No [concrete] Harm, No Foul? Article Iii Standing in the Context of Consumer Financial Protection

• Publication year: 2022

No [Concrete] Harm, No Foul? Article III Standing in the Context of Consumer Financial Protection

Annefloor J. de Groot
University of Georgia School of Law

No [Concrete] Harm, No Foul? Article III Standing in the Context of Consumer Financial Protection

Cover Page Footnote
J.D. Candidate, 2022, University of Georgia School of Law; B.A., 2019, University of Georgia. I would like to thank Dean Kent Barnett for his thoughtful comments on this Note.

NO [CONCRETE] HARM, NO FOUL? ARTICLE III STANDING IN THE CONTEXT OF CONSUMER FINANCIAL PROTECTION

LAWS

Annefloor J. de Groot^*

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In the U.S. Supreme Court's 2016 decision in Spokeo, Inc. v. Robins, the Court held that a bare procedural violation of a federal consumer protection statute is not enough to satisfy Article III's standing requirement because the alleged injury is not sufficiently concrete. This decision resulted in a sizeable circuit split regarding standing under the Fair Debt Collection Practices Act, with some circuit courts interpreting the holding as narrowing the scope of standing for consumer protection claims, and others maintaining a broader interpretation, allowing plaintiffs to obtain redress for violations of consumer financial protections laws.

In its 2021 ruling in TransUnion LLC v. Ramirez, the U.S. Supreme Court attempted to clarify Spokeo, holding that if a plaintiff does not suffer a real harm and a risk of future harm does not materialize, then there is no concrete harm to confer standing. TransUnion shifted the circuit split, still resulting in inconsistencies among the courts but making it even harder for plaintiffs to assert consumer financial protection claims in federal courts. This Note explores TransUnion's impact on consumer financial protection claims, with a focus on the evolution of the circuit split regarding standing under the Fair Debt Collection Practices Act, and argues that the U.S. Supreme Court wrongly decided TransUnion. A broader approach giving deference to Congress would be more in line with Article III, Spokeo, and Congress's role as a factfinder, and it would ensure judicial consistency and provide for

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better representation of modern issues posing harm, or a real risk of harm, to American consumers.

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Table of Contents

I. Introduction.................................................................822

II. Background.................................................................826

A. ARTICLE III STANDING FOLLOWING LUJAN AND SPOKEO.................................................................826

1. Lujan's Three-Part Structure.........................827
2. Spokeo's Concrete Injury Requirement.........828

B. FINANCIAL CONSUMER PROTECTION STATUTES: AN OVERVIEW.............................................................831

1. Fair Credit Reporting Act..............................832
2. Truth in Lending Act ..................................... 833
3. Fair Debt Collection Practices Act.................834

III. The Circuit Split Prior to TransUnion.................835

A. CIRCUITS FINDING A CONCRETE INJURY IN FACT .... 835

1. The Sixth Circuit............................................835
2. The Second Circuit......................................... 836

B. CIRCUITS FAILING TO FIND A CONCRETE INJURY IN FACT......................................................................837

1. The Seventh Circuit ....................................... 837
2. The District of Columbia Circuit................... 838
3. The Eleventh Circuit, with a Caveat ............. 838

IV. TransUnion LLC v. Ramirez.....................................841

V. The Circuits' Reactions to TransUnion..................848

A. THE SIXTH CIRCUIT................................................848
B. THE ELEVENTH CIRCUIT.........................................851

VI. Addressing Barriers to Consumer Financial Protection in the Courts..........................................853

A. ASSESSING THE CIRCUIT SPLIT...............................853
B. RETHINKING STANDING: A PROPOSAL TO GIVE DEFERENCE TO CONGRESS.....................................857

VII. Conclusion................................................................862

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I. Introduction

Imagine the following scenario. You receive a debt collection letter in the mail for credit-card debt that you defaulted on six years ago. The letter looks enticing, as it tells you that you have been pre-approved for a generous discount program designed to save you money and encourages you to act quickly to maximize your savings. Contrary to what you may be thinking, this letter is not so generous after all. Instead, the governing statute of limitations in your state provides that any claim to recover your six-year-old debt is time-barred.¹ The debt collection letter conveniently includes a small disclaimer at the bottom indicating this very fact. Given the misleading and deceptive nature of this debt collection letter, you may think that you have standing to sue for this clear violation of the Fair Debt Collection Practices Act (FDCPA).² The FDCPA prohibits "false, deceptive, or misleading representation[s]"³ and "unfair or unconscionable means"⁴ to collect debt and provides consumer victims with a private right of action against debt collectors.⁵ Should courts allow this type of litigation to proceed?

