Posts Tagged ‘Mixed Credit File’
What are the permissible purposes to access a credit report?
KCLS LIMITS THE GEOGRAPHY IN WHICH WE TAKE CASES.
YOU MUST BE A VIRGINIA RESIDENT.
If you are not a Virginia Resident, click here to find a lawyer near you.
The Fair Credit Reporting Act is designed to protect consumers from inaccurate or outdated information on credit reports.
ACCESS OF CREDIT REPORTS- PERMISSIBLE PURPOSES
All references to code sections are courtesy of the Legal Information Institute at Law.Cornell.edu.
The Fair Credit Reporting Act allows certain people to access your credit file or credit report, under certain circumstances.
The section that discusses the permissible purposes for accessing a credit file is 15 U.S.C. §1681b.
As usual, we start with the statute. Please note that we will only be reviewing the section on permissible purposes, so the rest of the section will not be reprinted or discussed.
(a) In general
Subject to subsection (c) of this section, any consumer reporting agency may furnish a consumer report under the following circumstances and no other:
(1) In response to the order of a court having jurisdiction to issue such an order, or a subpoena issued in connection with proceedings before a Federal grand jury.
(2) In accordance with the written instructions of the consumer to whom it relates.
(3) To a person which it has reason to believe—
(A) 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; or
(B) intends to use the information for employment purposes; or
(C) intends to use the information in connection with the underwriting of insurance involving the consumer; or
(D) intends to use the information in connection with a determination of the consumer’s eligibility for a license or other benefit granted by a governmental instrumentality required by law to consider an applicant’s financial responsibility or status; or
(E) intends to use the information, as a potential investor or servicer, or current insurer, in connection with a valuation of, or an assessment of the credit or prepayment risks associated with, an existing credit obligation; or
(F) otherwise has a legitimate business need for the information—
(i) in connection with a business transaction that is initiated by the consumer; or
(ii) to review an account to determine whether the consumer continues to meet the terms of the account.
(G) executive departments and agencies in connection with the issuance of government-sponsored individually-billed travel charge cards.
(4) In response to a request by the head of a State or local child support enforcement agency (or a State or local government official authorized by the head of such an agency), if the person making the request certifies to the consumer reporting agency that—
(A) the consumer report is needed for the purpose of establishing an individual’s capacity to make child support payments or determining the appropriate level of such payments;
(B) the paternity of the consumer for the child to which the obligation relates has been established or acknowledged by the consumer in accordance with State laws under which the obligation arises (if required by those laws);
(C) the person has provided at least 10 days’ prior notice to the consumer whose report is requested, by certified or registered mail to the last known address of the consumer, that the report will be requested; and
(D) the consumer report will be kept confidential, will be used solely for a purpose described in subparagraph (A), and will not be used in connection with any other civil, administrative, or criminal proceeding, or for any other purpose.
(5) To an agency administering a State plan under section 654 of title 42for use to set an initial or modified child support award.
(6) To the Federal Deposit Insurance Corporation or the National Credit Union Administration as part of its preparation for its appointment or as part of its exercise of powers, as conservator, receiver, or liquidating agent for an insured depository institution or insured credit union under the Federal Deposit Insurance Act [12 U.S.C. 1811 et seq.] or the Federal Credit Union Act [12 U.S.C. 1751 et seq.], or other applicable Federal or State law, or in connection with the resolution or liquidation of a failed or failing insured depository institution or insured credit union, as applicable.
So there are several reasons why an entity can get your credit file. Obviously, if you give them permission, or a judge gives permission, it is permissible. That requires little explanation.
But section 3 requires a bit more explanation.
They can access your report if you are applying for credit, or someone is collecting, for a background check for employment, or insurance underwriting, or for investment purposes. They can look if they have a legitimate business need, for a credit transaction or a review of a credit transaction.
The rest of the section is about child support agencies.
But the key factor is that for most purposes, they can only look if there is an underlying credit transaction.
But the key factor is CREDIT TRANSACTION. In a recent case, the 9th circuit court of appeals (the 9th circuit covers Alaska, Hawaii, California, Washington, Oregon, Arizona, Nevada, Montana and Idaho) held that a parking ticket, or traffic ticket was not a credit transaction, so a collector who was using the credit report to collect could not get access. Pintos v. Pacific Creditors Ass’n, 565 F.3d 1106 (9th Cir., 2009). “Because the current case involves neither a transaction for which Pintos sought credit nor the collection of a judgment debt, we conclude that § 1681b(a)(3)(A) did not authorize PCA to obtain the credit report on Pintos.” Pintos at 1110.
