Judge Invokes Hunstein Rulings in Dismissing FCRA Case for Lack of Standing

A District Court judge in New York has dismissed a plaintiff’s Fair Credit Reporting Act case, ruling he lacks standing to sue because his claims that factually inaccurate information about his credit report were disseminated to a third party — a credit reporting agency, in this case — and that the failure to note an account as disputed lowered his credit scores, were not enough to meet the standing threshold.

A copy of the ruling in the case of Spira v. TransUnion et al can be accessed by clicking here.

The plaintiff alleges that a financial institution began reporting inaccurate information to a credit reporting agency about an account, specifically that the account had been charged off and carried a $0 balance. The plaintiff disputed the tradeline, but the financial institution allegedly failed to conduct a reasonable investigation, according to the plaintiff. This caused his credit score to decrease, a loss of credit, and a “chilling and detrimental effect on future applications for credit.”

Regarding the dissemination of information to a third party, not all “third parties” are created equal, noted Judge Kenneth M. Karas of the District Court for the Southern District of New York. To prove his point, Judge Karas invoked the Hunstein claims that have been filed across the country, pointing out that while mailing vendors are third parties, “courts have reasoned that the dissemination to mailing vendors does not constitute concrete harm.”

In this case, a credit reporting agency — the only entity to see the inaccurate information — “are not the type of third parties contemplated by the Supreme Court” in TransUnion v. Ramirez.

With that argument “off the table,” Judge Karas then turned to the claims of a decreased credit score, which have been dealt with in similar cases within the Second Circuit.

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