Supreme Court Will Rule On Bad Web Data Case

The U.S. Supreme Court will decide whether a website that collects personal data can be sued under the Fair Credit Reporting Act (FCRA) for publishing inaccurate information if the mistakes don’t cause “actual or imminent harm,” the Associated Press reported on Monday (April 27).

The case involves a Virginia man who said online data aggregator Spokeo damaged his job prospects by identifying him as wealthier and better educated than he actually was, and is viewed as a test of whether fair-credit lawsuits can be filed by individuals even if there’s no demonstration of concrete harm. (Government enforcement actions are a different matter: In 2012, Spokeo paid an $800,000 civil penalty for allegedly violating the FCRA.)

Alternative lenders and banks are increasingly using Internet-based information for lending decisions, and their success in judging creditworthiness depends on the accuracy of that information.

In the case, Thomas Robins sued Spokeo after viewing a profile that incorrectly stated his age, that he had a graduate degree and a job, and that he was married with children. Robins was actually unemployed and said the inaccurate information hurt his job prospects, causing him “economic, reputational, and emotional” injuries, The Wall Street Journal reported.

A federal district court dismissed the case, saying Robins hadn’t suffered concrete harm from the erroneous information, but the motion was reversed by the Ninth U.S. Circuit Court of Appeals, which said it was enough that Spokeo had violated the credit reporting law. Spokeo has now successfully appealed to the Supreme Court, which will hear the case in the term that starts this October.

Google, Facebook and other Internet companies are reportedly watching the case closely, concerned that class-action suits like the one Robins filed could expose them to very large damages. In a successful suit, a company could face damages of up to $1,000 per violation under the FCRA, which could cost billions of dollars in a case involving a class with thousands of plaintiffs.