Safeco Did Not Eliminate Relevance of Pattern and Practice

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Safeco Did Not Eliminate Relevance of Pattern and Practice

Postby Administrator » Mon Sep 29, 2014 11:33 pm

Court Finds Check Verification Codes Can Be Consumer Reports. On January 10, in ruling on the parties’ summary judgment motions, the U.S. District Court for the Middle District of Tennessee found, among other things, that (i) simple numeric codes recommending whether to accept a check are “consumer reports” for Fair Credit Reporting Act (FCRA) purposes when issued by a consumer reporting agency, and (ii) the U.S. Supreme Court’s recent Safeco holding does not eliminate the relevance of pattern and practice proof to showing whether a violation was willful. Holmes v. Telecheck Int’l, Inc., No. 3:05-0633, 2008 WL 118064 (M.D. Tenn. Jan. 10, 2008). The consumer plaintiff presented as payments to four merchants six checks. On the recommendation of TeleCheck, a provider of check verification services largely based on a database it maintains of consumer check writing histories, five of the six checks were declined at the point of sale. The merchant ultimately accepted the other check, but TeleCheck initially issued a code requiring the merchant to whom the plaintiff had presented the check to contact TeleCheck to provide additional information regarding the transaction. The plaintiff alleged that TeleCheck violated the Fair Credit Reporting Act (FCRA) in a number of ways. The court found that TeleCheck was a consumer reporting agency under the FCRA, and that the numeric codes issued to merchants by TeleCheck constitute consumer reports under FCRA. On the issue of damages, the court noted that the U.S. Supreme Court held in Safeco Ins. Co. of Am. v. Burr, 127 S.Ct. 2201 (2007), that punitive and statutory damages may be recovered under the FCRA only if a plaintiff demonstrates (i) the defendant knowingly violated her FCRA rights or (ii) the defendant acted with reckless disregard for those rights. The court determined, however, that the Safeco ruling did not eliminate the relevance of pattern and practice proof to establishing willfulness.
David A. Szwak
Bodenheimer, Jones & Szwak, LLC
416 Travis Street, Suite 1404, Mid South Tower
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