District Court (Ill.) Says Emotional Distress from Denial of Credit is Not an Injury that the FCRA Vindicates

In Angulo v. Truist Bank, No. 22 C 923, 2022 U.S. Dist. LEXIS 193573, at *8 (N.D. Ill. Oct. 25, 2022), Judge Kendall granted a motion for judgment on the pleadings against an FCRA Plaintiff.

The intangible humiliation and embarrassment of credit denial may also be considered a concrete injury in the FCRA context. In passing the FCRA, Congress found, “[t]he banking system is dependent upon fair and accurate credit reporting,” and “[a]n elaborate mechanism has been developed for investigating and evaluating the credit worthiness, credit standing, credit capacity, character, and general reputation of consumers.” 15 U.S.C. § 1681(a)(1)-(2). Congress recognized that a person’s credit history bears on his character, and that disseminating inaccurate or misleading credit information injures a person’s reputation. Humiliation and embarrassment result from this loss of reputation. This injury therefore bears a close relationship to defamation, a long-recognized reputational harm. See TransUnion LLC, 141 S. Ct. at 2208-09 (finding concrete harm in dissemination of credit reports with false-positive OFAC alerts because injury was analogous to defamatory statements that “would subject [a person] to hatred, contempt, or ridicule” when published) (quoting Milkovich v. Lorain Journal Co., 497 U.S. 1, 13, (1990)).  Again, however, Angulo failed to support alleged reputational harm and his resulting humiliation and embarrassment with any specific factual allegations. “It is not enough to say that your reputation was harmed without explaining how.” Crabtree, 948 F.3d at 880. As discussed, Angulo never alleged any specific instance of credit denial, let allow how he experienced reputational harm from it. Without more, Angulo’s bare allegation of “humiliation and embarrassment of credit denial” is too “conjectural or hypothetical” to establish standing. SeeCrabtree, 948 F.3d at 880 (explaining that allegations of reputational injury in the FCRA context must be supported by specific facts).  In contrast, “mental and emotional pain [and] anguish” from credit denial is not an injury that the FCRA vindicates. While damages for emotional distress may flow from an FCRA violation with a proper causal connection, see Persinger, 20 F.4th at 1194 (collecting cases), the analysis of this intangible harm’s concreteness to confer standing is distinct. Intentional infliction of emotional distress is a “traditional” basis for American lawsuits. See, e.g., Restatement (Second) of Torts § 46 (Am. L. Inst. 1965). But there is no evidence Congress enacted the FCRA to protect consumers from the emotional distress of inaccurate credit reports. The statute vindicates a consumer’s interest in “fair and accurate credit reporting,” and it seeks to structure credit reporting “in a manner which is fair and equitable to the consumer, with regard to the confidentiality, accuracy, relevancy, and proper utilization of such information . . . .” 15 U.S.C. § 1681(a)-(b). But the statute is not designed to prevent a consumer from experiencing mental and emotional distress, even if inaccurate credit reporting may have that ancillary effect on a consumer. Cf. Pierre, 29 F.4th at 939 (holding that “worry . . . is insufficient to confer standing” in related context of Fair Debt Collection Practices Act violation). Even if Angulo were to succeed on the merits of his claims and prove Sheffield’s FCRA violation caused him actual damages for emotional distress, he has no standing to sue on this basis alone. Emotional distress is not a concrete injury the FCRA sought to protect consumers from, so it cannot be an injury in fact for standing purposes. Finally, “a chilling effect on applications for future credit” is not a concrete harm sufficient to confer standing in a suit for money damages. “[A] person exposed to a risk of future harm may pursue forward-looking, injunctive relief to prevent the harm from occurring, at least so long as the risk of harm is sufficiently imminent and substantial.” TransUnion, 141 S. Ct. at 2210. Suits for money damages, in contrast, recognize as concrete “harms that have in fact materialized.”  Pierre, 29 F.4th at 938 (citing TransUnion, 141 S. Ct. at 2210-11). An inaccurate credit report could plausibly cause a pecuniary harm to Angulo in the future if he applies for credit. But this does not confer standing to collect money damages now for harm that has not yet happened. In sum, Angulo’s complaint currently lacks factual allegations showing he plausibly suffered an injury from Sheffield’s alleged FCRA violation, so his claims lack standing. His alleged harms are either not concrete, or nothing more than bare, conclusory assertions of suffering. The Court cannot proceed to the merits of Angulo’s FCRA claims without sufficient facts to support each element of his standing to sue Sheffield for the alleged violation. If such facts exist, Angulo may amend his complaint and plead facts that show he has plausibly suffered (1) a concrete and particularized injury, (2) that Sheffield caused, and (3) the Court can remedy.  Angulo has not asked this Court for injunctive relief against Sheffield to correct his credit information. He has requested only actual damages, statutory damages, punitive damages, and attorney fees and costs for the on-going FCRA violation. (Dkt. 1 at 12).