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Impermissible Pull


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Setup:

OC files a complaint on an alleged account that is now charged off and closed. During the litigation of the complaint, the OC continually pulls credit.

I've read opinions that the OC is in violation of the FCRA. Does anyone have case law cites that would support those allegations?

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Impermissible purpose for an OC would only come into effect if the account were "paid" and closed. The OC could not do an account review for an "unpaid" and closed account but they can do a pull for collections for as long as there is a balance. Since you mentioned that the account was charged off then there is a balance so the OC can do a pull for collections.

I can give you a link to a case where it was opined that there is no pp for account review when the account is paid and closed. If the OC, in your case, is making pulls for account review instead of collections then you may have a claim against them because they did not provide the correct pp. However, they did actually have pp but simply errored by not giving the correct pp. The bona-fide error defense may come into effect.

Here's the case:

http://www.ca11.uscourts.gov/opinions/ops/200810416.pdf

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With litigation in play I would say it is a very fine line they are walking. They have the collection method of litigation going and there is no basis for such pull. If it was me I would be noticing plaintiff of Depositions for the people doing the pull so they may full explain why I should not amend my answer with counter claim.

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I'd like to see case law or FCC opinion supporting that theory as the FCRA clearly gives the OC unlimited permissible purpose for collection of an account:

604(a)(3)(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;

On the other hand, if the account is paid and closed, there is no pp. However, the op's account has been charged off, not closed. This means that the account is not paid and that the OC has pp to pull for the collection of the account.

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BV80 and I spent considerable time on this. Unfortunately, it is perfectly legal to pull your report (but not any of your body parts) for purposes of collection or litigation.

That's pretty good. :lol:

The FCRA states there must be a legitimate business need to make an inquiry. I could be wrong, but I think the Plaintiff would have to show they have a legitimate business need for conducting an inquiry during litigation. If you think about, pulling your report right before litigation could be for the purpose of confirming your address, verifying employment, or even determining if you're suit-worthy.

However, pulling it during litigation could be a different story. If they file suit, then serve you, but the summons is returned because they had the wrong address, their excuse would be that they pulled after the suit was filed because they needed to check your address.

BUT, the OP has stated that the creditor "continually pulls" during litigation. What would be the legitimate business need in that case? I can't see the reason for that.

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the OP has stated that the creditor "continually pulls" during litigation. What would be the legitimate business need in that case?

As long as they certify that the pull is for collections they don't need a business need. A business need is more for people who don't have a established business relationship.

If you walk into a car dealership you've never been to before and indicate that you are interested in purchasing a car from them then the car dealership has pp to do a pull. I don't like it but most of the time a dealer will do a pull before you know about it. Since you said that you were interested in doing business with them they don't need your signature to do a pull. You gave them pp when you said you wanted to do business with them.

I don't see where litigation by the OC would change things. They still have pp for collections and litigation is part of the collection process. They could reasonably pull every month as data furnishers who update generally update their accounts every month.

There may be an issue where, if they do a hard pull every month and the pulls bring your fico score down and you were denied credit, that this could be some sort of vexatious willful credit pulling intended to harm.

I really don't see any limit to the collections pp in the op's case.

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