This was precisely the situation that the plaintiffs faced in Trichell v. Midland Credit Management, Inc., a recent Eleventh Circuit case.⁶ In Trichell, the U.S. Court of Appeals for the Eleventh Circuit held that the consumer plaintiffs failed to allege a particularized, concrete injury required to demonstrate an injury in fact to satisfy Article III standing.⁷ Because the plaintiffs lacked standing, the debt collectors faced absolutely no

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repercussions for the statutory violations that they allegedly committed.⁸

The Trichell court relied heavily on the U.S. Supreme Court's 2016 landmark decision in Spokeo, Inc. v. Robins, in which the Court held that a "bare procedural violation" of a federal consumer protection statute is not enough to satisfy Article Ill's standing requirement because the alleged injury is not sufficiently concrete.⁹ This decision left federal courts in a tangle with some, like the Eleventh Circuit in Trichell, interpreting this decision as narrowing the scope of standing for consumer protection causes of action and others maintaining a broader interpretation, leaving room for plaintiffs to obtain redress for statutory violations, including under the FDCPA.¹⁰

In 2021, the U.S. Supreme Court revisited the issue of Article III standing in TransUnion LLC v. Ramirez.¹¹ There, the Court

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held that if a plaintiff does not suffer a real harm and a risk of future harm does not materialize, then there is no concrete harm and therefore no standing to assert a claim for damages.¹² As will be discussed in this Note, TransUnion further shifted the circuit split, causing more inconsistencies among the courts and yet again making it harder for plaintiffs to assert consumer financial protection claims in federal courts.¹³

The absence of a consistent standing doctrine among the circuit courts' jurisprudence is an area of great concern in the consumer financial protection context because some doctrines deprive consumers of a forum to enforce their interests. The Federal Trade Commission (FTC) purports to enforce federal consumer protection laws in an effort to "prevent fraud, deception, and unfair business practices," and the FTC's ultimate mission is to "protect consumers and promote competition."¹⁴ While agency enforcement of federal consumer financial protection laws is important for protecting consumers as a whole, it is imperative that courts recognize the shortcomings of government agencies, including their underfunding and underenforcement of these statutes.¹⁵ Although the FTC plays a crucial role in the enforcement of many federal consumer financial protection statutes, agency enforcement is simply not sufficient, resulting in a need for private rights of action when consumers seek relief for

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violations of these statutes.¹⁶ Despite the existence of private rights of action for violations of consumer financial protection statutes, courts have failed to consistently permit plaintiffs to seek redress due to a fundamental disagreement among the circuit courts regarding the requirements for Article III standing.¹⁷ This leaves consumers in jurisdictions that narrowly construe Spokeo and TransUnion without any means to hold companies accountable for harming, or attempting to harm, American consumers.¹⁸ Therefore, courts' interpretations of Spokeo, TransUnion, and Article III standing doctrines have serious implications for consumer financial protection.

This Note argues that TransUnion was wrongly decided and that courts should instead apply the Spokeo standard on Article III standing to federal consumer financial protection causes of action for statutory violations less strictly and more consistently than courts did prior to TransUnion. Part II first discusses the background of the Article III standing doctrine, Lujan v. Defenders of Wildlife's three-part structure as a constitutional minimum for standing,¹⁹ and Spokeo's concrete injury requirement. Part II then examines several key federal consumer financial protection statutes that are grossly diminished by narrow, inconsistent interpretations of Spokeo. Part III next explores the pre-TransUnion circuit split deepened by Trichell v. Midland Credit Management, Inc., in which the Eleventh Circuit joined the Seventh and D.C. Circuits in holding that the general increased risk to consumers that may come from misleading debt collection letters is not enough to confer standing under the FDCPA for debtors who cannot show that they were personally injured.²⁰ Part IV discusses the U.S. Supreme Court's decision in

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TransUnion, in which the Court made clear: "No concrete...