Notably, there has been a recent uptick in the number of lawsuits filed by consumers alleging improper access of their credit reports in violation of the Fair Credit Reporting Act (“FCRA”), 15 U.S.C. §1681 et seq. The FCRA imposes civil liability against “[a]ny person who obtains a consumer report from a consumer reporting agency under false pretenses or knowingly without a permissible purpose. . .” 15 U.S.C. §1681(n)(b). One permissible purpose is the receipt of a consumer report for use “in connection with a credit transaction involving the consumer on whom the information is to be furnished and involving the. . .collection of an account of the consumer.” 15 U.S.C. §1681b(a)(3)(A); Pyle v. First Nat. Collection Bureau, 2012 WL 1413970, at *3 (E.D. Cal. 2012). As credit reports can be valuable tools for analyzing a consumer’s ability to repay, those engaged in the collection of debts often pull credit reports relying on their ability to do so under §1681b(a)(3)(A). Opportunistic consumer debtors have recently attempted to use the FCRA’s prohibition on furnishing reports to their advantage. In an apparent attempt to avoid their obligations on their debt, consumers have been filing lawsuits against those in the debt collection industry alleging that their credit report has been pulled without a permissible purpose. Many times, the allegations in these lawsuits use the same “form” language and simply conclude, without any facts, that the agency pulled the report “without a permissible purpose in violation of the FCRA, 15 U.S.C. §1681(b). “
In a recent case located in the Southern District of California, a consumer brought a claim against an MS client alleging that the client “obtained [his] consumer credit report. . .with no permissible purpose. . . [because] [p]laintiff has never had any business dealings or any accounts with or made application for credit from, made application for employment with, applied for insurance from, or received a bona fide offer of credit from the Defendants.” MS moved for involuntary dismissal arguing that Plaintiff’s vague and conclusory allegations could not support a claim under the FCRA. The Court agreed and dismissed the case, concluding that “[p]laintiff has failed to set forth sufficient facts to show that Defendants’ actions were not permissible under the FCRA.” MS plans to use this beneficial decision in the defense of other similar “form” complaints against its clients.
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