Where a Statutory Violation Creates the ‘Risk of Real Harm’

FDCPA Win for Plaintiff

By summary judgment, Advanced Recovery Systems lost a case brought under section 8 of the Fair Debt Collection Practices Act, alleging that it failed to disclose on credit reports that the plaintiff disputed two allegedly unpaid debts.

Procedurally, while the summary judgment did not follow the traditional Rule 56 schedule, the Fifth Circuit found no harm because ARS had admitted to the district court that there were no remaining issues of fact.

Substantively, the Court rejected a challenge to Article III standing, finding that the plaintiff’s injury was sufficiently “tangible” — “[T]he violation of a procedural right granted by statute can be sufficient in some circumstances to constitute injury in fact .. . .

Among those circumstances are cases where a statutory violation creates the ‘risk of real harm’ . . . Unlike an incorrect zip code, the ‘bare procedural violation’ in [Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1549 (2016)], an inaccurate credit rating creates a substantial risk of harm.”

Sayles v. Advanced Recovery Systems, Inc., No. 16-60640 (July 6, 2017).

In Spokeo, 136 S. Ct. at 1548, the Supreme Court reiterated that “[a] ‘concrete’ injury must be ‘de facto’; that is, it must actually exist.” However, it also stated that “’

Concrete’ is not . . . necessarily synonymous with ‘tangible.’” Id. at 1549. Instead, “the violation of a procedural right granted by statute can be sufficient in some circumstances to constitute injury in fact.” Id.

“Among those circumstances are cases where a statutory violation creates the ‘risk of real harm.’” Bowse v. Portfolio Recovery Assocs., LLC, 218 F. Supp. 3d 745, 749 (N.D. Ill. 2016) (quoting Spokeo, 136 S. Ct. at 1549). Here, ARS’s § 807(8) violation exposed Sayles to a real risk of financial harm caused by an inaccurate credit rating.

See Spokeo, 136 S. Ct. at 1549; see also Bowse, 218 F. Supp.3d at 749 (“Unlike an incorrect zip code, the ‘bare procedural violation’ in Spokeo, an inaccurate credit rating creates a substantial risk of harm.”).

Consequently, the district court did not err when it determined that Sayles’ injury was concrete and that he satisfied all elements of standing.

See Spokeo, 136 S. Ct. at 1547.