Discover Financial Services FCRA Impermissible Request for Credit Report Class Action

None of us want a third party to be able to request our personal credit report without a proper reason—and a proper reason usually involves an action we’ve initiated, such as an application for a job or the maintaining of a credit card account. But the complaint for this class action alleges that Discover Financial Services requested plaintiff Daniel McHugh’s credit report from Experian on several occasions, even though McHugh no longer had an account with the company.

The nationwide class for this action is all persons who meet the following conditions:

  • Their consumer reports were requested by Discover from any of the three national consumer reporting agencies (Experian, Equifax, and TransUnion),
  • At a time when Discover did not have an ongoing right to receive payment from that person,
  • For which Discover did not otherwise have a permissible purpose to access the report,
  • Between July 18, 2015 and July 18, 2017.

The Nevada subclass is all Nevada residents who are members of the class.

Plaintiff Daniel McHugh had an account with Discover, but he paid it off and closed it in 2008. However, an Experian credit report showed that Discover had requested his credit report a number of times in 2016, including twice on September 16, and once on each of September 22, September 30, October 14, and October 27. At none of these times did Discover have a permissible reason to access his credit report.

Federal laws such as the Fair Credit Reporting Act (FCRA) seek to protect our private information from unauthorized access. The FCRA regulates credit reporting and the actions of both credit reporting agencies and users of credit reports. It intends to ensure that “consumer reporting agencies exercise their grave responsibilities with fairness, impartiality, and a respect for the consumer’s right to privacy.”

Among other things, the FCRA specifies the purposes for which a consumer report may be provided to a third party. These primarily involve transactions initiated by the consumer. A recent case in the US District Court for Nevada concluded that, although it is permissible for lenders to request consumer reports to determine whether a consumer continues to meet the terms of the account, “[t]he operative word in this provision is ‘continues,’” so that once the consumer has terminated the relationship with the lender, the lender is no longer permitted to access the consumer’s credit report.

Because Discover knows whether it has a relationship with a consumer, the complaint alleges that impermissibly pulling a credit report for a consumer with whom it does not have a relationship constitutes both deceptive trade practices and fraud under Nevada laws. 

Article Type: Lawsuit
Topic: Consumer

Most Recent Case Event

Discover Financial Services FCRA Impermissible Request for Credit Report Complaint

July 18, 2017

The complaint for this class action alleges that Discover Financial Services requested plaintiff Daniel McHugh’s credit report from Experian on several occasions, even though McHugh no longer had an account with the company. Among other things, the FCRA specifies the purposes for which a consumer report may be provided to a third party. A recent case in the US District Court for Nevada concluded that, although it is permissible for lenders to request consumer reports to determine whether a consumer continues to meet the terms of the account, “[t]he operative word in this provision is ‘continues,’” so that once the consumer has terminated the relationship with the lender, the lender is no longer permitted to access the consumer’s credit report.

discover_fcra_complaint.pdf

Case Event History

Discover Financial Services FCRA Impermissible Request for Credit Report Complaint

July 18, 2017

The complaint for this class action alleges that Discover Financial Services requested plaintiff Daniel McHugh’s credit report from Experian on several occasions, even though McHugh no longer had an account with the company. Among other things, the FCRA specifies the purposes for which a consumer report may be provided to a third party. A recent case in the US District Court for Nevada concluded that, although it is permissible for lenders to request consumer reports to determine whether a consumer continues to meet the terms of the account, “[t]he operative word in this provision is ‘continues,’” so that once the consumer has terminated the relationship with the lender, the lender is no longer permitted to access the consumer’s credit report.

discover_fcra_complaint.pdf
Tags: FCRA, No permissible purpose for request for report