• by Wendy Davis , Staff Writer @wendyndavis, June 5, 2012

Online data broker Spokeo found itself at the center of a controversy in 2010, when critics alleged that the company violates federal fair credit laws by selling information about consumers without giving them an opportunity to correct inaccuracies.

The watchdog Center for Democracy & Technology filed a complaint with the Federal Trade Commission; Virginia resident Thomas Robins also brought a potential class-action lawsuit against the data broker for allegedly violating the Fair Credit Reporting Act.

For its part, Spokeo says it's not a consumer reporting agency, but a search engine. Spokeo also says it allows consumers to opt out of its publicly available database -- though some critics have said that the opt-outs didn't always persist.

The company also argued in court papers that Robins' lawsuit should be dismissed because he couldn't point to any tangible injury caused by Spokeo's information.

Robins, who was unemployed, countered that wrong information on Spokeo was hindering his job search.

U.S. District Court Judge Otis Wright II in the Central District of California, who presided over Robins' lawsuit, flip-flopped on the issue. He ruled last May that Robins could proceed with the case. Four months later, Wright changed his mind and dismissed the lawsuit.

Now Robins is asking the 9th Circuit Court of Appeals to revive his case. He makes several arguments, including that he should be able to pursue his claim even without proof of financial loss. "Congress does not require consumers to prove economic harm to recover under the FCRA," he argues in papers filed with the appellate court on Friday. "Rather, it provided for actual damages or statutory damages of between $100 and $1,000 for willful violations."

He also says that he did suffer harm "in the form of anxiety, stress, and concern over Spokeo’s maintenance and dissemination of inaccurate consumer reports."

Whether the 9th Circuit will agree isn't clear.

Regardless of what happens with this lawsuit, data brokers could face new restrictions if lawmakers adopt recent recommendations by the FTC. That agency recently proposed that Congress enact legislation requiring data brokers to give consumers access to information about them. The FTC also is urging data brokers to create a centralized site where they can explain to consumers how their data is collected and used.