South-Western Legal Studies in Business

Sale of Credit Report for Impermissible Purpose May Invoke Liability
Description

Appeals court held that a credit reporting agency may have had grounds to suspect that a request for a credit report for "account review" was not a valid request since the consumer had no dealing with the company in question for four years.

Topic

Consumer Protection

Key Words

Fair Credit Reporting Act; Credit Reports; Sale; Permissible Purpose

C A S E   S U M M A R Y
Facts

Levine opened a store credit card account with Structure, a clothing company. The account was operated through World Financial National Network Bank (World). Levine paid the account in full and closed it. That fact was shown on his Experian credit report. Four years later, Experian sold Levine's credit report to Structure which told Experian it wanted the report for "account review" purposes. Levine filed a complaint in federal court against Experian, Structure, and World, contending violations of the Fair Credit Reporting Act (FCRA) for the request and sale of a credit report for an impermissible purpose. The trial court dismissed the suit. Levine appealed.

Decision

Reversed and remanded. Levine has stated a claim for a violation of the FCRA, so the suit should not have been dismissed. A consumer reporting agency can violate the FCRA by complying with a former creditor's facially valid request for a credit report, if it has reasonable grounds to believe that request is being made for an impermissible purpose. The fact that Levine's account with Structure had been closed for four years might have given Experian reasonable grounds to believe that the creditor wanted the report for impermissible purposes. That issue will be reviewed at trial.

Citation

Levine v. World Financial Network National Bank, 437 F.3d 1118 (11th Cir., 2006)

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