On June 19, a jury sitting in federal court in the United States District Court for the Northern District of California awarded plaintiffs $60 million after finding that the defendant, TransUnion, LLC, violated provisions of the Fair Credit Reporting Act (FCRA). This is reported to be the largest jury award on record for FCRA violations.1 The case is Ramirez v. Trans Union, LLC.2
By way of background, the FCRA, 15 U.S.C. § 1681 et seq., is a consumer protection law designed, inter alia, to promote the accuracy, fairness and privacy of information in the files of entities meeting the definition of a Consumer Reporting Agency (CRA). CRAs are entities that compile and sell consumer reports. Because inaccuracies in consumer reports have the potential to damage a consumer’s access to credit, employment, housing and/or insurance, the FCRA regulates how certain information about consumers is collected, shared and sold by CRAs.
Among other things, the FCRA requires CRAs to ensure that consumers have access to the information CRAs have about them, and to provide consumers an opportunity to review and dispute the completeness or accuracy of such information. One kind of inaccurate consumer report is known as a “mixed or mismerged file,” which means that some or all of the information in the consumer report pertains to someone other than the subject of the report. This error may occur when two different persons share the same or similar names, locations or other characteristics.
The thrust of the complaint in Ramirez v. Trans Union was that when creditors requested consumer reports about the plaintiffs from TransUnion, TransUnion provided “mixed files” erroneously showing that the plaintiffs were subject to an Office of Foreign Assets Control (OFAC) alert, indicating that the subjects of the reports were on OFAC’s list of Specifically Designated Nationals and Blocked Persons. This list includes persons who are subject to sanctions, such as terrorists and narcotics traffickers, with whom US persons are generally prohibited from doing business.3
In fact, however, persons other than the plaintiffs (with the same or similar names and/or other characteristics) were the subjects of the OFAC alerts. The plaintiffs further alleged that TransUnion failed to provide them an opportunity to review and dispute the accuracy of the claim that they were on the OFAC list as required by the FCRA. More specifically, the plaintiffs argued that Trans Union violated three distinct provisions in the FCRA:
- TransUnion failed to follow “reasonable procedures to ensure maximum possible accuracy of the information” regarding the OFAC alert contained in the plaintiffs’ consumer reports;4
- TransUnion failed to clearly and accurately disclose all of the information in the plaintiffs’ consumer reports upon their request;5 and
- TransUnion failed to provide plaintiffs with a summary of their rights under the FCRA.6
After a full trial, the jury found that TransUnion violated all three of the FCRA provisions above and awarded $984.22 in statutory damages (within the FCRA’s permissible range of $100-$1000) and $6,353.08 in punitive damages to each class member, which counsel for the plaintiffs felt was intended to “send a message” to TransUnion and other CRAs regarding the seriousness of consumer privacy and accuracy of information held by CRAs.7 The total award reached $60 million.
In light of this record-breaking jury award for FCRA violations, companies that collect, use or share personal information for FCRA-covered purposes should be taking a hard look at the following issues:
- Whether they are FCRA-covered entities, either as a “furnisher” of consumer information to a CRA, a CRA that shares consumer reports, or a “user” of consumer reports generated by CRAs;
- What their obligations are under the FCRA corresponding to each of those three roles; and
- Whether they are taking adequate steps to comply with their obligations under the FCRA.
As Ramirez has forcefully shown, civil liability reaching into the tens of millions of dollars can result from inadequately addressing these issues.