The terms and conditions to the rescue. A District Court judge in North Carolina has granted a defendant’s motion for summary judgment in a Fair Credit Reporting Act case on the grounds the plaintiff agreed to have her credit report checked when she submitted an online application for an account, thus giving it a permissible purpose under the statute.
The background: The plaintiff alleged that the defendant violated the FCRA and North Carolina’s Unfair and Deceptive Trade Practices Act by accessing her credit report without authorization.
- The plaintiff submitted an online application to open a membership account, after which the defendant obtained her credit report, according to the complaint.
- The plaintiff claimed she never gave consent for that inquiry and argued there was no permissible purpose under the FCRA.
- She further alleged the credit pull caused harm, including emotional distress and time spent monitoring her credit. The plaintiff send the defendant a demand letter, which the defendant did not respond to, leading the plaintiff to file this suit.
- The defendant, however, pointed to the online application and account agreements that the plaintiff electronically signed. Those documents included language authorizing the credit union to verify information provided in the application and to obtain a credit report as necessary to evaluate eligibility for the requested account.
The ruling: Judge Kenneth D. Bell of the District Court for the Western District of North Carolina sided with the defendant, pointing out that the authorization language was clear and directly above the plaintiff’s electronic signature.
- Quoting the disclosure, the court noted that by signing the application the plaintiff agreed to allow the defendant to “obtain if necessary a current credit report, or to make any credit investigations necessary to verify these statements.”
- Judge Bell also referenced the defendant’s account rules, which stated that when a consumer opens or accesses an account, they authorize the institution to “check your account, credit, and employment history and obtain a credit report from third parties.” Taken together, the court concluded these provisions established a permissible purpose under the FCRA.
- The judge also dismissed the related state law claim, explaining it is not unfair or deceptive to obtain a credit report under those circumstances.
