Citing Seventh Circuit precedent, the Eastern District of Wisconsin recently held the broad scope of the Fair Credit Reporting Act’s permissible purpose includes use that disregards an attempted restriction requested by the consumer.
In Long v. Bergstrom Victory Lane, Inc., No. 18-cv-688, 2018 WL 4829192 (E.D. Wis. Oct. 4, 2018), consumer Emily Long alleged that automotive dealer Bergstrom Victory Lane violated the FCRA and state law by disregarding the limitations she requested in connection with her auto finance application.
Long claims she visited the dealership with pre-qualified financing already arranged from a specified lender. Long allegedly told the dealer’s employee about her pre-qualification and advised them that she only granted permission to run her credit report for use with her specific lender and no other entity. Despite allegedly agreeing to Long’s request, the dealer submitted her credit application to multiple other companies. Long claimed the dealer intentionally disregarded the restricted scope of authority she provided and therefore used her credit application for an impermissible purpose in violation of the FCRA. She asserted that the dealer’s conduct caused her to suffer emotional distress.
Section 1681b of the FCRA details permissible purposes for obtaining and using consumer credit reports. In reaching its decision, the Court relied upon one such permissible purpose, section 1681b(a)(3)(A), which authorizes a consumer report to be provided by a consumer credit reporting agency when a person “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.”
The Court held that Bergstrom Victory Lane acted within the scope of the permissible purpose granted by Long. Specifically, section 1681b(a)(3)(A) granted the “authority to search out lenders for Long so that she could obtain financing for a vehicle—a statutorily-defined permissible purpose.” The Court explained the permissible purpose was not violated, despite Long’s attempts to restrict her authority to a specific lender because “[u]nder the FRCA, a business does not require the consent of the potential customer, so long as it has a statutorily defined ‘permissible purpose.’” Therefore, the Court ruled the dealer acted with a permissible purpose and did not violate the FCRA and, as such, Long’s FCRA claim was dismissed.