FCRA Class Action Review – 2025

party entity issuing the report, and state that the consumer report obtained may be used in employment decisions. See 15 U.S.C. § 1681(b). The authorization form must also inform the applicant of their rights, should the employer choose to take an adverse action against the applicant, i.e. , not hire them, due to the results of the consumer report. See 15 U.S.C. § 1681(b)(1)(B). These “adverse action” rights include: (i) the right to be informed if the employer is contemplating an adverse action; (ii) to view a copy of the consumer report; and (iii) to correct any errors in the consumer report before the adverse action is taken. See 15 U.S.C. § 1681(g)(c)(1)(B). Finally, when an employer obtains a consumer report from a third-party entity, the third party must obtain a certification from the employer that it has complied with all of the above authorization and notification requirements. See 15 U.S.C. § 1681(b)(b)(1). In 2024, in FCRA cases, the class action plaintiff ’ s bar continued to look for any technical failure of an employer to provide disclosures or obtain proper authorization from an applicant. Of note, although these authorization and disclosure requirements may appear to be relatively straightforward, case law has created additional requirements separate and distinct from the plain statutory requirements, which may not be obvious from a plain and ordinary reading of the FCRA alone. For example, in Walker, et al. v. Fred Meyer, Inc. , 953 F.3d 1082, 1088 (9th Cir. 2020), the Ninth Circuit interpreted the statutory requirement that the above disclosures be contained in a document that “consists solely of the disclosure,” 15 U.S.C. § 1681(b)(b)(2)(A)(i), to mean that an employer cannot place required state background check disclosures in the same document as the FCRA disclosures. The plaintiff ’ s bar has seized on this case law by bringing class actions against well-meaning employers who include required California background check disclosures in the same document containing required FCRA disclosures. Even where plaintiffs cannot prove actual damages, they may still have grounds for a class action lawsuit based on these technical non-compliance issues. Case law based on FCRA procedural violations remain prevalent, whether for failure to disclose, improper authorization language, or failure to follow the adverse action process, and technical non-compliance with the FCRA’s complex requirements has become a consistent source for class action lawsuits. While employers must be vigilant in their efforts to avoid running afoul of the FCRA authorization and disclosure requirements, the third-party agencies they obtain consumer reports from must also take active steps to ensure that they provide accurate reports. The FCRA requires consumer reporting agencies (CRAs) that furnish consumer reports to “follow reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the report relates. See 15 U.S.C. § 1681(e)(b). Additionally, when an individual makes a request, CRAs must provide “[t]he sources of the information” that the CRA used to generate a consumer report. See 15 U.S.C. § 1681(g)(a)(1). The plaintiff ’ s bar is quick to investigate violations of these provisions and bring Rule 23 class actions against CRAs. Although the amount of potential FCRA claims consumers can bring against employers and CRAs may appear daunting, the recent U.S. Supreme Court decision in TransUnion LLC v. Ramirez, et al., 141 S.Ct. 2190, 2199 (2021), substantially limits FCRA class actions by making it clear that only consumers who have “been concretely harmed by a defendant ’ s statutory violation may sue that private defendant over that [FCRA] violation in federal court.” Id. at 2205. In TransUnion , the plaintiff sued the defendant credit reporting agency TransUnion, in part, for the company ’ s alleged failure to “follow reasonable procedures to ensure the accuracy of information in his credit file.” Id. at 2202. Plaintiff specifically alleged that, on his credit report disseminated to an auto dealership, TransUnion had incorrectly matched his name with the name of another person who was on a State Department list of individuals who threaten America ’ s national security. Id. at 2201. Plaintiff sought to represent a class of 8,185 individuals. Id. at 2202. Of these 8,185 individuals, the Supreme Court held that only 1,853, including the named plaintiff, could bring FCRA claims against TransUnion because TransUnion had disseminated their potentially defamatory credit reports, which incorrectly showed they were on the U.S. State Department ’ s national security watch list, to third parties. Id. at 2209. However, the remaining 6,332 class members could not bring FCRA claims against TransUnion because the record definitively showed that TransUnion had not distributed their potentially defamatory credit reports to third-party creditors. Id. Thus, the Supreme Court in TransUnion announced an important requirement in FCRA actions, that plaintiffs must at least allege that they have suffered “injury-in-fact” that is “concrete… real, and not abstract,” to succeed in establishing a viable FCRA claim. Id. at 2204. As detailed below, this aspect of TransUnion has continued to impact FCRA class action litigation in 2024 and

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