Bad Grammar Keeps FCRA Class Action Alive

Consumer Finance Blog Feb 14, 2019 Tampa, FL

By: Murray Silverstein, Esq., Jacob Boehner, Esq. and Ellis Marder*

What does this disclosure communicate to you?

The scope of this notice and authorization is all-encompassing; however, allowing [CheckSmart] to obtain from any outside organization all manner of consumer reports and investigative consumer reports now and, if you are hired, throughout the course of your employment to the extent permitted by law.

In Gilberg v. California Check Cashing Stores, LLC, et al., the Ninth Circuit reversed the district court and concluded that the above language violated the requirements of being a (1) “standalone” document with (2) a “clear and conspicuous disclosure” under the Fair Credit Reporting Act (“FCRA”). As a result, the plaintiffs’ putative class action was revived.

Unfortunately, while CheckSmart’s disclosure form combined the required FCRA disclosure, it also included disclosures required under state law, thus violating FCRA’s standalone requirement. “Standalone,” in this sense, means a single disclosure only.

In analyzing FCRA’s “clear and conspicuous” requirement for proper disclosures, the Court accepted that CheckSmart’s disclosure form met the “conspicuous” requirement because the disclosure was capitalized, bolded with underlined headings, all on one page, with a legible font. The overall message, however, was not “clear.”

The lack of clarity was based on the failure, in the first part of the sentence, to include a simple explanation, in terms a reasonable person could understand, of how the authorization was “all-encompassing” and how that could affect the applicant’s rights.

Further, those words in the purported sentence following the semicolon lacked a subject, rendering the sentence incomplete because the “all-encompassing” authorization was suggestive but really not explained. The Court also stated that the disclosure form was unclear because it would confuse a reasonable applicant when it combines federal and state disclosures. Accordingly, the Ninth Circuit ruled that the district court erred in concluding that the “standalone” document and “clear” requirements under the FCRA were met and vacated the district court’s judgment in part, remanding for further proceedings.

Those who draft these types of documents, especially lawyers, will draft and re-draft language in an attempt to cover every contingency. In doing so, the drafter can easily lose sight of the basic requirements needed for the document, along with the goal of articulating the document’s purpose in plain language, without surplusage or vague and confusing additions. Before finalizing and adopting disclosure forms or other documents to be provided to consumers, businesses (and lawyers) should review for basic clarity, in addition to compliance with applicable law.

*Not an Attorney.

**The information in this article is provided for general informational purposes only, and may not reflect the current law in your jurisdiction. No information contained in this post should be construed as legal advice from Greenspoon Marder LLP or the individual author(s), nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting on the basis of any information included in, or accessible through, this Post without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a lawyer licensed in the recipient’s state, country or other appropriate licensing jurisdiction.

About Greenspoon Marder

Greenspoon Marder LLP is a full-service law firm with over 225 attorneys and more than 20 office locations across the United States. With operations from Miami to New York and from Denver to Los Angeles, our firm attracts some of the nation’s top talent in key markets and innovation hubs. Our core practice areas include Real Estate, Litigation, and Transactional Services, complemented by the capabilities of a full-service firm. Greenspoon Marder has maintained a spot on The American Lawyer’s Am Law 200 as one of the top law firms in the U.S. since 2015, and our goal is to provide exceptional client service by developing a thorough understanding of each client’s business needs and objectives in order to provide strategic, cost-effective solutions.

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Bad Grammar Keeps FCRA Class Action Alive

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