These are the reasons that the law allows. These are ALL of the reasons the law allows.
Now it gets interesting to look at the question of can a creditor or collector look at a credit report if the underlying debt is paid, or discharged.
There is a court of appeals decision that says that a former creditor who was owed money, but is now paid, does have a permissible purpose. Wilting v. Progressive County Mut. Ins. Co., 227 F.3d 474, 476 (5th Cir., 2000). There is another court of appeals case that says that a closed account no longer has a permissible purpose. Levine v. World Financial Network Nat. Bank, 437 F.3d 1118 (11th Cir., 2006). It is possible to distinguish a paid, closed account from an account that is paid, but with a status that is just inactive. As a result, impermissible access must be monitored.
A creditor who has been discharged is a horse of a different color. If they are accessing the report for the purposes of collection, they are knowingly collecting on a discharged debt. If they are accessing the report for a purpose other than collection, they need to show a new application, or they do not have a permissible purpose. So, they are either collecting on a discharged debt, or they do not have a permissible purpose. Collecting on a discharged debt is prohibited by the Bankruptcy code. Not having a permissible purpose is prohibited by the Fair Credit Reporting Act. In chess, this is called a fork. They are losing one or the other.
If someone has been looking at your credit, and does not have a permissible purpose, you may have a right to sue them. Contact us, for a free consultation, and lets discuss who is looking, and why.
If you have been damaged by any of these actions, you could be entitled to recover actual damages, attorney fees and costs, and in the right circumstances, punitive damages are available. Getting to punitive damages is very hard, so we usually tell clients that punitive damages are likely to be limited, if available, in their case.
If you have been impacted by anything we mentioned here, you can make an appointment to see us.
NO FEE IN YOUR FCRA CASE UNLESS WE RECOVER!!
OUR LEGAL FEES:
The rights afforded to you, as a consumer, under the FCRA and the FDCPA means that a corporation or party who has violated your rights may ultimately be made to pay for statutory damages, actual damages, and your legal fees. Therefore, if we agree to represent you in any case, you won’t pay any attorney’s fees unless we are successful and we recover on your behalf. We are here to serve and have assisted many consumers TO enforce their legal rights. Let us try and see if we can help you too. That means you pay no fee in your case unless we recover.
Contact us by e-mail or by telephone or fax or US Mail.
You can call us: 804.673.4358
You can fax us: 804.673.4350
You can contact us by US MAIL:
Krumbein Consumer Legal Services, Inc.
1650 Willow Lawn Drive
Suite 300
Richmond, VA 23230
Fair Credit Reporting Act Basics (long post)
KCLS LIMITS THE GEOGRAPHY IN WHICH WE TAKE CASES.
YOU MUST BE A VIRGINIA RESIDENT.
If you are not a Virginia Resident, click here to find a lawyer near you.
The Fair Credit Reporting Act is designed to protect consumers from inaccurate or outdated information on credit reports.
FAIR CREDIT REPORTING ACT BASICS
In this blog entry, we will NOT go into details of what happens or what to do, only the basic outline of what happens and what is supposed to happen when dealing with credit reporting issues under the Fair Credit Reporting Act (FCRA). It is a little bit long, because there is so much information, but bear with us.
All references to code sections are courtesy of the Legal Information Institute at Law.Cornell.edu.
So what is the Fair Credit Reporting Act?
The Fair Credit Reporting Act, or FCRA, is the law that requires that your credit file, commonly called a credit report be accurate. It is found in the US Code at Title 15, Chapter 41, Subchapter III, or Title 15 US Code sections 1681 through 1681x. Prior to the advent of this act, state and local law on defamatory statements were what controlled the dissemination of inaccurate information. It required a showing of malicious intent, a standard which is pretty hard to ascribe to a corporation or business.
Congress passed the FCRA to protect consumers (individuals) from the credit reporting issues of the Consumer Reporting Agencies, commonly called Credit Reporting Agencies. For brevity, we will call Consumer Reporting Agencies CRAs for this article.
Later, the FCRA was amended to add protections from actions of furnishers and users of consumer credit files. Furnisher is not a term that is defined, but has been held to mean any entity (person or business) that provides information to the CRAs. Users are entities (persons or businesses) that access the information stored at CRAs.
So who are the CRAs? And who are Users? And who are Furnishers?
