Spokeo Lawsuit Leads to Questions on Defining Financial Injury

Mar 1, 2011

By Kerrie Spencer, staff technology writer – March 1, 2011

A lawsuit can only exist in federal court if an injury of some kind is involved. When it comes to privacy issues, the intangible does not always win.

Take the latest federal lawsuit that involves Spokeo – an online people search company – and an irate consumer. The consumer took Spokeo to court, alleging that the company listed him as being in his 50s, married with three children and working in a professional or technical field. The gentleman was looking for work when he filed his lawsuit and feared that the mistakes in his credit report would backfire and quash any chances he had of getting a new job, and obtaining credit and insurance. These are definitely serious privacy concerns for the plaintiff, largely because Spokeo does not let people fix mistakes in their reports.

Consumers are not happy with this company. Predictably, there will be more lawsuits over violations of privacy issues. The company is in hot water with privacy advocates who are incensed that Spokeo offers financial data about Web users without also offering protections under the federal laws governing credit bureaus.

While consumers may be in an uproar over this kind of behavior, the company just recently had a federal court judge decide in their favor. This is not what you may think, though. The judge was not saying that the company did or did not do something wrong, he was saying that the plaintiff in the case could not follow through with his lawsuit because he did not state he had been injured by Spokeo. Will the plaintiff regroup and file again? Likely, as privacy is a fundamental issue that concerns many Americans. No one likes to think that his or her credit history is out there on the Internet for anyone to see, and then find out it is not even accurate and cannot be corrected.

The main argument in this case was that Spokeo was actually acting like a credit bureau, despite the fact the company is an online data aggregator and broker. However, privacy issues are somewhat intangible and therefore it is more difficult to prove injury. As the law stands right now, fear of future injury may not cut it as an injury claim. However, privacy violations can cause harm that is elusive and non-economic, but nonetheless it is a problem.

There is another potential lawsuit in the pipeline, which may be brought by the Center for Democracy & Technology. Their complaint is pretty much the same as the first one that went to court and the outcome for it may also be the same, due to the lack of injury issue. Nonetheless, these lawsuits have great potential to rein in companies who nonchalantly collect and distribute personal data without letting people have their say about its accuracy.

1) http://www.mediapost.com/publications/?fa=Articles.showArticle&art_aid=144502
2) http://celebrifi.com/gossip/Spokeo-Website-Invasion-of-Privacy-2075139.html
3) http://dailypuma.blogspot.com/2011/01/oh-no-its-spokeo-and-you-should-be.html

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