Trans Union LLC v. Federal Trade Commission

2002-06-10

Headline: Justices decline to review an FTC ban on selling credit bureaus’ target-marketing name-and-address lists, leaving the restriction in place and affecting marketers, charities, and the credit-reporting company.

Holding: The Court refused to review the lower court’s decision, leaving in place the ruling that the FTC may treat credit-reporting target-marketing lists as prohibited "consumer reports" and uphold the ban.

Real World Impact:

Allows FTC ban on selling target-marketing lists to remain in effect.
Exposes Trans Union to massive class-action damages risking bankruptcy and job losses.
Limits marketers and charities from buying targeted name-and-address lists.

Topics: credit reporting, consumer privacy, targeted marketing, free speech

Summary

Background

Trans Union is one of three major credit reporting companies. It creates lists of names and addresses of people who meet specific financial criteria, and marketers buy those lists to solicit goods and services. In 1994 the Federal Trade Commission concluded those lists were “consumer reports” and barred their sale under the Fair Credit Reporting Act. The D.C. Circuit rejected Trans Union’s First Amendment challenge, and the Supreme Court declined to review that decision, leaving the ban in place.

Reasoning

The central question was whether selling these marketing lists can be treated as consumer-reporting information and thus be restricted, and whether that restriction violates free-speech protections. The D.C. Circuit relied on an earlier case to apply a reduced level of constitutional protection, finding the lists were mainly of private commercial interest rather than public concern. In a dissent, Justice Kennedy argued that the earlier case dealt with false statements and may not apply to truthful commercial information, noted that the Government admitted the lists influence millions of purchasing decisions, and pointed out that the law still permits a more invasive practice called prescreening.

Real world impact

Because the ruling treats the lists as prohibited consumer reports, Trans Union faces a wave of class-action claims on behalf of roughly 190 million people. Statutory damages of $100 to $1,000 per willful violation could create claims approaching $190 billion, risking bankruptcy, job losses, and effects on the national economy. The denial of review leaves the lower-court outcome intact for now.

Dissents or concurrances

Justice Kennedy (joined by Justice O’Connor) dissented from the denial of review, arguing the case raises novel free-speech and national economic issues and that the Court should have examined the correctness of the lower court’s approach.