that the plaintiff did not allege sufficient facts to establish, or for the court to infer, a tangible injury because the plaintiff only stated she lost money without providing additional detail on what that entailed. Additionally, the court relied on the holdings of Courts of Appeals and found that the plaintiff’s alleged emotions of fear, anxiety, and stress alone do not state a cognizable or “particularized, concrete” injury. 

    Courts Debt Collection Standing FDCPA

  • District Court dismisses FDCPA class action lawsuit for lack of standing on alleged concrete injuries suffered

    Courts

    On January 31, the U.S. District Court for the Eastern District of New York dismissed an FDCPA class action lawsuit for lack of standing. According to the order, plaintiff alleged numerous violations of the FDCPA related to two debt collection letters sent to the plaintiff and his girlfriend. In September 2023, a debt collector (defendant) reportedly sent two letters to the plaintiff which allegedly did not contain the requisite information mandated by the FDCPA for communication with consumers, including validation and itemization details. One of the letters purportedly demanded payment by September 29, falling within the 30-day validation period. Additionally, plaintiff asserted that one of the letters was addressed to his girlfriend who bore no responsibility for the debt. Plaintiff claimed two concrete injuries: (i) the letters allegedly strained his relationship with his girlfriend, causing emotional distress; and (ii) due to the omission of critical information in the letters, plaintiff felt confused and uncertain about how to effectively respond.  

    In considering the plaintiff’s claims, the court discussed the elements required to state a claim for publicity given to private life and examines a specific case where such a claim was rejected by the court. It highlights that for such a claim to succeed, the matter publicized must be highly offensive to a reasonable person and not of legitimate public concern. Additionally, mere communication of private information to a single person typically does not constitute publicity, unless it has the potential to become public knowledge. Although Congress explicitly prohibits debt collectors from sharing consumer financial information with third parties, the court noted that it “does not automatically transform every arguable invasion of privacy into an actionable, concrete injury.” Therefore, the plaintiff's injury, as pleaded, was deemed insufficiently concrete for standing purposes. Regarding the second alleged injury, the court argued that confusion alone does not suffice as a concrete injury for standing purposes, and courts have determined that mere confusion or frustration does not qualify as an injury. Additionally, the court compared the case to other cases where plaintiffs had alleged confusion yet had also demonstrated further injuries.

    Courts FDCPA Class Action Consumer Finance Litigation Standing Debt Collection

  • District Court grants defendant MSJ over cross-motions on a dispute on different debt owed amounts

    Courts

    On February 2, the U.S. District Court for the Western District of Pennsylvania held that a plaintiff had standing to bring two FDCPA claims, but remanded the plaintiff’s third claim for lack of standing. The Court also granted the defendant’s motion for summary judgement as part of a cross-motion. The plaintiff is an individual suing a debt collection company for allegedly attempting to collect a debt improperly and misrepresenting the amount the plaintiff owed under the FDCPA, 15 U.S.C. § 1692. The District Court was presented with cross-motions for summary judgment filed by both parties, and supplemental briefing on Article III standing. 

    The court first determined that the plaintiff, an individual, had Article III standing in two of three of her FDCPA claims, but that the defendant was entitled to summary judgment on those claims. The Court agreed the plaintiff had Article III standing for the 1692(e) claim that the defendant misrepresented the amount of debt owed when the defendant listed the debt of $22.95 but then attached account statements showing a balance of $271.34. However, the court found that the least sophisticated debtor would understand the collection letter to unambiguously represent that the total amount of debt owed is $22.95. The plaintiff also had standing for her informational injury claim that the defendant violated § 1692g by restarting its collection activity despite having failed to provide information that validated the debt owed of $22.95. However, the court found that the defendant sufficiently validated the debt despite attachments showing a larger balance because “it was not required to show detailed files of the debt, bills, or other evidence.”  Regarding the third claim, on that the defendant violated § 1692f when it sent the debt verification to an email the plaintiff owns (but claims is a secondary email), the Court found the plaintiff did not have standing since the plaintiff had not suffered concrete injury. 

    Courts Debt Collection FDCPA Standing

  • Massachusetts State Appeals Court orders a consumer has standing to sue in state court under the FCRA without federal standing

    Courts

    On January 11, the Massachusetts Court of Appeals ordered that an employee has standing to sue in state court, despite lacking standing to sue in a federal court. The employee (plaintiff) sued a prospective employer for allegedly conducting a background check in a manner that violated the FCRA. The defendant successfully sought to have the case moved from state court to federal court. In federal court, the defendant was granted a motion to dismiss on the grounds that plaintiff lacked standing under Article III, which requires that the plaintiff allege a “concrete” injury. Ultimately, the case was remanded to state court, where the Superior Court dismissed the FCRA claims. The plaintiff appealed, and the appellate court ruled that the plaintiff had alleged facts sufficient to support standing to sue in state court, as the applicable standard did not require a showing of “concrete” harm. 

