Furniture Distributor Can’t Bench Federal Credit Privacy Claims

Warehouse Home Furnishing Distributors Inc. couldn’t convince a federal court to toss claims that it violated the Fair Credit Reporting Act by not correcting a consumer credit report.

Latisha Burns brought an FCRA action against Warehouse after her credit report allegedly listed an erroneous outstanding debt. Burns filed her suit in 2018 after credit reporting agencies TransUnion LLC and Equifax Inc. found that Warehouse failed or refused to update the credit report to correct the alleged debt.

Plaintiffs in consumer privacy suits can raise a threat of bad credit to continue with their claims in federal court, the U.S. District Court for the District of South Carolina ruled Aug. 19 in tossing the motion to dismiss. The plaintiffs in this case “suffered harm which, although not tangible in nature, is nonetheless de facto and is more significant than the bare procedural violation,” the court ruled.

Federal courts often dismiss consumer privacy cases for lack of standing because plaintiffs fail to show they suffered a concrete injury that is traceable to the alleged bad conduct. Following the U.S. Supreme Court’s 2016 decision in Spokeo v. Robins, courts often toss cases because plaintiffs raise a bare procedural violation of a federal law not connected to an alleged harm.

Still, plaintiffs are sometimes successful when raising privacy harms under federal laws, such as FCRA. Plaintiffs can advance past the motion-to-dismiss stage by alleging more than a procedural violation of FCRA.

“Warehouse disregards the harm bad credit imposes on a consumer by an erroneous credit line, and similarly ignores one of the harms the FCRA is protecting consumers from,” the court said.

Representatives for Warehouse didn’t immediately respond to a request for comment.

The case is Burns v. Trans Union, LLC, D.S.C., 4:18-03120-MGL, 8/19/19.