Trans Union Corp. v. Federal Trade Commission
345 U.S. App. D.C. 301, 245 F.3d 809, 2001 U.S. App. LEXIS 6241 (2001)
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Rule of Law:
Lists of consumer names and addresses sold for target marketing are considered 'consumer reports' under the Fair Credit Reporting Act (FCRA) if the criteria used to create the lists involve information that is used or expected to be used by creditors in making credit eligibility decisions. The FCRA's restriction on the sale of such reports for marketing purposes is a permissible regulation of commercial speech and does not violate the First or Fifth Amendments.
Facts:
- Trans Union, a consumer reporting agency, collected vast amounts of consumer credit information from lenders in the form of 'tradelines,' which include details like account history, credit limits, and payment status.
- In addition to selling traditional credit reports, Trans Union sold 'target marketing products,' which were lists of consumer names and addresses.
- These lists were created by extracting from Trans Union's credit database consumers who met specific criteria requested by the marketers, such as possessing a mortgage, an auto loan, or a credit card with a certain limit.
- While the lists themselves contained only names and addresses, the purchasers knew that every individual on the list possessed the specific credit-related characteristics used as selection criteria.
- The information used as selection criteria for the marketing lists was the same type of information Trans Union collected and used for its primary business of creating consumer credit reports for lenders.
Procedural Posture:
- The Federal Trade Commission (FTC) brought an administrative action against Trans Union.
- The FTC, as the adjudicator of first instance, determined that Trans Union's target marketing lists were 'consumer reports' sold for an impermissible purpose and issued a cease and desist order.
- Trans Union, as petitioner, sought review in the U.S. Court of Appeals for the D.C. Circuit.
- In a prior decision (Trans Union I), the D.C. Circuit set aside the FTC's order, finding a lack of evidence that the mere existence of a tradeline was a factor in credit decisions, and remanded the case to the FTC.
- On remand, the FTC conducted further proceedings, including a trial before an Administrative Law Judge, and again found the lists to be 'consumer reports' based on a more developed evidentiary record, reissuing its order.
- Trans Union again petitioned the U.S. Court of Appeals for the D.C. Circuit for review.
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Issue:
Does the Fair Credit Reporting Act (FCRA) prohibit a consumer reporting agency from selling targeted marketing lists derived from consumer credit data, and does such a prohibition violate the agency's First Amendment free speech rights or Fifth Amendment due process rights?
Opinions:
Majority - Tatel, Circuit Judge
Yes, the FCRA prohibits the sale of these lists for target marketing, and no, this prohibition is constitutional. The lists are 'consumer reports' because the information used to compile them is 'used or expected to be used or collected in whole or in part for the purpose of serving as a factor in establishing the consumer’s eligibility for credit.' The court found substantial evidence in the record showing that creditors use the very criteria Trans Union employed—such as the number, type, and age of tradelines—in prescreening and credit scoring models to make eligibility decisions. Constitutionally, the FCRA's restriction survives scrutiny. It does not violate the Fifth Amendment for vagueness because it is an economic regulation and Trans Union can seek clarification via FTC advisory opinions. The First Amendment challenge fails because the lists are commercial speech concerning private matters, warranting reduced constitutional protection. The government's interest in protecting consumer financial privacy is substantial, the FCRA's restriction directly advances that interest, and the law is reasonably tailored to address the unique access consumer reporting agencies have to sensitive data.
Analysis:
This decision solidifies the broad scope of the FCRA's definition of 'consumer report,' clarifying that the classification depends on the underlying data used for compilation, not merely the information explicitly disclosed. It establishes that a company cannot circumvent the FCRA's usage restrictions by selling lists that, while facially benign (names and addresses), implicitly communicate sensitive credit information. The ruling affirms that protecting consumer financial privacy is a substantial government interest that can justify restrictions on commercial speech, setting a key precedent for data privacy regulation and limiting the secondary use of data collected for credit reporting purposes.
