Home > Uncategorized > Fox News on the FCRA; and a word about permissible purpose

Fox News on the FCRA; and a word about permissible purpose

August 17, 2012

Fox News created a short consumer’s guide to the FCRA, which you can read here.  It does a nice job of giving the reader an overview of what the FCRA does and how it does it, and I recommend it for that reason.

I would caution readers against taking Point #2 of the guide – “Only authorized users can see what’s in your credit report” – too literally.  This part of the article implies that the law somehow prevents people from seeing your credit report.  That’s not how it works.

Neither the FCRA nor the criminal law can stop someone from seeing what’s in your credit report.  Rather, the FCRA penalizes the companies that create credit reports if they allow unauthorized users to see your report, and the criminal law punishes unauthorized users who gain access to your report.  The penalties under both laws are indeed fairly stiff, so the credit reporting agencies have a good incentive to good your report private, and unauthorized users have a good incentive to stay out of your private affairs.

However, sometimes a mistake gets made, or someone slips through the cracks, and an unauthorized user does get access to someone’s credit report.  This shouldn’t be too surprising:  not too long ago, someone stalled on a jet ski in the water near New York City and had to swim to shore; he ended up swimming to JFK airport, where he unintentionally breached its $100 million anti-terrorist security system.  If that can happen, so can errors in the credit reporting security system.  I’m familiar with one case in which a mortgage broker had established access to credit reports, so that he could obtain reports about people who wanted to obtain mortgages through him.  One of the broker’s children allegedly logged onto the system without telling anyone and used it to pull credit reports of people that the child knew.  And I’ve read about cases in which a private eye, a car dealer, or another person with a business reason to obtain credit reports uses that access impermissibly.

In these situations, the FCRA is usually NOT going to penalize the credit reporting agency.  See, e.g., Boothe v. TRW, 557 F. Supp. 66 (S.D.N.Y. 1982); Wilson v. Sessoms, No. 96-1031, 1998 U.S. Dist. LEXIS 8154 (M.D.N.C. Mar. 16, 1998); Short v. Allstate Credit Bureau, 370 F. Supp. 2d 1173 (M.D. Ala. 2005), all of which held that a credit reporting agency was not liable when a previously trustworthy business used its relationship with the agency to obtain someone’s credit report without permission.  From the agency’s perspective, a mortgage broker, car dealer, or private eye asked for a credit report; the agency had no reason to suspect that there was anything impermissible about that request.  The FCRA or some other law may give the person whose report was accessed a right to sue the broker, dealer, or private eye.  But they may not be wealthy enough to make suing them worthwhile.



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