Credit Report Provider AppFolio Must Face Class Claims
In October 2016, Plaintiff Anthony Leo applied for an apartment. As part of the application process the rental agency performed background research and paid Defendant AppFolio to produce a “consumer report” on Mr. Leo.
The consumer report that AppFolio sold to the rental agency identified a recent eviction in Mr. Leo’s past. The only problem was that the eviction record was not Mr. Leo’s. The defendant in the eviction action was named Tanya Lee. Because of this eviction, the rental company refused to rent the apartment to Mr. Leo.
To correct this false reporting, Mr. Leo requested a copy of his file from AppFolio. The Fair Credit Reporting Act requires AppFolio to tell Mr. Leo where it got the information contained in the file and to list the people who received a copy of his consumer report. But, AppFolio did not do this. AppFolio did not disclose the people who got a copy the report, and it also stated, wrongly, that the eviction record came from a court in South Carolina. In fact, the incorrect information came from a private vendor.
Mr. Leo sued AppFolio on behalf of himself and all similarly situated consumers. Mr. Leo claims that AppFolio systematically fails to disclose information to consumers that AppFolio is required to disclose by law. He also claims that AppFolio’s standard procedures are unreasonable because they result in incorrect information being included in consumer reports, such as the eviction record in his report.
Soon after the case was filed, AppFolio asked the Court to dismiss the class allegations. The Court refused.
AppFolio also asked the Court to dismiss claims that it violated the Fair Credit Reporting Act when it failed to disclose the name of the private vendor from whom it had received the incorrect eviction record and the people to whom the inaccurate report was given. Again, the Court refused.
The Court found that the Fair Credit Reporting Act is meant to protect consumers and prevent the distribution of inaccurate information about them. By requiring companies to disclose where they got their information, consumers can then contact the source of any errors so that they can be corrected. And by requiring companies to disclose who has requested the consumer’s report, consumers can then contact the people who received inaccurate reports to correct errors. Because AppFolio did not disclose this information required by the Fair Credit Reporting Act, Mr. Leo was unable to correct the inaccurate information in his report, and the Court concluded that Mr. Leo was entitled to pursue his disclosure claims.