A federal district court in Indiana has allowed a plaintiff’s claim that a debt collector improperly accessed her credit report to proceed because the debt collector did not claim the alleged debt arose from a credit transaction in its motion to dismiss the complaint.

Plaintiff Vivian Pigg incurred the alleged debt after defaulting on a lease agreement. The debt was subsequently assigned to the defendant debt collector, Fair Collections & Outsourcing of New England, Inc.  As a part of its collections process, Fair Collections obtained Pigg’s credit report but did not obtain her consent prior to doing so.  Pigg subsequently filed suit, alleging violations of the Fair Credit Reporting Act and Fair Debt Collection Practices Act.

In its motion to dismiss the FCRA claims, Fair Collections claimed that it had the right to access Pigg’s credit report as part of its attempts to collect on the debt.  Pigg countered that the FCRA requires the debt collector to first establish that the debt arose from a credit transaction before it can access a credit report in connection with the collection of a debt.

The Court, citing Miller v. Trans Union LLC, No. 06 C 2883, 2007 U.S. Dist. LEXIS 14315, 2007 WL 641559 (N.D. Ill. Feb. 28, 2007), agreed with Pigg and ruled that a debt collector must satisfy two elements before acquiring a consumer’s credit report: the debt must be in connection with a credit transaction involving the consumer, and the report must be sought for a permissible purpose.  Under the FCRA, the extension of credit or the collection of an account are both permissible purposes for acquiring a credit report.  The Court then concluded that Fair Collections had not argued that Pigg’s lease agreement was a credit transaction, and it denied Fair Collection’s motion to dismiss.

The Court specifically declined to decide whether the lease agreement was a credit transaction within the context of the FCRA and narrowly tailored its opinion to whether Fair Collections had properly alleged it had satisfied the aforementioned elements before obtaining Pigg’s credit report. 

The case is Vivian Pigg v. Fair Collections & Outsourcing of New England, Inc., Civil Action No. 1:16-cv-1902 (S.D. Ind.).