Appeals Court Holds that Obtaining Consumer Report to Verify Identity is “Permissible Purpose” Under FCRA

Fair Credit Reporting Act (FCRA)

Written By ESR News Blog Editor Thomas Ahearn

On September 9, 2020, the U.S. Court of Appeals for the Eleventh Circuit held in the case of Domante v. Dish Networks, LLC that obtaining a consumer report to verify the identity and eligibility for a service of a consumer is a “legitimate business need” and a “permissible purpose” under the federal Fair Credit Reporting Act (FCRA).

Plaintiff Domante was previously the victim of identity theft when her personal information was used on several occasions to create accounts with defendant television provider Dish Networks. The plaintiff brought suit against the defendant for alleged FCRA violations after learning about the delinquent accounts. The lawsuit was settled.

The current lawsuit resulted from the plaintiff’s personal information – which included the last four digits of her Social Security number (SSN), first name, and date of birth – again being used fraudulently to apply for the defendant’s services. Other information, such as last name, address, and telephone number were different.

The defendant sent the application information to a consumer reporting agency (CRA) that provided a consumer report that included the plaintiff’s full SSN and began processes pursuant to the settlement of the first lawsuit that prevented the opening of an account. At the plaintiff’s request, the CRA deleted the inquiry from her record.

The plaintiff filed a lawsuit that claimed the consumer report was obtained without “permissible purpose” and the terms of the settlement agreement were breached. However, a trial court found that the defendant had a “legitimate business need” for obtaining the report and fulfilled the terms of the settlement agreement.

The Court of Appeals found the FCRA lists “an exhaustive list of the ‘permissible purposes’ for which a person may use or obtain a consumer report… One of those permissible purposes is where a person ‘has a legitimate business need for the information.. in connection with a business transaction that is initiated by the consumer.’”

The Court of Appeals agreed “that requesting and obtaining a consumer report for verification and eligibility purposes is a ‘legitimate business need’ under the FCRA” and found “the FCRA does not explicitly require a user of consumer reports to confirm beyond doubt the identity of potential consumers before requesting a report.”

Enacted by Congress in 1970, the FCRA 15 U.S.C § 1681 promotes the accuracy, fairness, and privacy of consumer information contained in the files of CRAs, and protects consumers from the willful and/or negligent inclusion of inaccurate information in their consumer reports, including consumer credit information.

Employment Screening Resources® (ESR) – a leading global background check provider – offers background screening solutions that comply with the FCRA as well as whitepapers on how employers may avoid FCRA lawsuits and on how CRAs may avoid FCRA lawsuits. To learn more about ESR, visit www.esrcheck.com.

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