What does a recent Supreme Court decision on Spokeo.com, an online personal information aggregator, have to do with TILA-RESPA Integrated Disclosure? Not much, on its face, but a recent Inman article about a California class-action lawsuit leveled against Spokeo argues that the suit may have big implications for TRID-affected industries.
Spokeo.com’s purpose is to collect and display information like age, employment, marital status and education on individuals. In 2011, Thomas Robins filed a class action suit against the site, alleging that the information displayed was inaccurate. Spokeo’s rebuttal stipulated that the information was indeed inaccurate, but that Robins suffered no actual harm from its display.
The Constitution’s Article III states that the plaintiff must display “concrete harm” in order to hold the defendant responsible and receive damages. The 9th Circuit Court of Appeals ruled that there was an implicit “private cause of action” to enforce statutory rights — which is to say, if those statutory rights have been impinged upon, the procedural violation itself is adequate cause to level suit even if no harm has taken place. In response, Spokeo took the case all the way up to the Supreme Court, which vacated the 9th Circuit’s ruling and sent it back down the chain for further examination.
So what does this all have to do with TRID compliance? The question of concrete harm versus procedural violation. As many of us in the mortgage industry know, TRID compliance is a tricky transition that’s still causing waves — and will likely cause more as the grace period draws to a close.
If the court rules that inaccuracies themselves are cause for suit, even if those inaccuracies cause no harm to the client, it opens up mortgage professionals and loan officers to an enormous amount of liability and adds pressure to an already-over-boiling pot. Suddenly the industry will be faced with not just compliance demands, but also the potential need to defend themselves against meritless — but costly — lawsuits.
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