FCRA Class Action Review – 2025

opinion. In Fernandez, et al. v. RentGrow, Inc ., 116 F.4th 288 (4th Cir. 2024), the plaintiff, after returning from a U.S. Navy deployment, applied to rent an apartment in Maryland from Dorsey Ridge, a property management company. Dorsey Ridge relied on tenant screening reports provided by the defendant, a CRA. These reports contained personal and financial details about applicants, including their credit, rental, and criminal histories. They also included a list of potential issues under the heading “Items to Review,” such as any possible matches to the U.S. Treasury Department’s list of Specially Designated Nationals (OFAC list), which includes individuals linked to national security threats like terrorism or drug trafficking. Id. at 292. The report flagged the plaintiff as a “possible match” to someone on the OFAC list – Mario Alberto Fernandez Santana, a suspected drug trafficker from Mexico, but the report noted that this match was only “possible,” based on a similar name. Id. at 293. The report also flagged criminal records supposedly linked to the plaintiff in California. As a result, Dorsey Ridge initially rejected his application, citing the criminal history. The plaintiff soon clarified that the criminal records did not belong to him, and Dorsey Ridge reversed its decision, approving his application two days later. The plaintiff subsequently filed a class action lawsuit against the defendant, alleging that it had violated the FCRA by failing to ensure the accuracy of the OFAC information in his report. Specifically, the plaintiff argued that the defendant’s procedures for handling potential OFAC matches were insufficient, leading to false and misleading reports that could harm applicants. The plaintiff moved for class certification, and the district court granted the motion. On appeal, the Fourth Circuit evaluated whether the plaintiff had suffered a concrete injury sufficient to confer standing. The Fourth Circuit opined that to establish standing, the plaintiff must show that the misleading information in his report was both read and understood by a third party – whether or not it caused him to be rejected for housing. Without evidence that a third party considered the OFAC alert, the Fourth Circuit determined that there was no reputational harm, and thus the plaintiff did not suffer a concrete injury. The Fourth Circuit concluded that the evidence did not support an inference that anyone at Dorsey Ridge read or used the misleading information in the plaintiff’s report. For these reasons, the Fourth Circuit remanded the action to the district court to reconsider the motion for class certification. In Mondelez, et al. v. Robert Half International, Inc., 2024 U.S. Dist. LEXIS 165168 (D. Ore. Sept. 13, 2024), the plaintiff filed a consumer class action alleging that the defendant violated the FCRA by failing to provide the required pre-adverse action notice before rejecting her application for employment. Specifically, the plaintiff claimed that the defendant obtained her consumer report and used it to determine she was “not placeable” for a job but did not send her the necessary pre-adverse action notice, as required by the FCRA. Id. at *2. The plaintiff filed a motion for class certification, and the court granted the motion. The defendant thereafter moved to decertify the class, and the court denied the motion. The court explained that the central issue was whether the defendant’s preliminary internal decision (before sending the pre-adverse action notice) constituted an adverse action under the FCRA. The plaintiff argued that she and other class members suffered an “informational injury” because they did not receive timely pre-adverse action notices required under the FCRA. Id. at *18. The court agreed that the failure to timely disclose information can harm consumers by depriving them of the opportunity to respond to potentially adverse information, which could affect their ability to make informed decisions, such as seeking other employment. In addition, the plaintiff contended that because of this procedural violation, class members were deprived of opportunities to make informed decisions regarding their employment. The court found that this “lost opportunity” constituted a concrete harm, even if the information in the reports was accurate. Id. at *22. For instance, without timely notice, applicants could not take steps to address or contest the information before being adversely affected by it. The defendant, in turn, argued that the class failed to meet the commonality requirement of Rule 23 and that individualized questions predominated because the delays and whether they constituted an “adverse action” under the FCRA could vary across class members. Id. at *23-24. The court disagreed. It opined that the key question – whether being “not placeable” and the ensuing delay constituted an adverse action – was a common issue for the class. Id. at *25-26. Therefore, the court denied the defendant’s motion to decertify the class. VII. Key FACTA Rulings In Fausett, et al. v. Walgreen Co ., 2024 Ill. App. LEXIS 2798 (Ill. App. 2d Dist. Dec. 18, 2024), the plaintiff, a consumer, filed a state court class action alleging that after purchasing a reloadable prepaid debit card at the defendant’s store, for which she paid cash, she received a receipt that allegedly disclosed more than the last five digits of the card’s number, in violation of the Fair and Accurate Credit Transactions Act (FACTA). The

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