The District Court for the District of Nevada recently addressed the reach of a consumer’s written authorization to obtain a consumer report under the Fair Credit Reporting Act. In Rodriguez v. Your First Choice, LLC, it implicitly limited a business’s ability to obtain a report based on “written authorization” to situations when a permissible purpose would otherwise exist, even without the authorization. Based on this logic, the Court denied the payday lender’s motion for summary judgment.
Plaintiff Irma Rodriguez obtained a payday loan from Your First Choice. At the time she obtained the loan, she provided written authorization by signing a document stating that the lender “may make inquiries concerning [her] credit history and standing.” Eventually, Rodriguez defaulted on the loan and Your First Choice attempted to collect on the debt, calling her several times and sending representatives to her home.
In October 2016, Rodriguez sued Your First Choice, alleging its collection activities violated Nevada law. During discovery, Your First Choice produced a copy of a consumer report on Rodriguez that it obtained during the litigation. In response, Rodriguez amended her complaint, adding a claim that Your First Choice violated the FCRA by ordering a report on her for litigation purposes. Rodriguez asserted that litigation is not a permissible purpose for obtaining a consumer report under the FCRA.
Your First Choice eventually moved for summary judgment on Rodriguez’s FCRA claim. In its motion, Your First Choice argued that it had several permissible purposes for procuring a consumer report on Rodriguez. One such purpose was that Rodriguez had consented to the report when she gave her permission to the lender to “make inquiries concerning [her] credit history and standing.” The FCRA allows individuals to obtain a consumer report “in accordance with the written instructions of the consumer to whom it relates.”
Although the FCRA allows users to obtain a consumer report pursuant to a consumer’s written instructions, the Court denied Your First Choice’s motion for summary judgment. Your First Choice had argued that Rodriguez consented to a consumer report and that consent was sufficient under the FCRA. The Court rejected that argument. In the Court’s view, Rodriguez’s consent was in connection with an extension of credit, which is a permissible purpose. Although her authorization did not include any temporal or subject matter limitation, the Court refused to read it as allowing a consumer report outside the loan application process. The Court opined that “[i]t is not clear that consent to a credit pull for a permissible purpose (such as the extension of credit) also authorizes a credit pull for a statutorily impermissible purpose,” including litigation purposes.
In recent years, the “permissible purpose” provisions of the FCRA have been a trending area of individual and class action litigation. Troutman Sanders has significant experience defending some of the country’s largest permissible purpose cases. We also provide our clients with valuable compliance advice concerning permissible purposes as a means of avoiding litigation in the first place.