A District Court judge in New York has granted a motion to dismiss filed by a creditor that was accused of violating the Fair Credit Reporting Act over access and use to the plaintiff’s credit reports when attempting to purchase a vehicle from one of the defendants.
The background: The plaintiffs attempted to purchase a vehicle in early 2024 and were approved for financing through a dealership. After the transaction shifted to a more expensive vehicle, additional financing steps were taken, including the involvement of a co-signer. Although paperwork was executed and the vehicle was delivered, the financing arrangement later fell apart, and after a lot of back and forth between the dealership and the plaintiffs over requests to return the vehicle, it was eventually repossessed.
- The plaintiff alleged that weeks after the initial transaction, the creditor defendant accessed his consumer credit reports without a permissible purpose. The complaint asserted that because financing had already been approved earlier, any later credit pulls were unauthorized under the FCRA and harmed the plaintiff by lowering his credit score and disseminating inquiry information to other lenders.
- The plaintiff also claimed the creditor failed to provide required adverse action notices.
The ruling: Judge Lewis J. Liman of the District Court for the Southern District of New York rejected those arguments and dismissed the FCRA claims against the creditor. In doing so, the judge emphasized that the FCRA permits access to a consumer report not only for the extension of credit, but also for the review or collection of an account.
- Based on the allegations in the complaint itself, the court found it plausible that the dealership was either attempting to finalize financing or collecting on an obligation, both of which qualify as permissible purposes under the statute.
- Judge Liman also noted that the complaint failed to plead facts showing the creditor acted negligently or willfully. As the judge explained, “the statute’s plain language indicates that if the party obtaining the report had the intent to use it for one of the specified permissible purposes, there has been no violation of the FCRA.” The court further observed that the creditor was entitled to rely on certifications that the request for the report was for a lawful purpose.
- Finally, the judge dismissed the adverse action notice claim with prejudice, reiterating that Section 1681m of the FCRA does not provide a private right of action.
