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suing utility for non PP inquiry *updated 15 MAR* response

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Apparently the trend at some major phone companies is to pull a credit report when setting up an account without asking for permission, disclosing this fact, or anything like that. A certain phone company I am about to head to court with is trying to suggest that phone service is an extension of credit, thus they had a PP to pull it.

In reality, it determines the need and amount of any security deposits, straight from their mouths, and yes I have that "recorded" :)

Any thoughts on this?

Is there an official definition for an extension of credit?

If they want to play the extension of credit card, couldn't I counter with asking for a loan agreement, TIL, or something like that?

Also, as far as PP's go, it has to be absolutely necessary for the transaction in the FTC's opinion. Seems to me if they can still do the transaction with a deposit paid, the credit pull isn't absolutely necessary.

Also, I am going at it pro se and asking for 1k right now. There are two violations, but I figured I'd just do one first and see how that goes.

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Some will argue that they have a LEGITIMATE business need to pull your credit... don't forget this little clause in the PP section of the FCRA:

(a) In general. Subject to subsection ©, any consumer reporting agency may furnish a consumer report under the following circumstances and no other:

(1) In response to the order of a court having jurisdiction to issue such an order, or a subpoena issued in connection with proceedings before a Federal grand jury.

(2) In accordance with the written instructions of the consumer to whom it relates.

(3) To a person which it has reason to believe

(A) intends to use the information in connection with a credit transaction involving the consumer on whom the information is to be furnished and involving the extension of credit to, or review or collection of an account of, the consumer; or

(B) intends to use the information for employment purposes; or

© intends to use the information in connection with the underwriting of insurance involving the consumer; or

(D) intends to use the information in connection with a determination of the consumer's eligibility for a license or other benefit granted by a governmental instrumentality required by law to consider an applicant's financial responsibility or status; or

(E) intends to use the information, as a potential investor or servicer, or current insurer, in connection with a valuation of, or an assessment of the credit or prepayment risks associated with, an existing credit obligation; or

(F) otherwise has a legitimate business need for the information

(i) in connection with a business transaction that is initiated by the consumer; or(ii) to review an account to determine whether the consumer continues to meet the terms of the account.

HOWEVER.. Sprint and AT&T just got slammed to the tune of 1.8 million for not sending adverse action notices...

The ECOA ((Equal Credit Opportunity Act)) AND THe FCRA require Adverse Action notices to be sent.

Basically.. if they pull your credit... and require you to pay a deposit or don't give you the same service they would give someone else with better credit they MUST send you an adverse action notice ..within 30 days per the FCRA.. the ECOA gives no time frame.

If they don't... go after your cash.

Lotsa luck!

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They are trying to cling to section E, but I hardly think phone service qualifies as an extension of credit, and even if it did that only applies to investors, servicer (?), or insurer with an EXISTING credit obligation.

I think they are out of luck as they don't have a legit business need on section F

and they called me, I didn't call them, so I didn't initiate the transaction, and this was one of those "please come back to SBC" calls so, I didn't have service at the time with them.

Should be fun in court...

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You might have them then.. if they called you.. and never informed you that they were pulling your credit.. I think you have a GOOD chance of winning that one.

Good luck and PLEASE keep me posted on this one.

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Well, I got a response from the utility's lawyer.

They hired a local firm here in town who appear to be somewhat legit. I have to research their main practice areas, though.

They denied the allegations and demand strict proof, reserved the right to amend the answer, and are asking that I recover nothing and they recover all costs and any additonal relief entitled.

I wonder, can I amend the complaint? I probably want to add in some Texas statues as well to keep it in small claims.

I figured they'd send a generic "piss off" letter, as we won't have a date for probably 2-3 more months.

I am going to research some case law in the meanwhile...any other suggestions?

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I thought anytime ANYONE pulls your credit, with the information you provide they must inform you that they will be doing so.

They called you and asked you to come back... (so they know your payment history)

Pulled your credit report without telling you they were going to do so?

