We think our credit report is a secret, hidden from prying eyes. To some extent that’s true – but not always.
In the past we’ve talked about permissible purposes and the Fair Credit Reporting Act. And most of the time, you can tell if someone has a permissible purpose – they’ve got some preexisting tie to you, or perhaps you’ve asked to establish a business relationship of some sort.
What about debt collectors who want to get a copy of your credit report?
Under 15 U.S.C. § 1681b(a)(3)(A), a consumer report may be obtained by a person who “intends to use the information in connection with a credit transaction involving the consumer on whom the information is to be furnished and involving the extension of credit to, or review or collection of an account of, the consumer.”
Therefore, if a collection agency is hired by a creditor to collect a consumer debt, it will typically have a permissible purpose for obtaining a consumer report in conjunction with its collection activities, so long as it seeks to use information in connection with a transaction that the consumer initiated with the creditor.
This is pretty much a blanket rule, though it was restated in the April 2012 decision of Pyle v. First National Collection Bureau, a case decided by Magistrate Sheila K. Oberto of the U.S. District Court for the Eastern District of California.
In the Pyle case, the consumer pulled a copy of his TransUnion credit report in 2011 and saw that First National Collection Bureau had obtained a copy of his credit record. He’d never heard of the entity, so he sued for violations of the Fair Credit Reporting Act.
I’ve got no idea as to whether the consumer had a lawyer or not, but if so then shame on the lawyer for failing to review and understand a basic element of the Fair Credit Reporting Act.
And if the consumer went into court without the assistance of an attorney then shame on the consumer for not calling on one of the many excellent California credit reporting lawyers that would have surely clued him into the fact that his case was going to end up nowhere good.
As for you, now you know that permissible purpose under the FCRA extends to a debt collector who pulls your credit report in connection with its collection activities. When in doubt, however, give a call to a lawyer like me who knows these sorts of things. A quick call may well save you a lot of difficulties later on down the road.