Tag Archives: Fair Credit Reporting Act

Third Circuit Adopts New “Reasonable Reader” Standard and Holds Reporting Consumers’ Pay Status as Past Due with $0 Balance after Transfer Did Not Violate the FCRA

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Diana M. Eng and Andrea M. Roberts ●

In Bibbs v. TransUnion LLC, 2022 WL 3149216 (3d Cir. Aug. 8, 2022), the Third Circuit Court of Appeals (“Third Circuit”) affirmed the United States District Court for the District of Pennsylvania’s (“District Court”) orders granting TransUnion’s motions for judgment on the pleadings and dismissing the Complaints in three separate actions by Appellants Marissa Bibbs, Michael Parke, and Fatoumata Samoura (collectively, “Appellants”) for violations of the Fair Credit Reporting Act (“FCRA”). Specifically, the Third Circuit held that TransUnion’s credit reporting of Appellants’ accounts, which reflected a Pay Status of more than 120 days past due, a $0 balance, and closing of their accounts due to transfer, when read in their entirety, were accurate and not misleading under the “reasonable reader” standard.

Summary of Facts and Background

Appellants admittedly defaulted under their respective student loans.[1] After the defaults, Navient and Fedloan closed and transferred Appellants’ accounts. As such, Navient and Fedloan reported to the credit reporting agencies, including appellee TransUnion, that the accounts were closed with a balance of zero and all of Appellants’ payment obligations were transferred. Further, the reporting reflected a Pay Status of more than 120 days past due.

After reviewing their credit reports, Appellants, through counsel, sent TransUnion a letter disputing the accuracy of the reports. Specifically, Appellants asserted that the reporting was erroneous because Appellants owed no money to Navient and Fedloan, the prior creditors, and thus, “it is impossible for their current status to be listed as late.”

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How SCOTUS Clarified the Spokeo Standard of “Concrete” Harm Necessary to Establish Article III Standing, and What It Means for the Future of Class Actions

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Ana Tagvoryan, Deborah A. Skakel, Edward W. Chang, Scott E. Wortman, Jeffrey N. Rosenthal, Chenxi Jiao, and Harrison M. Brown

On June 25, 2021, the United States Supreme Court issued its decision in TransUnion LLC v. Ramirez, No. 20-297, 2021 WL 2599472 (U.S. June 25, 2021) (“TransUnion”), providing much needed clarity regarding the type of “concrete” harm necessary to establish a plaintiff’s standing under Article III of the United States Constitution.

In a 5-4 decision authored by Justice Kavanaugh, the Court expounded on its ruling in Spokeo, Inc. v. Robins, 578 U.S. 330 (2016), using several examples to illustrate how to measure the harm plaintiffs allege from a statutory violation. As Justice Kavanaugh succinctly stated: “No concrete harm, no standing.”

In TransUnion, the lower court certified a class of 8,124 absent class members who purportedly suffered injury under the Fair Credit Reporting Act (“FCRA”) because TransUnion had placed an alert on their credit report indicating that the consumer’s name was a “potential match” to a name on the list maintained by the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) of terrorists, drug traffickers, and other serious criminals.

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Ninth Circuit Holds That Fannie Mae Is Not a Consumer Reporting Agency under FCRA

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By: Wayne Streibich, Cheryl S. Chang, Diana M. Eng, and Christine Lee

On January 9, 2019, a divided Ninth Circuit panel ruled that the Federal National Mortgage Association, or Fannie Mae, was not a “consumer reporting agency” within the meaning of the Fair Credit Reporting Act (“FCRA”). In Zabriskie v. Federal National Mortgage Association, the Ninth Circuit reversed the Arizona District Court’s holding that Fannie Mae acts as a consumer reporting agency when it licenses its proprietary software, Desktop Underwriter (“DU”), to lenders and that it is therefore subject to the FCRA. Zabriskie v. Fed. Nat’l Mortgage Ass’n, Nos. 17-15807, 17-16000, 2019 WL 137931 (9th Cir. Jan. 9, 2019).

The FCRA defines a “consumer reporting agency” as “any person which, for monetary fees, dues, or on a cooperative nonprofit basis, regularly engages in whole or in part in the practice of assembling or evaluating consumer credit information or other information on consumers for the purpose of preparing or furnishing consumer reports.” 15 U.S.C. § 1681a(f). In reaching its conclusion, the Ninth Circuit specifically examined whether Fannie Mae’s licensing of its DU software constituted: (1) regularly engaging in the practice of assembling or evaluating consumer credit information and (2) for the purpose of preparing or furnishing consumer reports.

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