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Fair Credit Reporting: 7.4.6.3 Other Types of Transactions

The exceptions set forth above, permitting release of a spouse’s report for use in connection with some credit transactions, do not apply when a report is sought for use in connection with insurance, employment, a government license or benefit, or a business transaction with the consumer alone. Thus, there is generally no permissible purpose to release or use the report of the consumer’s spouse or another third party for use in noncredit transactions not involving that party.617

Fair Credit Reporting: 7.4.6.4 Joint Information

A former spouse has a permissible purpose to obtain a joint consumer report of herself and her former husband when the information contained in the report related to her own creditworthiness, credit standing, and credit capacity and their ability to discharge their parental duties under state law.622

Fair Credit Reporting: 7.4.7 Use in Connection with Insurance Claims

Most courts and FTC opinions have held that insurance claims reports are not consumer reports when information is used, expected to be used, and collected solely for that purpose.627 Consequently, the use of such reports to evaluate insurance claims (as opposed to insurance underwriting) is not covered by the Act, and the FCRA does not restrict their release.

Fair Credit Reporting: 7.4.8 Marketing

The only marketing-related permissible purpose under the Act is prescreening firm offers of credit or insurance, under the limitations of the prescreening provision.633 Otherwise, marketing is not a permissible purpose under the Act.634 “It is clear that Congress did not intend to allow access to consumer credit information ‘for catalogs and sales pitches.’”635 Thus, neither full consumer reports nor consumer lists that qualify as consumer reports,

Fair Credit Reporting: 7.4.9 Impermissible Use of Medical Information

The FCRA generally prohibits CRAs from furnishing medical information in consumer reports without consumer consent unless the information pertains to medical debts, and even then, the information is restricted and regulated. The term “medical information” has its own definition distinct from whether the information constitutes a consumer report, though the two overlap. Furthermore, creditors are prohibited from using medical information in evaluating eligibility for credit unless medical debts are involved.

Fair Credit Reporting: 7.4.10 Use by Social Network Sites

A social network Internet site should not have a permissible purpose to use consumer reports to profile or screen consumers for others on the network. For example, a dating site should not be able to obtain consumer reports in order to inform members of the service about the creditworthiness of other members (unless, of course, the consumer provides written consent). Social uses are not among the permissible purposes allowed under the FCRA and use in this context should not be viewed as a legitimate business need.643

Fair Credit Reporting: 7.4.11 Other Impermissible Uses

There is no exclusive list of impermissible uses. Instead, there are only limited permissible uses, and any other uses are impermissible. Many of the impermissible uses have been described above, but certainly not all possible improper uses are listed here.

Fair Credit Reporting: 7.5.1.1 Two Separate Obligations Imposed on CRAs

Consumer reporting agencies have two separate obligations concerning when they can release consumer reports to users, and they should be liable under the FCRA for failing to comply with either provision.

First, CRAs cannot release consumer reports for impermissible purposes, and both negligent and willful violations of this requirement are actionable under the Act.653

Fair Credit Reporting: 7.5.2.1 Nature of Certification

The CRA must require prospective users to identify themselves, certify the purpose for which they intend to use the information, and certify that the information will not be used for other purposes.667 The CRA must obtain a specific, written certification that the recipient will obtain reports for certain specific purposes and for no others.668 If the report is obtained by a reseller to release to someone else, the reseller must identify the end-user.

Fair Credit Reporting: 7.5.2.2 Blanket Certifications

Consumer reporting agencies generally obtain a blanket certification from a user (such as a creditor) that typically has a permissible purpose for receiving a consumer report, stating that it will use all reports it receives only for specified permissible purposes and for no others.

Fair Credit Reporting: 7.5.2.3 Follow-Up and Continuing Reports

It is not enough for a user to certify that its initial use of a report will be for a permissible purpose, if there is a risk that follow-up reports will no longer be for a permissible purpose. The CRA will have to obtain a separate certification for each follow-up report on the consumer.690

Fair Credit Reporting: 7.5.2a Procedures Ensuring Information Pertains to the Correct Consumer

A permissible purpose is specific to the consumer who is the subject of the user’s request.693 If a CRA issues a report that includes information on multiple consumers, it lacks a permissible purpose.694 The CFPB has clarified that providing a disclaimer stating that the report may not belong to the specific consumer and that further review is required does not cure the CRA’s failure to satisfy the permis

Fair Credit Reporting: 7.5.3 Agency Verification Procedures

It is not enough that the CRA obtain a certification from the user. The CRA must have a system to verify that it is dealing with a legitimate business having a legitimate permissible purpose for the report being requested.700 A CRA has a duty to investigate a facially valid request when there are reasonable indications that the request is for impermissible purposes.701

Fair Credit Reporting: 7.5.4 Electronic Communication of Reports

Electronic communication of consumer reports to users is common. CRAs may provide consumer reports in this manner provided that they take the necessary steps to ensure that the users have a permissible purpose.713 The CRA must also be able to know and retain a record of what users have obtained access to consumer reports on which consumers, so that the CRA can comply with other FCRA provisions that necessitate that CRAs know who has used which consumer reports.714

Fair Credit Reporting: 7.5.6 Procedures by Non-Consumer Reporting Agencies for Ensuring That Information Is Not Used for FCRA Purposes

An entity that is clearly a consumer reporting agency or that produces consumer reports must ensure that the reports are only used for permissible FCRA purposes. But an entity that claims not to be a CRA, and not to produce consumer reports, has the opposite obligation: it must ensure that the information is not collected, used, or expected to be used for FCRA purposes. Otherwise, the reports will be a consumer report and the entity may be a CRA.724

Fair Credit Reporting: 7.7.1 Overview

Notwithstanding the consumer reporting agency’s reasonable efforts to verify the user’s identification and purpose for requesting information, some users will obtain consumer reports through misrepresentation. In light of the difficulty which the CRA may have in discovering fictitious creditors, it may be that the consumer will have more success suing the user than the CRA.

Fair Credit Reporting: 7.7.2 Uncertified Uses of a Consumer Report

A person cannot use or obtain a consumer report for any purpose unless the purpose is a permissible one that has been certified to the CRA.754 This rule, which applies to users, references the separate provision requiring CRAs to maintain procedures requiring users to certify that the information will be used for the permissible purpose specified and no other purpose.755

Fair Credit Reporting: 7.7.5 Vicarious Liability of User for Acts of Employees

Employers may be held vicariously liable for employees who obtain reports for impermissible purposes, even while the employee may be separately liable.788 The Act does not address employer liability per se, but courts have generally found that common law theories of vicarious liability are consistent with and even necessary to fulfill the FCRA’s privacy and consumer protection purposes.789

Consumer Bankruptcy Law and Practice: 15.5.1.5 Enforcing the Discharge Injunction

Violation of the discharge injunction is usually contempt, punishable by awards of damages, including emotional distress and punitive damages in certain cases, and attorney fees.807 However, an award of damages and other relief against a governmental unit will be limited by section 106(a).808 If the violation is asserted against the Internal Revenue Service, the debtor may have to exhaust administrative remedies prior to seeking judicial relief.809