In a case that was defended by the team at Malone Frost Martin, the Court of Appeals for the Seventh Circuit has affirmed a lower court’s summary judgment ruling in favor of a defendant that was sued for violating the Fair Credit Reporting Act for accessing an individual’s credit information via a soft inquiry for determining a propensity to repay an unpaid debt.
A copy of the ruling in the case of Persinger v. Southwest Credit Systems can be accessed by clicking here. A recap of the lower court’s ruling in favor of the defendant can be accessed by clicking here.
The plaintiff and her husband filed for bankruptcy protection. The defendant was notified of the filing and discharge because it was collecting a debt incurred by the plaintiff’s husband. The bankruptcy discharge included the four former last names used by the plaintiff. Months later, an account was placed with the defendant using one of the plaintiff’s former last names. It performed a bankruptcy scrub, which did not flag the account. So the defendant ordered a propensity to pay score for the debt, which included a soft inquiry of the plaintiff’s credit report. Several months later, the vendor performing the bankruptcy scrub for the defendant updated the plaintiff’s records with information about the bankruptcy, at which point the defendant closed the account.
First looking at the issue of standing, the Seventh Circuit — which has been at the forefront for more than a year of raising the bar over which plaintiffs must pass in order to have standing to sue — ruled that the plaintiff had suffered a concrete injury. Labeling the inquiry as an invasion of her privacy, the Seventh Circuit likened it to an unlawful inspection of an individual’s wallet, mail, or bank account.
Turning to the merits of the case, however, an alleged invasion of privacy was not enough for the Seventh Circuit to overturn the lower court’s ruling. “… Summary judgment for Southwest was appropriate because no reasonable juror could conclude that the inquiry into Persinger’s propensity‐to‐pay score resulted in actual damages,” the Appeals Court wrote.
The plaintiff also argued that the defendant should have known that she had filed for bankruptcy because of her husband’s account with the defendant, even though her account was placed with the defendant months later.
“To be sure, Persinger’s debt was discharged7 by the time Southwest obtained her propensity to‐pay score — for this, there was no permissible purpose under the FCRA,” the Appeals Court wrote. “But Southwest lacked actual knowledge of the bankruptcy, and it did not recklessly disregard the possibility that debt had been discharged. The evidence shows that it had a reasonable basis for relying on its procedures.”
