Class Action Reinstated Against Check Verifiers

     (CN) – The 6th Circuit revived a class action accusing foreign check-verification companies of ignoring a numbering change in Tennessee’s driver’s license system, making it appear as if “hundreds of thousands, if not millions” of consumers were first-time check writers.

     Cheryl Beaudry filed the class action in 2007 against TeleCheck Services, TeleCheck International and First Data Corp., alleging violations of the Fair Credit Reporting Act (FCRA).
     U.S. District Judge Aleta Arthur Trauger dismissed the case, saying Beaudry failed to allege injury – namely, that she had a check rejected or transaction canceled because of the error.
     But the Cincinnati-based appellate panel said she didn’t need to prove actual injury under the law.
     “FCRA’s private right of action does not require proof of actual damages as a prerequisite to the recovery of statutory damages for willful violations of the Act,” Judge Sutton wrote.
     “The district court and the defendants suggest that, if we read the law to allow statutory damages without proof of injury, we would be creating a strict liability regime,” Sutton added. “Not so. The existence of a willfulness requirement proves that there is nothing ‘strict’ about the state of behavior required to violate the law” (emphasis in original).
     Sutton said Beaudry simply had to show that the defendants used unreasonable procedures in preparing her credit report.
     “Under these circumstances,” the court concluded, “Beaudry’s claim should not have been dismissed.”

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