Permissible Purpose

Discussion in 'Credit Talk' started by ru4real, Sep 9, 2003.

  1. ru4real

    ru4real Member

    I am in the process of suing a creditor. A couple of days after the law suit was filed they pulled a soft inquiry. Then about two weeks ago they pulled another soft inquiry. In the two years that I havve the account with them they never pulled a soft inquiry. Correct me if I'm wrong, but this seems like the exact issue that is dealt with in the Greenblatt FTC opinion letter. (

    Do you think I have them on another violation?
  2. jlynn

    jlynn Well-Known Member

    Account closed? Do you owe them money? Need details.
  3. ru4real

    ru4real Member

    Account is open, and I do not owe them money...
  4. jlynn

    jlynn Well-Known Member

    Oops, revolving (open end) or a closed end installment type loan?
  5. ru4real

    ru4real Member

  6. jlynn

    jlynn Well-Known Member

    Then its a bit dicey. If you have an open account like that, your creditor is allowed to pull your credit report. But I agree - its fishy.
  7. greenvan

    greenvan Well-Known Member

    Here is my take on your situation. The issue in Greenblatt is somewhat different in that the brokerage firm obtained the CR for the stated purpose of crafting settlement offers in response to pending litigation. This stated purpose is not found under FCRA 604 and therefore the FTC Staff Attorney correctly opined that the brokerage firm did not have PP for obtaining the CR for that specific use. The brokerage firm would have a PP under 604(a)(3)(F) to obtain a CR if someone applies to open an account, or thereafter to determine whether to discontinue doing business with an established client. However, if the brokerage firm misrepresents to the CRA that it is obtaining the CR pursuant to 604(a)(3)(F) and instead uses the CR in connection with settlements and pending litigation, then it has violated the FCRA.

    In your case, I think the key is to establish in writing the reason why the company pulled your CR. This would not be a violation unless you have evidence that they pulled your CR in response to your lawsuit or that they somehow used the CR in connection with the lawsuit.

    Write them a letter asking them why they pulled your CR. If they state in writing that it had any connection with your lawsuit, then you have them on a clear violation with written evidence to prove it. However, if they say that they are simply reviewing your open revolving account with them, then you have no violation (because FCRA 604(a)(3)(F) allows them to legally do that). If they do not respond, then you have no written proof that a violation has occurred.

    Also, watch carefully to see if they use or reference either of the two CR (on the dates of the soft inquiries) in any manner connected with your lawsuit. If they do, then you could argue that they misrepresented to the CRA their PP for pulling your CR and that they used them for a non-permissible purpose. Finally, you have the option of suing them in small claims for the soft inquiries (which potentially could be worth $2000). However, you would still have the burden to prove that there was no PP, which could be difficult if the judge sees that you had an open account with them and without having evidence that somehow ties it directly to the lawsuit.

    The key is that you need some type of hard evidence that they obtained and/or used your CR in connection with the lawsuit in order to prove that a violation has occurred. Just my opinion.

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