On September 22, the U.S. Court of Appeals for the 9th Circuit reversed a district court judgment totaling more than $140 million in a class action alleging a telecommunications company willfully violated the FCRA by pulling consumers’ credit reports without a permissible purpose. The plaintiff alleged the company obtained her credit report after she completed four of five steps in an online ordering process but never clicked “submit” to finalize her purchase, leaving before seeing the company’s final pricing, which could include a deposit based on the credit check. The company argued it had a “legitimate business need” for the information under the FCRA’s permissible purpose provision to provide accurate pricing and protect against identity fraud. A class of 56,075 members proceeded to trial after the district court denied the company’s defense under Safeco Insurance Co. of America v. Burr, and the jury awarded each class member $500 in statutory damages and $2,000 in punitive damages.

The 9th Circuit held the company was entitled to judgment as a matter of law on its Safeco defense, finding its interpretation of the FCRA was not objectively unreasonable. The court concluded the company’s reading — that a consumer “initiated” a business transaction by completing four of five steps — had a foundation in the statutory text, as the term “initiated” is undefined in the FCRA and bears a range of reasonable meanings. The court further found no court of appeals had addressed when a business transaction is “initiated” under the statute, and no authoritative agency guidance warned the company away from its interpretation. The court noted that an informal FTC staff opinion letter addressing automobile dealers in brick-and-mortar showrooms was not sufficiently specific to the company’s online process to constitute such notice.

In separate concurrences, one judge wrote that a consumer who completes all but the final step of a multi-step online purchase has initiated a business transaction under the FCRA, while another judge expressed regret that the panel declined to resolve the statutory question and warned that the ruling could serve as a license for the company and other online sellers to act in presumptive violation of the FCRA. He would have held that a consumer does not initiate a transaction until she knows the “full cost of services” and submits her order.