Reported / Citable
Background
Lydia Bultemeyer completed four steps of CenturyLink’s online ordering process but stopped before the final submission. CenturyLink nevertheless obtained her credit report, saying it needed the information to calculate pricing and guard against identity fraud. She brought a class action alleging that no consumer-initiated business transaction existed until the final order was submitted.
The district court rejected CenturyLink’s defense under Safeco Insurance Co. v. Burr, which precludes willfulness liability when a company adopts an objectively reasonable reading of the Fair Credit Reporting Act. A jury awarded $28 million in statutory damages and $112 million in punitive damages.
The Court’s Holding
The Ninth Circuit reversed and directed judgment for CenturyLink on willfulness. Even if CenturyLink’s interpretation of when a consumer initiates an online transaction was ultimately wrong, it had a foundation in the statutory text. No controlling appellate decision or authoritative agency guidance warned the company away from that reading.
The panel therefore did not decide exactly when an online shopper initiates a transaction under FCRA. Separate concurrences disagreed on that underlying question: Judge Clifton believed completing all but the final step could qualify, while Judge Bybee would require the consumer to know the full cost and press submit.
Key Takeaways
- FCRA willfulness requires more than a mistaken interpretation; the reading must be objectively unreasonable.
- Statutory grounding and the absence of authoritative contrary guidance can establish the Safeco defense.
- The Ninth Circuit left unresolved when an online shopping interaction becomes a consumer-initiated business transaction.
- Businesses should document the legal basis and operational need for credit pulls at each point in an online workflow.
Why It Matters
The decision eliminates a $140 million class judgment and shows the enormous stakes attached to FCRA’s statutory and punitive remedies. It also reinforces Safeco as a powerful limit on willfulness claims when law and agency guidance are unsettled.
Businesses should not treat the ruling as permission to pull reports early. The substantive meaning of initiation remains open, and negligent violations may involve different issues. Clear disclosures, consent records, and periodic review of new authority remain essential.
Safeco asks whether the defendant’s reading was objectively unreasonable, an inquiry distinct from whether the court would ultimately adopt that reading. CenturyLink pointed to statutory language connecting a permissible pull to a transaction initiated by the consumer. With no controlling construction of initiation in a multistep internet checkout and no authoritative agency warning, its position cleared that threshold. That defeated the element of willfulness and made the enormous statutory and punitive award legally unavailable.
The disagreement between the concurrences matters for product design. One view treats substantial voluntary progress through a purchase flow as initiation; the other locates initiation at informed final submission. Until the issue is resolved, companies can reduce risk by delaying hard credit pulls, clearly explaining when a pull occurs, securing express authorization where appropriate, and offering pricing information without unnecessary access. Plaintiffs should identify binding authority or agency material that made the challenged practice unreasonable when adopted.