Consumer Compliance Outlook: Second Issue 2022

On the Docket: Recent Federal Court Opinions


The U.S. Department of Housing and Urban Development (HUD) enters into a Conciliation Agreement with Bank of America and one of its loan officers to resolve allegations of familial status and sex discrimination under the Fair Housing Act (FHA). In October 2021, a married couple filed a complaint with HUD, alleging the bank and a loan officer violated the FHA by refusing to approve a residential mortgage loan until after one of the applicants returned to work from maternity leave, even though her employer paid 80 percent of her salary during her leave. The FHA prohibits discrimination on certain prohibited bases in housing transactions, including discrimination based on an applicant’s sex and familial status.

Under the agreement, Bank of America will pay the couple $15,000; establish a policy under which applicants on temporary leave, including parental leave, can be approved for a mortgage prior to returning to active work status; agree to maintain its existing policies and procedures of prohibiting employees in lending-related roles from discouraging an applicant from applying due to any prohibited basis, or suggesting applicants return to work from parental leave prior to applying for a home loan; and conduct fair lending training for employees in lending-related roles.


The Ninth Circuit rejects broad interpretation of the information a consumer reporting agency (CRA) must provide in response to a consumer request.

Tailford v. Experian Information Solutions, Inc. 26 F.4th 1092 (9th Cir. 2022). Section 1681g of the Fair Credit Reporting Act (FCRA) requires CRAs to disclose certain information to the consumer upon request. The CRA must provide all the information in its file, including a record of inquiries for credit or insurance made within one year prior to the request.

After the plaintiffs learned of a data breach of a company with consumer reports purchased from Experian, they requested the information in their Experian file, which Experian provided. Their class-action lawsuit alleged that Experian violated §1681g by omitting certain information Experian collected but did not provide, including 1) aggregate consumer behavioral data (such as household income, purchase history, and other marketing attributes), 2) soft credit inquiries, 3) the identity of parties procuring their consumer reports, and 4) the dates on which their employment history was reported. The lower court held that the FCRA did not require disclosure of this information and dismissed the case.

On appeal, the Ninth Circuit affirmed. The court first addressed the threshold, procedural issue of whether the plaintiffs have legal standing to pursue their claims. The Supreme Court clarified in Spokeo, Inc. v. Robins, 578 U.S. 330, 339 (2016) that standing in federal court requires a showing that the plaintiff “suffered ‘an invasion of a legally protected interest’ that is ‘concrete and particularized’ and ‘actual or imminent, not conjectural or hypothetical.’” Applying this standard, the court found the plaintiff’s informational and privacy interests were sufficiently concrete to satisfy Spokeo’s standing requirements.

Turning to the merits, the court noted that §1681g requires disclosure of all information in a consumer “file,” which the court clarified is limited to “information that has been included in a consumer report in the past or is planned to be included in such a report in the future.” Under this standard, Experian was not required to include the behavioral data because it contained aggregate data, which is not included in a consumer report. Moreover, the information was not used to establish eligibility for credit or employment but used to target consumers for invitation to apply for credit. Regarding soft inquiries, the court stated that they cannot be viewed by third parties requesting a consumer report and therefore are not part of a file that would have to be disclosed. Finally, the court concluded Experian was not required to indicate when employment dates were first reported because that information was not related to creditworthiness or other characteristics specified in the FCRA.

The Eighth Circuit dismisses FCRA class-action lawsuit for lack of standing.

Schumacher v. SC Data Center, Inc., 33 F.4th 504 (8th Cir. 2022). The plaintiff applied to SC Data for employment and completed an application that inquired whether she had been convicted of a felony. She indicated she had not. The employer offered her a position, conditioned on her successfully completing a background check. The background search revealed a prior felony conviction, and the employer rescinded the offer based on this information. Her class-action complaint alleged the employer violated the FCRA by taking adverse employment action based on a consumer report without first providing her the report, by providing a disclosure in a form that did not comply with FCRA, and by obtaining more information than she had authorized.

The court found that the results of the background search constituted a consumer report under the FCRA, and therefore the plaintiff was entitled to see it before the employer took adverse action. However, the court also noted the information in it was accurate and determined that the plaintiff had therefore not suffered an injury in fact and lacked standing. The court rejected the plaintiff’s argument that the FCRA provided her with the right to discuss the contents of the report with the employer. The court also found that the technical errors in the employer’s FCRA disclosure did not harm the plaintiff, and therefore, she lacked standing for this claim. Finally, the court rejected the claim that she had not authorized a background search; the plaintiff did not plead concrete harm and therefore lacked standing.

