11th Circuit: Credit Pulls Didn’t Violate FCRA or Settlement

The U.S. Court of Appeals for the Eleventh Circuit recently affirmed summary judgment for a television provider that had pulled credit in response to fraudulent applications made by third parties using a consumer’s social security number, with respect to a consumer with whom the company had previously settled a FCRA lawsuit in which the company agreed to flag the consumer’s personal information.

The previous case began in 2013 after the plaintiff consumer was made aware that her personally identifying information (PII) had been used to open an account with the defendant that was then referred to collections after nonpayment.  Two years later, the plaintiff’s information was used once again to open an account with the defendant that was then referred to a debt collection agency.  The plaintiff sued defendant in 2016 for allegedly failing to comply with FCRA.  The parties settled in 2016, when the company agreed to flag plaintiff’s social security number in any future transactions to prevent the creation of fraudulent accounts in her name, and plaintiff agreed to dismiss her suit.

The instant case arose because following the entry of that agreement, the company had requested and received copies of the plaintiff’s credit report when fraudulent attempts were made to open accounts using plaintiff’s information.  Plaintiff filed suit against the company a second time, alleging that the company negligently and willfully obtained these reports without a permissible purpose in violation of FCRA and further, that the company breached its obligations under the settlement agreement.

The company filed a motion for summary judgment in the district court, explaining that its system is set up to automatically pull credit (in at least a limited form) based on the information provided in the initial account application, which includes only the last four digits of the consumer’s social security number.  Only after the automatic inquiry (which the company contended did not meet the definition of a consumer report under FCRA, an issue that the court of appeals did not reach) was complete could defendant’s network flag the plaintiff’s PII, including full social security number, in compliance with the settlement agreement.  The district court granted the company’s motion for summary judgment and the plaintiff appealed to the Eleventh Circuit. 

The Eleventh Circuit affirmed, finding that pulling a full credit report for the purpose of complying with the settlement agreement constituted a legitimate business purpose.  The Court also concluded that since no fraudulent accounts had been successfully opened using the plaintiff’s information, defendant was clearly in compliance with the settlement agreement, and therefore not liable for breach of contract.