CONSUMER REPORTING AGENCY MUST GIVE CONSUMER REPORT

Have you been denied housing or employment because of a background report?  Federal law, the Fair Credit Reporting Act, prohibits consumer reporting agencies from prohibiting users (such as prospective landlords) from sharing the background report with the potential tenant if the background report was used in whole or in part to make the decision.  15 U.S.C. 1681e(c).  Also, the Fair Credit Reporting Act requires, upon request, consumer reporting agencies to disclose all of the information in the consumer’s file to the consumer.  15 U.S.C. 1681g(a)(1).  If a consumer reporting agency fails to comply with the law, then the consumer may sue the agency for actual, statutory and punitive damages.  15 U.S.C. 1681n and o.

Recently, in Meyer v. National Tenant Network, Inc., Plaintiffs, Harold and Phyllis Meyer, sought employment and housing at Shorewood RV Park in September 2012. They were hired as assistant resident managers pending a background check. Shorewood purchased background reports from National Tenant Network allegedly for employment purposes. Harold Meyer’s report inaccurately reported three criminal sex offense records. Plaintiff is not a sex offender. The inaccuracies were caused by National Tenant Network when it mixed Harold Meyer’s consumer report with Charles Otis Meyer’s report and others.

Based in whole or in part on the National Tenant Network background report, Shorewood based on the erroneous background report.  Plaintiffs requested copies of their background reports from National Tenant Network at least two times.  National Tenant Network did not provide Plaintiffs with copies of their files until they hired a lawyer and the lawyer requested the reports.  When National Tenant Network provided the Meyers with the reports, the background reports were incomplete.  National Tenant Network also directed the Meyers to contact Experian to get their complete reports. The reports were incomplete because they did not include anything about the alleged sex crimes.

The Meyers asked Shorewood for copies of the files. Shorewood refused to give Plaintiffs their files because they signed an Applicant Screening Authorization Form, required by National Tenant Network, which prohibited Shorewood from giving the background reports to them. Eventually, Shorewood provided the Meyers with the background reports (after a request from their attorney), but the background reports did not include all of the information from National Tenant Network.

The Meyers sued National Tenant Network under the Fair Credit Reporting Act because National Tenant Network failed to disclose the entire contents of their file and because National Tenant Network precluded Shorewood from sharing the background reports with the Meyers. 

National Tenant Network moved to dismiss Plaintiffs’ claims.  The Court denied Defendant’s motion to dismiss 1681e(c) and g, but granted the motion to dismiss 1681k with leave to amend. The Court also denied Defendant’s motion to dismiss the class action claims.

Plaintiffs’ first claim alleged that Defendant willfully prohibited the users of its consumer reports from disclosing the contents of those reports to the consumer, in violation of 1681e(c). Plaintiffs’ claim was based, in part, on the Applicant Screening Authorization Form, which Plaintiffs argued violates 1681e(c), which mandates that consumer reports be provided to consumers after an adverse action has been taken against them.  The authorization form stated the consumer report “must not be disclosed” without exception to the consumer. The Court was not persuaded by Defendant’s disingenuous argument that the form does not say that the user may never disclose a report to the consumer. Defendant also asserted that the form’s statement alone cannot form the basis for Plaintiffs’ claim because it was not in a statement directly from National Tenant Network to the Meyers or in a detailed policy book.

However, not only are no such requirements found in the statute, but the Court failed to see the logic of limiting the statute to statements made “directly” to the consumer. National Tenant Network unsuccessfully argued that Section 1681e(c) is violated only where the sole purpose of the adverse action was for employment purposes. The Court rejected this argument asserting that the section does not only apply to instances where employment was the report’s sole purpose.

Count II: Section 1681g(a).  Plaintiffs alleged that Defendant violated the FCRA by willfully failing to provide them with all the information in their file. Plaintiffs further alleged that although in late December 2012 their attorney was able to successfully request their files from Defendant, the files were incomplete; namely, Mr. Meyer’s file disclosed “no information about the sex offender criminal records or the credit history records that National Tenant Network had, in fact, furnished to Sherwood in September 2012.” The Court held that these allegations were sufficient to state a claim under Section 1681g(a). Defendant’s primary contention was that it disclosed only what was in Plaintiffs’ files “at the time of the request,” just as Section 1681g(a) requires. Defendant asserted that Plaintiffs’ claim fails since they do not allege that the criminal history records were still in Mr. Meyer’s file when the requests were made.

The Court rejected this argument because as Plaintiffs alleged they made two telephonic requests that went unanswered before their attorney was finally successful, at least partially, with a third request.  According to Defendant’s theory, it did not provide any documents to Plaintiffs following their first two requests because there were no documents to produce. Because Plaintiffs’ first request was less than a month after Defendant furnished its report to Sherwood, it was plausible that Defendant still maintained Plaintiffs’ files.

Count III: Section 1681k(a).  Plaintiffs alleged that Defendant violated the FCRA by “negligently and willfully failing to provide Mr. Meyer with notice at the time that it was selling adverse public records about him, and the source of such information and by failing to maintain strict procedures to ensure that adverse public records information it reports is complete and up to date.” Defendant contended that Plaintiffs’ claim under this statute fails because Plaintiffs failed to allege that Defendant either knew or should have known that the report it furnished to Shorewood would be used for employment purposes. The Court agreed with this argument. Plaintiffs did not adequately allege that Defendant knew that the report would be used to evaluate Plaintiffs’ employment application in addition to their tenancy application.

Class Action Claims.  Defendant challenged the class claims as deficient under Rule 12(b)(6). Defendant, however, cited no authority for the proposition that Rule 12(b)(6) is a proper vehicle for dismissing class claims. Further, while Plaintiffs’ class claims may ultimately fail, Defendant did not explain what about those class allegations were “redundant, immaterial, or impertinent and scandalous matter.” Fed. R. Civ. P. 12(f).

We represent clients who have background report errors.  Inaccurate information can keep consumers from getting credit, housing and employment.  If you have errors on your background report and the consumer reporting agencies have refused to delete this information, then you may be entitled to money damages under the Fair Credit Reporting Act (FCRA).

Contact us for a free case review at 1-800-263-9091.

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