Reyna v. Karma

Background

Joseph Anthony Reyna, representing himself and proceeding without paying the filing fee, submitted a first amended complaint against Credit Karma, LLC. He alleged that Credit Karma provided “approval-odds and similar predictive representations” that influenced his credit applications. After he applied for credit products and was denied, he alleged that his credit score was harmed.

Reyna asserted a claim under the Fair Credit Reporting Act (FCRA). He argued that Credit Karma was a “consumer reporting agency” and violated the FCRA’s requirement that such agencies use reasonable procedures to ensure the maximum possible accuracy of information they provide. He sought a declaration that Credit Karma violated the FCRA, damages, and costs.

Screening standard

Because Reyna was proceeding without paying the filing fee, the court screened his complaint under 28 U.S.C. § 1915(e). That statute requires dismissal when a complaint fails to state a claim for which relief may be granted. The court applied the same standard used for a motion to dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6). Under that standard, a complaint must contain enough factual matter to make the claim plausible, rather than merely reciting legal elements or conclusions.

Court’s analysis

The FCRA defines a consumer reporting agency as an entity that, for fees or on a cooperative nonprofit basis, regularly assembles or evaluates consumer credit or other consumer information for the purpose of providing consumer reports to third parties.

The court found that Reyna had not alleged that Credit Karma charged fees, assembled or evaluated consumer credit information within the meaning of the FCRA, or provided consumer reports to third parties. The court also noted that another court in the district had described Credit Karma as a consumer-facing personal-finance platform rather than a consumer reporting agency. In addition, the court cited prior district-court reasoning that a consumer is not a “third party” when receiving a credit report about himself or herself.

The court separately found that Reyna had not alleged with enough specificity and plausibility that Credit Karma violated the FCRA’s accuracy-procedure requirement. According to the court, the complaint merely repeated the statutory language without supporting factual allegations.

Disposition

The court dismissed the first amended complaint during screening. It expressed skepticism that Reyna could cure the defects, but because he was representing himself and leave to amend should generally be freely given, the court allowed him to submit a second amended complaint addressing the identified deficiencies within 28 days after entry of the order.