@Anonymous wrote:
...This CA was not collecting on behalf of or related to an "original creditor." They were collecting on a statutory liability. That does not grant a permissible purpose under any credit request.
However, the big GRAY AREA is that the FCRA does have language which states that a credit consumer report can be obtained for "the collection of debt." And it is not completely obvious, or at least the language used is not exactly clear that this is related to the collection of debt incurred by a credit request and extension...
I absolutely agree. For PP based on a transaction initiated by a consumer, the consumer has to participate in and initiate the credit transaction and not just be obliged to pay because of some liability.
Moreover, I also agree with you about FCRA not being clear about the term - "initiating a credit transaction". How does a consumer initiate a credit transaction with a debt collector? IMO, the debt collector has PP based NOT ON the reason that the transaction was initiated by the consumer BUT ON THE BASIS of collection of the account.
Permissible Purpose as per section 604,
A CRA can provide a consumer report to a OC/CA for the following reasons;
1) The OC is extending credit (ex: CC app,CLI etc)
2) The OC is reviewing the account of the consumer (ex: CLD or just plain reviewing etc..)
3) The CA is collecting on the account ( ex: reviewing the collection a/c information, address info etc...)
4) Business transaction (ex: Renting an Apt.)
IMO,
In #1) the transaction is initiated by the consumer
In #2) the transacton is NOT initiated by consumer. Rather, the PP is for review of the a/c.
In #3) the transaction is NOT initiated by consumer. Rather, the PP is for collection of the a/c
In #4) the transaction is initiated by consumer and also theres a legitimate business need. To make a point here that the CAs do not have legitimate business need. The business need has to be direct and personal to the consumer involviing home, property, family etc.
If the transaction is not DIRECTLY initiated by the consumer, then the associated inquiry should not be visible to anybody other than the consumer. In other words it has to be a soft.The CRAs have to employ reasonable judgement in determining whether the person requesting the CBR has PP. To do this, they have to obtain the requesting person's
a) Identity and
b) their specific description of need for the CBR.
Accordingly, the inquiry is coded as hard or soft.
If the CA lies about their a) Identity or b) Need, so as to associate the inquiry with # 1) or # 4) which would result in a hard inquiry, then they are in a violation. For instance;
- if the CA wrongly identifies themselves to the CRA as a factoring company with an appropriate code(?), then they perhaps would be allowed a hard inquiry as factoring companies extend credit sometimes(?)
- if the CA lies about their specific need for the CBR, as in, they state the reason as say, 'for extension of credit' instead of 'for collection of account', then they are in violation as well.
Below area couple of examples with TU;
For a credit transaction initiated by the consumer, the appropriate code would be 'CT'.
For a collection transaction, the appropriate code would be 'CL'
There is no direct credit transaction with a CA.
IMO, if the CRA do not verify the information provided by the CA then they are also in violation although I did come across someone somewhere saying that the CRA would only rely on a sworn affidavit of some sort by the CA.
So, IMHO, or atleast it was up until now, that the CAs can only do a soft. This Pintos verdict did confused me a little. Even if the argument is that the transaction IS INDEED INITIATED by the consumer on an account with a CA, the CAs do not need to obtain the entire credit report resulting in a hard hit. But only a soft inquiry resulting in them obtaining the OCs and CAs TLs and other minimal but pertinent information. Essentially its all in the codes and they can only be revealed during discovery.
Message Edited by nothingman02 on 05-08-2009 10:03 AM
thats one for the consumers! The one who felt that the transaction was initiated by the consumer by knowingly leaving the vehicle in a towing zone had me for a moment! lol..I suppose the least sophisticated consumer won.
