11th Circuit Addresses False Pretenses and Reverses FCRA Suit Against National Bank

The U.S. Court of Appeals for the Eleventh Circuit recently reversed in part and affirmed in part a district court’s dismissal of a consumer’s FCRA and FDCPA actions against a national bank alleging the bank provided debt information using a “false name” to a credit reporting agency and requested the plaintiff’s credit report for an impermissible purpose.  The plaintiff argued that the bank violated the FDCPA by using a name other than its true name in connection with the collection of debt.  Additionally, the plaintiff argued that the bank violated the FCRA by failing to investigate the accuracy of information it provided to the credit reporting agency, and by requesting his credit report without a permissible purpose.  The district court dismissed the complaint for failure to state a claim.

On appeal, the Eleventh Circuit affirmed the dismissal of the FDCPA claim because, while the bank used a name other than its own on the plaintiff’s credit report, the name did not indicate that a third person was collecting the plaintiff’s mortgage.  The court held that the so-called “false-name exception” applies when the “least sophisticated consumer” would believe a third party was involved in collecting a debt:  “The least sophisticated consumer would not believe that [the third-party debt collector] was an unrelated third party attempting to collect on [the plaintiff’s mortgage with the bank].”  The court, however, held that the district court erred in dismissing the FCRA claims.  The court agreed that “intentionally obtaining a credit report under the guise of a permissible purpose while intending to use the report for an impermissible purpose can constitute false pretenses.”  Accordingly, the court affirmed dismissal of the FDCPA claim, and reversed dismissal of the FRCA claims and remanded them for further proceedings consistent with the court’s opinion.