JP Morgan Violated the FCRA by Pulling Credit Reports for Litigation

By The Kim Law Firm, LLC

There are only a limited number of circumstances under which a credit pull (or inquiry) can be conducted under the FCRA.  Despite this fact, unfortunately, businesses conduct unauthorized credit inquiries thereby accessing consumer credit reports in violation of the law.  This is what is alleged to have occurred by the plaintiff John Pinson. Pinson v. JPMorgan Chase Bank, No. 16-17107 (11th Cir. Nov. 12, 2019).

Mr. Pinson filed a lawsuit against JP Morgan Chase Bank (“JP Morgan”) for having inaccurately reported information on his credit report and for accessing his credit report without a permissible purpose under the FCRA.   The district court dismissed his complaint, but the 11^th Circuit reversed the district court’s dismissal of Mr. Pinson’s case in part.  The 11^th Circuit affirmed the dismissal of Mr. Pinson’s Fair Debt Collection Practices Act (“FDCPA”) claim relating to the inaccurately reported credit information but reversed the dismissal of Mr. Pinson’s FCRA claims.  The 11^th Circuit found, among other things, that JP Morgan having allegedly accessed Mr. Pinson’s credit report through approximately 20 different inquiries – for litigation purposes (as alleged by Mr. Pinson) – would not be one of the permissible purposes to access a consumer’s credit report.  Thus, as a matter of law, would constitute a violation of the FCRA.  Inherent in its decision is the 11^th Circuit’s recognition of the important consumer privacy rights protected by the FCRA.

When a company pulls your report to gain an edge in a dispute

Pinson matters because it names the pattern: a bank in a dispute with a consumer looked at his file about twenty times, and the court held that litigation is not a permissible purpose. The evidence is on the report itself — the inquiries section names the company and the date of every pull. If the dates line up with a lawsuit, a collection or a dispute, save that page and write to the company asking what purpose it relied on. A company that obtains a report without a permissible purpose is liable under the Act: actual damages for a negligent violation, and statutory damages of $100 to $1,000 per violation plus punitive damages where the violation was willful. Someone pulled your credit and had no right to sets out what to check on all three reports and what to send. An FCRA claim must be filed within two years of the day you discovered the violation, and never more than five years after it happened. I review the file at no cost and bring these cases on contingency: you pay nothing unless we win.

Sources: Pinson v. JPMorgan Chase Bank, N.A., 942 F.3d 1200 (11th Cir. 2019) (opinion linked above); 15 U.S.C. §§ 1681b, 1681n, 1681o and 1681p.

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Litigation is not a permissible purpose by itself

Companies sometimes pull a consumer report to evaluate a person they are suing or being sued by, on the theory that a legal dispute is business need enough. The statute does not work that way. Permissible purpose is a defined list, and wanting to know whether an opposing party can pay a judgment is not on it. Because large financial institutions have standing access to bureau data through their lending operations, the temptation to use that access for an unrelated purpose is structural rather than occasional.

• Chase — holds bureau access through several lending businesses.
• Wells Fargo — maintains reporting relationships across multiple product lines.
• Bank of America — obtains reports for origination and account review.
• Citibank — pulls across proprietary and co-branded portfolios.
• Barclays Bank Delaware — the issuing entity for several partner programs.
• Portfolio Recovery Associates — a debt buyer with routine access to consumer data.

If you are in a dispute with a company and see a hard or soft inquiry from it around the time of the filing, note the exact date, because the timing relative to the litigation is what makes the inquiry meaningful. Ask the company in writing to state the permissible purpose it relies on. A pull made to assess collectability or to develop leverage in a lawsuit is not authorized, and where the company knew that, the violation is not merely negligent.