A District Court judge in Kentucky has denied a defendant’s motion to dismiss a Fair Credit Reporting Act case after it was accused of accessing the plaintiffs’ credit reports without a permissible purpose, ruling that the amended complaint includes sufficient factual allegations to support a plausible claim at this stage of the proceedings.
The background: The case centers around allegations that the defendant, a mortgage company, accessed the credit reports of one of the plaintiffs without a permissible purpose. According to the complaint, prior to 2018, the defendant held a mortgage on the plaintiff’s property. In April 2018, after the plaintiff’s account fell into default, the property was foreclosed and sold by the defendant. The plaintiffs assert that either the foreclosure sale satisfied the mortgage completely or that the defendant waived any deficiency that may have remained.
- Between September 2021 and July 2022, the plaintiffs allege that the defendant made multiple requests for and obtained several copies of the plaintiff’s credit report. The plaintiffs claim that, since the mortgage had either been satisfied or waived, the defendant no longer had a permissible purpose to access their credit information.
The ruling: Judge Karen K. Caldwell of the District Court for the Eastern District of Kentucky ruled against the defendant’s motion to dismiss, finding that the amended complaint contained enough factual detail to support a reasonable inference that the defendant did not have a permissible purpose to access the credit reports.
- The defendant argued that the amended complaint was deficient because it only contained bare allegations about the lack of a permissible purpose. However, Judge Caldwell noted that the plaintiffs went beyond simply denying permissible purposes and included specific factual assertions to support their claims.
- For example, the amended complaint detailed that the defendant had not initiated any new legal proceedings against the plaintiff that would have allowed for a permissible credit pull under the FCRA. The judge highlighted that the plaintiffs also addressed the various statutorily enumerated permissible purposes for accessing a consumer’s credit report, asserting why none of them applied to the defendant’s actions in this case. Judge Caldwell found that these details provided sufficient grounds to allow the case to proceed to discovery.
- The defendant also argued that it may have accessed the credit report to either extend new credit or review an existing account, which could constitute permissible purposes under the FCRA. However, the judge pointed out that the plaintiffs alleged they had no ongoing business relationship with the defendant after the foreclosure in 2018, making it unlikely that the credit pulls were for such purposes.
- Judge Caldwell ruled that these factual allegations were enough to support a plausible claim that the defendant lacked a permissible purpose for accessing the plaintiffs’ credit reports. She did emphasize that at the pleading stage, these allegations were sufficient to allow the case to proceed to discovery
