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Bad Data, Specious Claim

The U.S. Supreme Court began to hear arguments this week on a case called Spokeo Inc. vs. Robins. The case hasn’t gotten too much attention, but for data publishers, the outcome could be profound.

The plaintiff in this case, Thomas Robins, claims that Spokeo, one of the larger online consumer data aggregators, damaged his reputation by disseminating incorrect information about him. According to published accounts, the record Spokeo had on Robins was a real botch job – almost everything was wrong. Ironically, a lot of the information was wrong in a good way: Spokeo tagged him as wealthy even though he was unemployed, gave him a wife and even awarded him a graduate degree he didn’t have. But wrong data is wrong data, according to Robins.

Here’s the part that gets weird, subtle and scary. Robins can’t point to any specific example of how he was damaged by this bad information. And courts don’t like awarding damages when damages can’t be shown. That’s why Robins is suing under a provision of the Fair Credit Reporting Act, which does let consumers claim damages if false information about them is distributed. As Robins sees it, even though he can’t prove he was damaged, he’s still entitled to damages because the information was supposed to be correct and it wasn’t. Starting to feel a chill going down your spine? Well, it gets even scarier when you realize there are quite a few laws relating to consumer and professional information like this on the books. And while the maximum penalty under the Fair Credit Reporting Act isn’t huge – just $1,000 – this is the stuff of dreams for class action lawyers, who can sue on behalf of millions of individuals, with a maximum penalty of $1,000 each.

 If Robins prevails, the information industry will become a happy hunting ground for lawyers who can use these so-called statutory penalties to take data companies to court for a broad range of practices, even if nobody was damaged by them. Business data may be a safer place to be right now, but with the increased blurring of our business and personal lives, the safety could easily be undone by a creative lawyer somewhere.

The Robins case won’t be decided until 2016, but it’s one to monitor carefully. A lot of big players in the information industry are already monitoring it … very nervously.