The Seventh Circuit finds that the investigation of disputed information in a credit report was reasonable

Woods v. LVNV Funding, LLC, 27 F.4th 544 (7th Cir. 2022). The plaintiff alleged he was the victim of identity theft because someone opened an American Airlines credit card in his name and made charges to the card. When the charges were not paid, the account was sold to a third party, which retained a debt collector to collect it. The plaintiff disputed the debt, but the debt collector verified it and then furnished negative information to the CRAs.

After the plaintiff again disputed the debt, the debt collector requested additional information to aid its investigation, but the plaintiff failed to respond. The plaintiff then filed disputes with the CRAs, which forwarded the disputes to the debt collector to verify. The debt collector again verified the debt. The plaintiff then filed a lawsuit alleging violations of the Fair Debt Collection Practices Act (FDCPA) and the FCRA. After the lawsuit was filed, American Airlines notified the plaintiff that the debt was not his, and the information was removed from his credit report.

The plaintiff claimed that Resurgent, as the furnisher of the credit information, violated the FCRA by failing to conduct a reasonable investigation into his fraud claims. The court noted that the investigation must be reasonable, not pro forma, but the reasonableness depends on the particular information the furnisher receives about the dispute. The CRA sent the furnisher a copy of a police report indicating American Airlines had sent the plaintiff two letters concluding that the plaintiff made the disputed purchase. The court found this information supported the determination that the debt collector made a reasonable investigation.

Moreover, the debt collector again asked the plaintiff to provide additional documentation, but the plaintiff failed to respond even though he had information that supported his dispute. Accordingly, the court concluded the furnisher’s investigation was reasonable. But the court added a caveat: “[T]his opinion is no license for furnishers to offload their §1681s-2(b)(1)(A) investigation obligations to consumers by spamming them with requests for additional information. Instead, like all questions of reasonableness, our conclusions depend on the totality of the circumstances in the case before us.”


The Tenth Circuit concludes that extended overdraft fees do not constitute interest under the National Bank Act subject to usury laws.

Walker v. BOKF, N.A., 30 F.4th 994 (10th Cir. 2022). When the plaintiff overdrew his account by $25, the bank covered the overdraft and charged him an initial overdraft fee of $34.50. When his account remained overdrawn, the bank imposed an Extended Overdraft Fee of $6.50 per business day after a short grace period that resulted in a total of $234 after the account remained overdrawn for 36 days. His class-action lawsuit alleged the bank’s initial payment of her overdraft constituted an extension of credit, and the Extended Overdraft Fees constituted interest subject to applicable usury laws and not a deposit account service, consistent with a Southern District of California court case decided in 2016. See Farrell v. Bank of America, N.A., 224 F. Supp. 3d 1016 (S.D. Cal. 2016).

BOKF is a national bank subject to the National Bank Act (NBA) and its implementing regulations. Under §85 of the NBA, national banks are subject to the usury laws of the state where they are chartered. BOKF is incorporated in Oklahoma, which has a usury limit of 6 percent. The lawsuit alleged BOKF violated these usury limits by charging the plaintiff an annual rate of between 501 percent and 2,362 percent.

The court noted that the OCC has issued two regulations, 12 C.F.R. §7.4001 and §7.4002, that clarify the distinction between “interest charges” and “non-interest charges and fees,” respectively. The court found it was ambiguous whether the Extended Overdraft Fees fall within the definition of interest charges under the regulations; however, the court noted that OCC Interpretive Letter 1082 (May 17, 2007) clarifies this issue. The interpretive letter stated that overdraft fees are “non-interest charges and fees” for “deposit account services” governed by §7.4002 of the OCC’s regulations, which provides in relevant part: “A national bank may charge its customers non-interest charges and fees, including deposit account service charges.”

The regulation also specifies the considerations that should inform the amount of the fee. Finally, the court noted that under Supreme Court precedent, deference is owed to an agency’s interpretations of its own regulations when, as here, they are ambiguous. The court therefore concluded that deference was owed to the OCC’s interpretative letter classifying extended overdraft charges as noninterest charges.