Legal Update: Key Court Decisions Impacting Consumer Rights and Financial Institutions

May 15, 2024

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Sessa v. Trans Union, LLC – A Win for Consumer Protection 

In a notable decision from the United States Court of Appeals for the Second Circuit, the case of Sessa v. Trans Union, LLC has set an important precedent for consumer rights under the Fair Credit Reporting Act (FCRA). On behalf of herself and a class of similarly situated consumers, Plaintiff Gia Sessa challenged Trans Union’s erroneous reporting of her auto lease. Specifically, instead of reflecting that her financial obligations would end at the end of the lease, Trans Union reported the buyout amount for the vehicle as a “balloon payment”.  The difference between buy out amounts (the amount you can purchase a vehicle for at lease-end IF you decide to do so) and balloon payments (a large payment that you are required to make in order to avoid defaulting on a loan) is important, as one involves having much more debt than the other.  

The District Court had initially dismissed Sessa’s claims, ruling that the inaccuracy was a legal issue rather than a factual one, and that the FCRA did not cover disputes regarding legal issues. We appealed, and the Court of Appeals for the Second Circuit vacated the lower court’s ruling, emphasizing that the FCRA does not distinguish between legal and factual inaccuracies.   Rather, any objectively and readily verifiable inaccuracy can form the basis of an FCRA claim. The Second Circuit also noted that auto lease in question clearly did not contain a balloon payment, so there was no legal dispute in any meaningful sense.   

In siding with Ms. Sessa and the rest of the class, the Court accepted positions urged not just by Schlanger Law Group, LLP and our appellate co-counsel, Gupta Wessler LLP, but also the Consumer Financial Protection Bureau and Fair Trade Commission, which submitted a brief in support as the FCRA’s regulatory agencies.  The nation’s leading consumer advocacy organizations also submitted a “friend of the court” brief in support of our position.  The Second Circuit’s decision rejected positions advanced by the U.S. Chamber of Commerce and various other business groups, who submitted briefing in support of Trans Union.   

 The case underscores the broader protections available to consumers under the FCRA and the importance of being willing to continue fighting even when a lower court rejects the consumer’s position. 

If your credit has been impacted by significant inaccuracies on your credit report, we are happy to speak with you about your options. 

Sparkman v. Comerica Bank – Protecting Consumers Against Mishandled Electronic Funds 

The United States District Court for the Northern District of California recently issued an order in the case of Sparkman v. Comerica Bank, addressing key issues under the Electronic Funds Transfer Act (EFTA) and California law.  Our client, Paula Sparkman, brought a class action against Comerica Bank and Conduent Business Services, LLC, alleging that the defendants wrongfully deny fraud claims made by consumers who receive child support payments on prepaid debit cards.   

The Court held that our client’s claim for breach of contract based on defendants’ failure to keep the promises made in the informational sheet provided to each consumer regarding “Mastercard’s Zero Liability Protection” policy could move forward.   In addition, the Court ruled that claims that the defendants violated the EFTA by improperly shifting the burden of proof during the dispute process could move forward.  The Court also denied the bank’s request to dismiss our Plaintiff’s claim for injunctive relief under California’s Unfair Competition Law. 

We are proud to work with our co-counsel at Terrell Marshall Law Group and Berger Montague on behalf of Ms. Sparkman and the other consumers in the class. 

If you think you have been treated unfairly by your bank when disputing unauthorized bank charges (including charges on pre-paid benefits cards), please contact us.   

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Reviewed by: Attorney Daniel Schlanger, Managing Partner

Written by: Schlanger Law Group