On September 11, 2024, the Fourth Circuit Court of Appeals held that there is no publication to a third party — and therefore no Article III standing under the Fair Credit Reporting Act (FCRA) — where the recipient of a consumer report did not read, understand, or otherwise consider allegedly inaccurate information appearing in the report.

In Fernandez v. RentGrow, Inc., No. 22-1619, 2024 WL 4138658 (4th Cir. Sept. 11, 2024), Marco Fernandez alleged that his consumer report, provided to a prospective landlord by RentGrow, Inc. (“RentGrow”), contained inaccurate information indicating a “possible match” to a name on the U.S. Treasury Department’s Office of Foreign Assets Control’s (OFAC) list of specially designated nationals (SDN) identified as national security threats. Individuals on the SDN list include known terrorists, drug traffickers, and other serious criminals. Fernandez’s consumer report also included criminal records information. The landlord initially denied Fernandez’s application but approved it two days later after Fernandez explained that the criminal records did not belong to him. Based on these allegations, Fernandez asserted individual and class claims that RentGrow violated the FCRA by failing to follow reasonable procedures to assure maximum possible accuracy with respect the reported criminal records and OFAC information.

On RentGrow’s motion for summary judgment before the U.S. District Court for the District of Maryland, the record showed that the landlord’s employees, as a standard practice, did not review consumer reports beyond the recommendation on the first page if the recommendation was “accept.” While Fernandez’s application was delayed briefly due to the criminal record information on the report, the landlord never viewed or considered the OFAC information in evaluating the application. The landlord’s senior property manager who reviewed Fernandez’s report testified that “she was not ‘sure what OFAC is.’” Id. at *2. Nonetheless, the District Court denied RentGrow’s motion for summary judgment, holding that simply providing a consumer report containing inaccurate information to a third party caused sufficiently concrete reputational harm to confer Article III standing, regardless of whether the third party read or understood the inaccurate information. The District Court further held that the jury could conclude that the landlord viewed the OFAC information and simply had forgotten because the landlord paid for the report. In addition to denying summary judgment to RentGrow, the district court also certified a class of individuals whose RentGrow consumer reports included OFAC information that did not match their date of birth, address, or social security number.

The Fourth Circuit accepted RentGrow’s petition for interlocutory appeal of the class certification decision pursuant to Fed. R. Civ. P. 23(f). Reviewing the case law regarding the nature of defamatory injuries, specifically as applied to FCRA claims by the U.S. Supreme Court in TransUnion LLC v. Ramirez, 594 U.S. 413 (2021), the court noted that publication sufficient to establish a defamatory injury requires not only that defamatory material be delivered to and brought to the attention of a third party but that the recipient understand its defamatory significance. Because the record below showed that the landlord did not view the OFAC information on Fernandez’s report and would not have understood its allegedly defamatory significance, the Fourth Circuit held that the OFAC information had not been published to a third party. Therefore, Fernandez had not suffered the defamatory reputational injury necessary to establish Article III standing under Ramirez. The Fourth Circuit also held that the District Court’s speculation that the OFAC information could have been seen by the landlord and forgotten was not supported by the undisputed evidentiary record. Because Fernandez, as the sole class representative, lacked Article III standing, the Fourth Circuit vacated the order certifying the class and remanded for further proceedings.

The Fourth Circuit’s decision in Fernandez, which is the first Court of Appeals decision to address the publication issue in detail following Ramirez, has important implications for consumer reporting agencies facing FCRA claims. Under Fernandez, it is now more critical than ever that CRAs involved in FCRA litigation determine what portions of a consumer report were actually viewed and considered by end users in making credit and rental decisions, whether those end users in fact understood the information they viewed, and, if so, how that information was understood. Although other federal appellate courts have not addressed this issue, plaintiffs will now have greater difficulty in raising claims based on information in a consumer report that was not viewed, considered, or understood by the report recipient. While the Fernandez decision is only binding within the Fourth Circuit, CRAs and litigators alike should stay tuned to see if other courts of appeals adopt similar reasoning.