Class Action Certification and § 1681e(b)

Posted By: John Albanese October 20, 2016

The Fair Credit Reporting Act provides: “Whenever a consumer reporting agency prepares a consumer report it shall follow reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the report relates.” 15 U.S.C. § 1681e(b). In order to bring a claim under this section, a consumer must have an inaccuracy in his or her report. Dalton v. Capital Associated Indus., Inc., 257 F.3d 409, 415 (4th Cir. 2001) (“[A] consumer reporting agency violates § 1681e(b) if (1) the consumer report contains inaccurate information and (2) the reporting agency did not follow reasonable procedures to assure maximum possible accuracy.”). Because a consumer must show an inaccuracy in the report, there has been a disagreement among courts about whether § 1681e(b) claims can be certified as class actions.

A series of three cases involving the reporting of government sanctions illustrates the divide. The Office of Foreign Assets Controls (OFAC) publishes a list of people who are forbidden from doing business with the United States because they are known terrorists, narcotics traffickers, or other persons suspected of serious wrongdoing. Some background check companies include OFAC information on their consumer reports. Consumer reporting agencies, however, often use loose name-matching when reporting these records, thus the OFAC records reported may not belong to the subject of the report.

Gomez v. Kroll Factual Data, Inc.

In Gomez v. Kroll Factual Data, Inc., No. 13-CV-0445-WJM-KMT, 2014 WL 1456530 (D. Colo. Apr. 14, 2014), plaintiff Joseph Gomez was matched with a “Jose Gomez.” The plaintiff sought to represent a class of other persons who were mismatched with similarly dissimilar names. The court denied the without much explanation, and instead found that individualized issues would predominate over common issues due to the fact that accuracy is an individualized issue.

Ramirez v. Trans Union, LLC

The decision Ramirez v. Trans Union, LLC, 301 F.R.D. 408 (N.D. Cal. 2014) also dealt with the OFAC list and loose name matching. Plaintiff Sergio Ramirez was matched with two individuals named Sergio Ramirez with different birthdates. The plaintiff sought to represent a class of people who were similarly inaccurately matched. Trans Union argued that accuracy of the match would be an individualized issue. The court disagreed:

Trans Union argues that the question of whether the OFAC Alert for each class member was accurate is an individual question that renders certification inappropriate. The record before the Court does not support Trans Union’s argument. Trans Union is unable to identify any instance in which a person it identified as a “potential match” was in fact a match. Indeed, it has not identified a single instance in which the birth date of the person on the OFAC List and the “potential match” matched, or even the address matched; in other words, in which there is something other than the person’s name to suggest the person is on the OFAC List. This record supports a finding that not one of the members of the class is in fact on the OFAC List.

Id. at 422. The court disagreed with Kroll finding that “the decision does not explain the court’s reasoning.” Id. at 422.

Patel v. Trans Union, LLC

The case of Patel v. Trans Union, LLC, 308 F.R.D. 292, 309 (N.D. Cal. 2015) dealt with a nearly identical issue as Ramirez, and like Ramirez, the court certified a class of people whose reports were inaccurate. As for the possibility that some reports could be accurate, the court held that:

On this record, the court has already concluded that whatever small fraction is accurately tagged as potential terrorists, it does not defeat common-issue predominance, especially because the defendants may offer their individual defenses.

Id. at 309. The court declined to follow Kroll, finding that Kroll court denied certification “without explaining its reasons.” Id.

Patel and Ramirez show that where faulty procedures are generate a high rate of inaccuracies such that few reports can be shown to be accurate, class certification of a § 1681e(b) claim is warranted.