PayPal Credit/Comenity Capital Bank Hard Credit Pulls FCRA Class Action

The Fair Credit Reporting Act (FCRA) prohibits anyone from getting a consumer credit report unless they have one of the permissible purposes outlined in the law. But Comenity Capital Bank, the entity behind PayPal Credit, made two hard credit pulls via Equifax on information about plaintiff Kevin Teichen, the complaint for this class action alleges.

The Impermissible Pull Class for this action is all persons in the US to whose credit report Comenity performed a hard credit inquiry, who did not have a business relationship with Comenity and did not apply for any extension of credit by or through Comenity

PayPal Credit offers a revolving credit line built into the accounts of its users so that they can pay for purchases over time. As with most credit cards and credit lines, PayPal Credit is provided via a bank, in this case Comenity Capital Bank. 

Consumers normally have to apply for a credit card or line of credit before they are vetted for one. But Comenity seems to have thought it was entitled to check out plaintiff Teichen before he’d asked them for anything. 

The complaint reproduces a report of “hard” inquiries made to Teichen’s Equifax account. It shows two such inquiries made by Comenity, one on August 3, 2017 and one on March 10, 2018. 

Teichen says he does not have any business relationship with PayPal Credit, nor did he apply for a PayPal Credit account on either occasion. The complaint claims that Comenity must have misrepresented to Equifax that Teichen was trying to obtain credit with it. 

But the invasion of privacy isn’t the only problem. The complaint claims that credit inquiries are 10% of a person’s FICO score and that Teichen’s credit rating was therefore damaged by the credit pulls. 

The complaint claims that Teichen is not the only victim of Comenity’s activities. It reproduces a posting from a PayPal Community website that begins, “On March 16, 2018, I received an alert from credit karma, telling me that a hard inquiry had been made on my credit, and that my credit score was lowered because of it. I never authorized this inquiry.” The inquiry seems to have been made by the same party as the inquiry to Teichen’s credit report, in other words, Comenity. 

Another posting at a different site begins, “I didn’t authorize paypal credit to pull a hard credit inquiry. Unacceptable that this happened…”

The complaint claims violation of the FCRA because Comenity’s inquiries were made without Teichen’s authorization and without any permissible purpose. 

Article Type: Lawsuit
Topic: Consumer
Tags: Credit Reports, Unauthorized Credit Reports or Credit Pulls, Your Bank