Am I understanding this correctly?????

They think this is OK???

I"m not sure I understand, did they charge you a deposit?

sorry i'm new to this post, but find it very interesting.

I would think that they would NOT have PP because they already have your payment history!! What would be the benifit of pulling something they already have knowledge of?

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They did call to ask for me back and actually pulled my credit twice. Once when I was with them initially, and again when I came back the second time, so they actually already had a credit report on me as well as my good payment history (never late, no charge offs, never had a problem), and no they didn't require a deposit either time.

When I later asked, they stated they didn't have to tell me that they were pulling my credit and tried to suggest that phone service is an extension of credit. They also tried to suggest it was a soft inquiry and didn't impact my score at all and if it did, well then that's just too bad. They stated it is a standard practice for this company to pull a credit report as well for all customers.

Where I am in Tx, there aren't many consumer lawyers I have seen or any that are familiar with the FCRA. If I could find one that would work on contingency and they were more familair with the FCRA and such than I am, then I would consider it.

Anyone have any info on amending a lawsuit?

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(f) Certain use or obtaining of information prohibited. A person shall not use or obtain a consumer report for any purpose unless

(1)the consumer report is obtained for a purpose for which the consumer report is authorized to be furnished under this section; and

(2) the purpose is certified in accordance with section 607 [§ 1681e] by a prospective user of the report through a general or specific certification.

"Authorized" meaning "allowed under" that section, or "authorized by the consumer"?

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You won't like my opinion on this one. They had a legitimate business relationship. They do extend credit. If you get a phone on Jan. 1 and make a ton of calls, you don't pay anything until a bill is received. If you don't pay, they have an outstanding balance that they allowed you to create, thus creating a form of credit. If you have a relationship with them, ie account, they have permissible purpose.

I've beat this subject to death with two Consumer Law Attorney's in California and the firm representing me in my Class Action against National Magazine Exchange for their non-pp. The key is the relationship.

Please keep us apprised of the case. Don't let it drop off the board.

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Ok, here's my defense to the "credit extension" argument. First, they billed me in advance for the entire month, and that is stated on the "welcome back" letter. Not only that, but I alread had another inq from this utility a month before. I switched from one phone company to another and then back again.

My argument is this: if they would require a deposit or advance payment if I had negative marks on my credit, then how can the they say the credit check is a legitimate business need? Even with negative credit info the utility would still do the deal and by their own admission, the check is to determine the amount if any of a deposit. If the deal can be done with a deposit, then why even pull the credit in the first place.

Further, if they are now suggesting service is credit, they never disclose that this is a credit account, the type of credit, terms of credit, or anything like that. The accout is neither an open or closed end credit.

The way I read legitimate business need is that without the credit check, it is a show stopper. No lender could make a loan without running a credit check, and even then they ask.

Also, can there be a business relationship if my phone service is provided by another company at the time?

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I think he DOES have a case here.

They are not exstending credit.. they are providing a service. If he had been given a choice of paying a deposit or having a credit check run.. then he could have opted to pay a deposit and never had the credit check.

They will extend service to anyone IF they pay the money.

I think the key here is they didnt DISCLOSE the fact that they were going to pull his credit.

I mean he could have said NO. I dont want you to pull my credit.. I am going to stay with the service I have. He was not given the OPPORTUNITY or CHOICE to do one of these.

He was not informed of why the company was asking for his report.. he was not given the chance to deny them access.

That is MY opinion only..but I'd fight these bastages till the cows come home.

Good luck and I will try and locate those cases I found about Sprint and AT&T

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Going in stealth mode, I found out that they do have a standing policy and option if you don't want your credit checked. You can send in a $50 advance payment instead and proof of identity and essentially prepay for the service.

Of course, they don't mention this because they didn't disclose the credit check in the first place. Apparently they think that giving your SSN is consent to run a credit report.