    Courts Massachusetts FCRA Appellate Standing

  • Florida appeals court: Injury required for FACTA standing

    Courts

    On July 13, a Florida District Court of Appeals affirmed the dismissal of Fair and Accurate Credit Transactions Act (FACTA) class claims brought against a defendant shoe company after determining that the lead plaintiff lacked standing because he suffered no “distinct or palpable” injury. The plaintiff first filed a class action suit in federal court, claiming a receipt he received from the company included 10 digits of his credit card number—a violation of FACTA’s truncation requirement, which only permits the last five digits to be printed on a receipt. The plaintiff did not allege that his credit card was used, lost, or stolen in any way, nor was evidence presented to show there was any danger of his credit card being used. The suit was stayed pending the resolution of a different FACTA dispute in the U.S. Court of Appeals for the Eleventh Circuit. As previously covered by InfoBytes, a split en banc 11th Circuit concluded that the plaintiffs in that separate action lacked standing because they did not allege any concrete harm and vacated a $6.3 million settlement. Specifically, the en banc majority rejected the named plaintiff’s argument that “receipt of a noncompliant receipt itself is a concrete injury,” and noted that “nothing in FACTA suggests some kind of intrinsic worth in a compliant receipt.”

    Following the 11th Circuit decision, the parties agreed to dismiss the federal action and remanded a later-filed action to state court where the plaintiff argued that “state standing was plenary and therefore less restrictive than federal standing.” The trial court disagreed and granted the defendant’s motion to dismiss, ruling that “Florida requires a concrete injury to have standing,” and “alleging a mere statutory violation does not convey standing per se.” The trial court ruled that “obtaining a receipt in alleged violation of FACTA does not satisfy this requirement,” and the appeals court agreed, holding that, among other things, no actual damages occurred since nothing was alleged to have been charged to the plaintiff’s account, nor was there the imminent possibility of injury because the plaintiff retained possession of the receipt. In its opinion, the appellate court cited the U.S. Supreme Court’s decisions in Spokeo and TransUnion with approval, noting that “individuals ‘must allege some threatened or actual injury resulting from the putatively illegal action.’”

    Courts State Issues Florida FACTA Privacy, Cyber Risk & Data Security Class Action U.S. Supreme Court Standing Appellate

  • Supreme Court limits class standing in FCRA suit

    Courts

    On June 25, the U.S. Supreme Court issued a 5-4 decision in TransUnion LLC v. Ramirez, holding that only a plaintiff concretely harmed by a defendant’s violation of the FCRA has Article III standing to seek damages against a private defendant in federal court. In writing for the majority, Justice Brett Kavanaugh reversed and remanded a 2020 decision issued by the U.S. Court of Appeals for the Ninth Circuit, which found that all 8,185 class members had standing to recover statutory damages due to, among other things, TransUnion’s alleged “reckless handling of information” from the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC), which, according to the appellate court, subjected class members to “a real risk of harm” when TransUnion erroneously linked class members to criminals and terrorists with similar names in a database maintained by OFAC. (Covered by InfoBytes here.) The 9th Circuit, however, did reduce punitive damages, explaining that, although TransUnion’s “conduct was reprehensible, it was not so egregious as to justify a punitive award of more than six times an already substantial compensatory award.” TransUnion filed a petition for writ of certiorari after the 9th Circuit denied its petition for rehearing.

    The Court considered whether federal courts can certify consumer classes where the majority of class members have not alleged the type of concrete injury necessary to establish Article III standing, even if the named plaintiff suffered an injury meeting this bar. The parties stipulated prior to trial that only 1,853 members of the class had misleading credit reports containing OFAC alerts provided to third parties during the period specified in the class definition, whereas the remaining class members’ credit files were not provided to any potential creditors during that period. In applying the standing requirement of concrete harm, the majority concluded that the 6,332 class members whose credit reports were not provided to third parties did not suffer a concrete harm and thus did not have standing as to the reasonable-procedures claim. The majority further determined that even though all 8,185 class members complained about alleged formatting defects in certain mailings sent to them by TransUnion, only the lead plaintiff had demonstrated that the alleged defects caused him concrete harm, thus only he could move forward with those claims. According to the majority, the remaining class members failed to explain how the formatting error prevented them from requesting corrections to prevent future harm.

    “The mere existence of inaccurate information, absent dissemination, traditionally has not provided the basis for a lawsuit in American courts,” the majority wrote, adding that while the Court “has recognized that material risk of future harm can satisfy the concrete-harm requirement in the context of a claim for injunctive relief to prevent the harm from occurring, at least so long as the risk of harm is sufficiently imminent and substantial,” in this instance the 6,332 class members have not demonstrated that the risk of future harm materialized.

