ACA Submits Amicus Brief to U.S. Supreme Court In Case Challenging Plaintiff’s Standing to Sue When No Actual Damages Are Suffered

On Jan. 6, 2014, ACA International filed an amicus curiae brief with the U.S. Supreme Court in the case of Mutual First Federal Credit Union, et al. v. Jarek Charvat. At issue is whether a plaintiff has standing to sue for violations of a federal statute when the plaintiff suffers no economic loss or other tangible harm but merely seeks statutory damages for the alleged violation.

The Charvat case arises under the Electronic Fund Transfer Act. Prior to the December 2012 amendment to the EFTA, the EFTA required ATM operators that charged transaction fees to provide two forms of notice of those fees at the time of the transaction:

1. A physical sign “on or at” the ATM (usually a sticker), and
2. A notice “on the screen… after the transaction is initiated and before the consumer is irrevocably committed to completing the transaction…”.

The consumer-plaintiff made withdrawals from ATMs operated by the bank-defendants and was charged a $2 fee for each transaction. Although the consumer received the on-screen notices and specifically accepted the fees, the on-machine sticker notices were missing from the ATMs. The consumer contended, however, that the mere absence of the sticker notices violated his statutory rights, and those of a class of all other users of the ATMs, even though no one could have made a transaction and been assessed a fee without actually receiving the on-screen notice and expressly agreeing to accept the fee.

The consumer did not allege or seek any actual damages for the violations. Instead, he sought only statutory damages on behalf of the putative class, as well as attorneys’ fees and costs.

The issue in the Charvat case arises under a wide array of important and far-reaching federal statutes, including the FDCPA and TCPA.

Thousands of FDCPA and TCPA lawsuits are filed in federal courts across the country each year, and in most cases, the plaintiff has not suffered any actual damages resulting from the alleged violation. Most consumers are pursuing only statutory damages, which are generally capped at $1,000 and $500 respectively, while their attorneys seek thousands more in fees as compensation for proving technical violations of the acts that have caused no harm to their clients.

Unfortunately, the courts have made these “no injury” cases easy to pursue by repeatedly ruling that consumers do not need to prove “actual damages” under the FDCPA and TCPA in order to recover statutory damages and attorneys’ fees. Therefore, ACA filed the amicus brief in Charvat to urge the Supreme Court to hear the case and ultimately decide that all plaintiffs in “no injury” cases lack standing to sue.

ACA’s efforts to proactively support the industry are part of ACA’s Industry Advancement Program and are made possible by funding through ACA’s Industry Advancement Fund. In July 2013, the ACA International Board of Directors approved initiatives to protect the long term viability of the credit and collection industry. These efforts are funded by a three-year Industry Advancement Fund assessment.