4th Circuit: No Standing if No One Read the False Alert

Case: Fernandez v. RentGrow, Inc.
Court: U.S. Court of Appeals for the Fourth Circuit
Citation: No. 22-1619 (4th Cir. Sept. 11, 2024)
Decided: September 11, 2024
Bottom line: In a tenant or employment screening case, evidence that the landlord or employer actually saw and used the false entry can decide whether the case goes forward.

Background

When Marco Fernandez returned from a Navy deployment and applied for an apartment in Maryland, the landlord ordered a tenant screening report from RentGrow. Among the “Items to Review” on the first page was “1 possible match in OFAC name search,” and the last section of the report described the supposed match: a man linked to a drug trafficking organization on the Treasury Department’s sanctions list. RentGrow flagged a possible match when an applicant’s first and last names were the same as, or within one or two characters of, a name on the list. The man listed was not Fernandez.

The landlord denied his application, but because of criminal records that also did not belong to him; it approved him two days later after he explained. Fernandez sued under § 1681e(b) and sought to represent a class of people whose RentGrow reports carried a “possible OFAC match” without a matching date of birth, address, or Social Security number. The district court certified the class, holding that sending the misleading report to a third party was itself a concrete injury.

What the court held

The Fourth Circuit, in an opinion by Judge Rushing, vacated the class certification order. Applying TransUnion LLC v. Ramirez, the court explained that an inaccurate OFAC alert causes a concrete injury because it resembles defamation, and defamation requires publication. Drawing on the common law, the court held that publication means a third party read the statement and understood its defamatory meaning.

The record showed the senior property manager reviewed only the first-page result unless a report recommended rejection, did not know whether she had ever looked at an OFAC section, and was not sure what OFAC was. She testified that Fernandez’s file needed further review because of the criminal records, not the OFAC entry. The OFAC flag also did not affect RentGrow’s accept-or-reject recommendation. On that record, the court held that Fernandez had not shown that anyone read and understood, or otherwise considered, the alert, so he lacked standing for this claim. Because he was the only class representative, the certification order could not stand.

The court acknowledged that evidence that a business requested and paid for a report can support an inference that it was read. It held only that this inference can be rebutted, and was rebutted here. It also noted that the class sought only damages, not injunctive relief, so a risk of future publication did not help. Judge Niemeyer concurred.

Our take

We think Fernandez reads TransUnion more narrowly than the Supreme Court required. In TransUnion, the Court treated the dissemination of 1,853 reports to businesses as publication without asking whether each recipient understood the OFAC notation. The Fourth Circuit read that silence as an open question rather than an answer. The result rewards a defendant whose customers do not read the reports they buy, which is an odd incentive in a statute designed to make those reports accurate.

That said, the opinion is narrower than some headlines suggest. It does not require a consumer to show a denial, a higher price, or any harm beyond the reputational injury itself. It accepts that paying for a report supports an inference it was read. And it turned on unusually specific testimony from a manager who said she never looked at OFAC information. In most individual cases, where the consumer was denied or questioned because of the false entry, the publication element will be easy to prove.

The larger effect will be on class actions. Defendants will argue that whether each recipient read a particular field is an individual question that defeats class certification. Plaintiffs will respond with evidence of how reports are designed, scored, and used, and with the paid-for inference the court recognized. We expect the issue to be litigated report by report and screening product by screening product.

What it means if your report is wrong

If you were turned down for housing or a job after a screening report, write down what the landlord or employer told you, and ask for a copy of the report and any adverse action notice. Statements like “your report shows a match to a watch list” or “we saw a criminal record” are evidence that the false entry was read and understood. Dispute the error with the screening company as well. A free case review can assess how Fernandez affects a claim, with no fee unless we win.

Sources

Primary

Opinion (Fourth Circuit)

Commentary we reviewed

Updated November 1, 2026. "Our take" is the firm's opinion. This page is general information, not legal advice, and later decisions may change the law.