    Courts U.S. Supreme Court FCRA Credit Reporting Agency Appellate Ninth Circuit OFAC Class Action Standing Financial Crimes

  • 6th Circuit: “Anxiety and confusion” not an injury under FDCPA

    Courts

    On May 28, the U.S. Court of Appeals for the Sixth Circuit held that a consumer’s alleged “confusion and anxiety” does not constitute a concrete and particularized injury under the FDCPA. The plaintiff alleged that the defendant’s debt collector, an attorney’s office, violated the FDCPA when it communicated with him, on behalf of a bank, by sending a letter stating the plaintiff’s mortgage loan was sent to foreclosure. The letter also informed the plaintiff that the bank “might have already sent a letter about possible alternatives,” further explaining how the plaintiff could contact the bank “to attempt to be reviewed for possible alternatives to foreclosure.” The plaintiff also alleged that the attorney’s office “sent a form of this letter to tens of thousands of homeowners and that it did so without having any attorney provide a meaningful review of the homeowners’ foreclosure files, so the communications deceptively implied they were from an attorney.” The plaintiff alleged the letter confused him because he was unsure if it was from an attorney, and that, moreover, the letter “raised [his] anxiety” by suggesting “that an attorney may have conducted an independent investigation and substantive legal review of the circumstances of his account, such that his prospects for avoiding foreclosure were diminished.”

    The 6th Circuit found the plaintiff’s allegations to “come up short” in regard to proving that the statutory violations caused him individualized concrete harm. In addition, the appellate court said that “confusion doesn’t have a close relationship to a harm that has traditionally been regarded as providing a basis for a lawsuit.”

    Courts Appellate Sixth Circuit Debt Collection FDCPA Standing Spokeo

  • 6th Circuit affirms dismissal of FACTA credit card receipt suit

    Courts

    On May 11, the U.S. Court of Appeals for the Sixth Circuit affirmed dismissal of a putative class action for lack of subject matter jurisdiction, holding that while a merchant technically violated the Fair and Accurate Credit Transactions Act (FACTA) by including 10 credit card digits on a customer’s receipt, the customer failed to allege any concrete harm sufficient to establish standing. According to the opinion, the named plaintiff filed a class action against the merchant alleging the first six and last four digits of her credit card number were printed on her receipt—a violation of FACTA’s truncation requirement, which only permits the last five digits to be printed on a receipt. The plaintiff argued that this presented “a significant risk of the exact harm that Congress intended to prevent—the display of card information that could be exploited by an identity thief,” and further claimed she did not need to allege any harm beyond the violation of the statute to establish standing. The district court disagreed, ruling that the plaintiff “lacked standing because she alleged merely a threat of future harm that was not certainly impending” and that the merchant’s technical violation demonstrated no material risk of identity theft.

    In agreeing with the district court, the 6th Circuit concluded that a “violation of the statute does not automatically create a concrete injury of increased risk of real harm even if Congress designed it so.” Moreover, the appellate court reasoned that the “factual allegations in this complaint do not establish an increased risk of identity theft either because they do not show how, even if [p]laintiff’s receipt fell into the wrong hands, criminals would have a gateway to consumers’ personal and financial data.” The appellate court further concluded, “statutory-injury-for-injury’s sake does not satisfy Article III’s injury in fact requirement” and the court must exercise its constitutional duty to ensure a plaintiff has standing.

    Courts Appellate Sixth Circuit FACTA Credit Cards Class Action Standing Privacy/Cyber Risk & Data Security Consumer Finance

  • 7th Circuit: “Stress and confusion” not an injury under the FDCPA

    Courts

    On March 11, the U.S. Court of Appeals for the Seventh Circuit held that a consumer’s alleged “stress and confusion” did not constitute a concrete and particularized injury under the FDCPA. The plaintiff alleged that the defendant debt collector violated the FDCPA when it directly communicated with her by sending a dunning letter related to unpaid debt even though she had previously notified the original lender that she was represented by counsel and requested that all debt communications cease. The district court granted the defendant’s summary judgment motion on the grounds that the debt collector could not have violated the FDCPA “without having actual knowledge of [the consumer’s] cease-communication request.”

    On appeal, the 7th Circuit concluded that the complaint should be dismissed for lack of subject-matter jurisdiction because the plaintiff lacked standing. The 7th Circuit held that the consumer’s allegations—that the dunning letter caused her “stress and confusion” and “made her think that ‘her demand had been futile’”—did not amount to a concrete and particularized “injury in fact” necessary to establish Article III standing under the FDCPA. The court further noted that “the state of confusion is not itself an injury”—rather, for the alleged confusion to be concrete, “a plaintiff must have acted ‘to her detriment, on that confusion.’” Here, the consumer pointed only to a statutory violation and “failed to show that receiving [the debt collector’s] dunning letter led her to change her course of action or put her in harm’s way.” Additionally, the appellate court found the consumer’s argument that the dunning letter also “invaded her privacy,” raised for the first time on appeal, unpersuasive because she did not allege that injury in the complaint.

    Courts Appellate Seventh Circuit Debt Collection FDCPA Standing

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