Some Good News for Credit Grantors – The 6th Circuit Raises The Bar For Pleading “Permissible Purpose” Violations Under FCRA
At a time when some courts allow FCRA claims to withstand motions to dismiss based on largely conclusory assertions of the elements of a FCRA violation (particularly § 1681s-2(b) claims alleging a failure to “reasonably investigate”), the U.S. Court of Appeals for the 6th Circuit just issued an opinion in Daniel v. Goodyear Tire/Cbsd, 2018 U.S. App. LEXIS 29345 (October 17, 2018) that raises the pleading bar for plaintiffs – at least in cases alleging a “permissible purpose” violation under FCRA.
In order to obtain a credit report without a consumer’s permission, a requestor must meet one of the “permissible purposes” specified in FCRA § 1681b. Of the permissible purposes identified therein, the one most utilized by credit grantors allows them to obtain a limited consumer report for the purpose of providing a “firm offer of credit” to potential applicants. These “soft pulls” are often done for promotional purposes, such as receiving a credit card offer in the mail, and are not factored into the computation of a customer’s credit score.
In Daniel v. Goodyear Tire, the plaintiff alleged that she learned belatedly that a card issuer had requested a credit report on her in June 2012. When she sought an explanation as to why her credit had been pulled, she was advised that the card issuer’s retention policy prevented it from determining why it had requested her consumer report more than two years before or whether she had applied for credit at that time (a retention policy that was FCRA and ECOA compliant). In affirming the dismissal of the plaintiff’s FCRA claim that her credit had been pulled for an impermissible purpose, the 6th Circuit held that the plaintiff’s allegation that the card issuer had no record of a credit application in her name more than two years after it requested a credit report was insufficient to state a plausible claim for a willful violation of FCRA’s permissible purpose requirements. In addition, the 6th Circuit found that the plaintiff’s complaint did not state a claim for damages for a negligent violation of the FCRA based on her claimed “frustration” with the explanation provided by the card issuer and its allegedly “unapologetic and nonchalant” communications with her, holding that such “conclusory allegations of emotional damages for what amounted to, at worst, poor customer service did not state a plausible claim for damages” under FCRA.
Hopefully, other federal courts will follow suit in holding plaintiffs to a pleading standard that requires actual damages and more than boilerplate assertions of the elements of a FCRA claim.