The BIG 3 CRAs are Equifax Information Services, LLC (Equifax), Trans Union, LLC (TransUnion) and Experian Information Solutions, lnc. (Experian). There are others, some are up and coming companies that are attempting to challenge the Big 3, like Innovis Data. Others are “specialty” reporting agencies, like Medical Information Bureau, ChexSystems, and TeleCheck Services.
Users are companies who either you would like to do business with, or THINK you would like to do business with them. Examples are Discover Card, American Express, Chase, CitiBank and Capital One. They have a legitimate interest in seeing your credit file, to see if you are the kind of person who pays their bills. They want to loan money to people who, by and large, pay their bills. Preferably not all at once, so they can charge interest, but still, you should pay your bills.
Furnishers are the same people as users, only they are providing feedback about how well you pay them. Examples are Discover Card, American Express, Chase, CitiBank and Capital One. They are telling other people about their experiences with how you pay your bills- on time, late, or not at all.
So what kinds of things are violations?
The FCRA regulates most portions of the credit reporting industry.
Impermissibly accessing a person’s credit report allows, not only civil damages, similar to invasion of privacy, but in some cases, also criminal penalties.
The CRAs must maintain an accurate file on you, and their failure can lead to civil damages.
The CRAs also must investigate your complaints. If you tell them something is wrong, they must investigate, tell the furnisher, and if the information is inaccurate or unverifiable, change or delete the information.
Furnishers must also be tasked with reporting to the CRAs your credit reporting history accurately, but, they must be notified properly before you can sue them for those damages. We recommend that you tell the furnisher what they are reporting wrong. Tell them in detail, and preferably in writing. YOU DO NOT HAVE A RIGHT TO SUE FOR THE FURNISHER MESSING THIS PART UP. See 15 USC 1681s-2[c] and [d].
However, if you also notify the CRAs of the inaccuracy, they must send your dispute to the furnisher, and once they get the dispute that way, they must fix the problem, or face the possibility of being sued. You must dispute to the CRA dispute addresses. We suggest that you do your dispute in writing, sent by certified mail, return receipt requested. It is not necessary to do this, but it makes proving that you notified them of the dispute easier.
What can you sue for?
FCRA is not a strict liability lawsuit, like the FDCPA or TILA or other actions. Technical violations are NOT something you can sue for. The FCRA is there to protect you from inaccurate information, so as numerous courts have said, you can only sue for information that is inaccurate. But what is inaccurate?
Examples of inaccurate information are
- Identity theft, where someone unknown to you (or maybe known to you, but you did not know they were doing this) opened an account that you did not know was being opened.
- Mixed Credit File, where the CRAs have mixed you up with someone else, and their information is on your credit report. Mixed files and ID theft may be very hard to tell apart until the lawsuit has been filed, and discovery has started.
- Reporting an account that you have paid as still owing.
- Reaging, where they are reporting that an account that you failed to pay years ago, as a recent failure to pay. This is particularly common when the statute of limitations has passed for the collector or creditor to sue to collect the money. Most negative information can only be reported for 7 years, but there are exceptions. 15 U.S.C. §1681c.
- Bankrupt account reporting, where the consumer has filed Bankruptcy, and the creditor either still, or again, reports the debt as owing or charged off, rather than discharged in Bankruptcy. This may also be a violation of the discharge of Bankruptcy, 11 U.S.C. §524.
In each of these cases, if the information is there, it can cause damages, such as loss of ability to obtain credit on terms that YOU deserve. This can lead to other issues, which we will discuss in great detail in another blog entry.
If you have been damaged by any of these actions, you could be entitled to recover actual damages, attorney fees and costs, and in the right circumstances, punitive damages are available. Getting to punitive damages is very hard, so we usually tell clients that punitive damages are likely to be limited, if available, in their case.
If you have been impacted by anything we mentioned here, you can make an appointment to see us.
NO FEE IN YOUR FCRA CASE UNLESS WE RECOVER!!
OUR LEGAL FEES:
The rights afforded to you, as a consumer, under the FCRA and the FDCPA means that a corporation or party who has violated your rights may ultimately be made to pay for statutory damages, actual damages, and your legal fees. Therefore, if we agree to represent you in any case, you won’t pay any attorney’s fees unless we are successful and we recover on your behalf. We are here to serve and have assisted many consumers TO enforce their legal rights. Let us try and see if we can help you too. That means you pay no fee in your case unless we recover.
Contact us by e-mail or by telephone or fax or US Mail.
You can call us: 804.673.4358
You can fax us: 804.673.4350
You can contact us by US MAIL:
Krumbein Consumer Legal Services, Inc.
1650 Willow Lawn Drive
Suite 300
Richmond, VA 23230