Litigation Alert: The Fourth Circuit Finds No Article III Injury in Fair Credit Reporting Act Case

The U.S. Court of Appeals for the Fourth Circuit held that the plaintiff’s allegations that Experian denied him access to information to which he was entitled under the Fair Credit Reporting Act was insufficient to establish injury under Article III in Dreher v. Experian Information Solutions, Inc., et al.

The Fair Credit Reporting Act was enacted to “ensure fair and accurate credit reporting, promote efficiency in the banking system, and protect consumer privacy.” Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47, 52 (2007). It imposes certain requirements on any “consumer reporting agency” that “regularly … assembl[es] or evaluat[es] consumer credit information … for the purpose of furnishing consumer reports to third parties.” 15 U.S.C. § 1681a(f). Such requirements include, but are not limited to, “clearly and accurately” disclosing to the consumer “[t]he sources of information [in the consumer’s file at the time of the request].” 15 U.S.C.§ 1681(g)(a)(2). The FCRA provides a private right of action against consumer reporting agencies for their willful or negligent failures to comply with the FCRA’s requirements. See 15 U.S.C. § 1681n(a) & 1681o(a).

Plaintiff Michael Dreher filed a class action suit in September 2011 against defendants Experian Information Solutions, Inc. (Experian) and CardWorks, Inc. and CardWorks Servicing, LLC (CardWorks) in the Eastern District of Virginia alleging that Experian willfully violated the FCRA by failing to provide accurate information in its credit report. Dreher alleged that, in 2010, he was undergoing a background check for security clearance when the federal government discovered he was associated with a delinquent credit card account. Dreher requested his credit report from Experian, which listed a delinquent account under the names Advanta Bank or Advanta Credit Cards. Dreher corresponded with Advanta about removing the delinquent account, which remained on his credit report until June 2012. The delinquent account did not affect Dreher’s security clearance.

Unknown to Dreher at the time, Advanta had gone into receivership in early 2010, and CardWorks had been appointed as servicer of Advanta’s portfolio. CardWorks continued using the Advanta name, website, and phone number, and continued to list Advanta accounts on consumer credits reports as being associated with the Advanta name. Dreher alleged the listing on his credit report of Advanta rather than CardWorks as the holder of his delinquent account violated the FCRA’s requirement that a consumer report accurately identify the source of information in the report.

In May 2013, the district court certified a class of all persons who requested a copy of a consumer disclosure from Experian after August 1, 2010 and received a document in response that identified Advanta Bank or Advanta credit cards. The district court later granted Dreher’s motion for partial summary judgment concluding that Experian committed a willful violation of the FCRA and denied Experian’s cross-motion for partial summary judgment wherein Experian argued that Dreher lacked Article III standing. The district court held that the FCRA “creates a statutory right to receive the ‘sources of information’ for one’s credit report,” and when a credit reporting agency fails to disclose those sources, “it violates that right, thus creating a sufficient injury-in-fact for constitutional standing.”

The Fourth Circuit reversed the district court’s decision, concluding...