Further they say that the credit pull is a soft inquiry, doesn't affect your score, and thus they don't have to disclose that. Unfortunately for them, my credit report disagees and the inquiry is listed as a hard inquiry that does affect my score. I don't know how you could code a soft inquiry if you don't have an account with that company. It can't account review because you don't have an account with them yet.

I never recieved any TILA or any disclosures related to credit terms. Further, looking at the FTC's definition of credit, phone service doesn't fall under it. You have open and closed forms of credit. Open credit is your typical revolving account and closed credit is your typical term loan. The account definately isn't a term loan, so it could only be a revolving account.

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I think you need to start doing LOTS of research on this one...

Look up FCRA cases anywhere you can find.

Where are you located?

I might have a few things I can send your way.

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Of course, they don't mention this because they didn't disclose the credit check in the first place. Apparently they think that giving your SSN is consent to run a credit report.

Go to the FTC's web-site and read the opinion letters on permissible purpose. Giving your SSN to a car dealer is not consent to run a credit check, even if you are test driving a car. Only after you discuss the monthly payments, delivery date and other items and are ready to sign do they have PP. That situation is similar to yours.

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i dont know if this applies here at all, but every time i have called a company about mortgages, insurance, cable, power etc, and they have wanted to pull a credit report, they have clearly asked me for my permission to do so, to the point I am quite sure they tape the convos getting authorisation.

(something to ask for in discovery!)

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I am in El Paso, Tx. If you have any info that might help I'd like to look it over.

I have looked over the FTC opinion letters as well as their info on credit and credit types.

I will be sure to ask for the tape recordings as well as the policy at this phone company, although I already have it recorded.

Although mortgage companies and such ask for permission, they technically don't have to, since you are applying for credit and such, but even they go the extra step of getting permission.

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Alright, got some more intel in email form from this company.

I asked:

Does your company pull a consumer's credit report?

Is this disclosed to the consumer prior to requesting the report?

Is the report a hard or soft inquiry?

Does your company bill for payment in advance of initial service?

Is there a policy for a consumer that doesn't want their credit

pulled? If so, how does that work?

They replied to my queries regarding credit pulls and said :

<For the application of phone service there is a soft inquiry based on

the social security number. The representative placing the order does

not have the ability to actually see the credit report and/or

activity. All they are able to determine is the result. This is not

proactively disclosed to the customer. Based on this information is

the determination whether an advance payment is necessary. In most

cases it is $50.00, and possibly more, depending whether or not

affiliates such as X, Y, Z, etc. is also subscribed to.

An advance payment is always applied to the first month bill. We do

bill in advance for the first month if service as well. It is always

your right to deny a credit inquiry by refusing to disclose a social

security number. Our main concern is the validation of identity and

this may also be achieved by a drivers license number. However, it is

also automatic that an advance payment may be requested.>

I followed that up with:

Why is the intention by your company to pull a credit report not disclosed

to the consumer?

How could a customer possibly deny a credit inquiry if it is never

disclosed that a cerdit report is being pulled in the first place?

Does your company consider giving a SSN consent to pull a credit report?

and in response to my

<The soft report is to advise us of possible fraud alerts. We should

explain to the customer this is used to determine if an advance

payment is required, then if the customer refuses we would request

the advance payment.

We are extending virtually extending unlimited credit to customers and need to

have a rating. The rating is not like a credit score, it just tells

us which reporting agency the approval came from.>

In the lawyers response, they are going to try to collect their costs from me as well, which kinda has me worried.

They admit that they don't disclose the intention to pull a credit report in the initial email response and try to equate giving ones SSN with consent to pull a CR. I really wonder how I could possibly refuse a credit check if I don't know one is being pulled. Further, this business about a soft pull is garbage. The only types of soft pulls are account reveiws, which certainly didn't happen as I had no account with them at the time, and promotional pulls, which again is impossible as the CRA's just scan various demographics, incomes, age groups, etc for profiles and spam them with junk mail.


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