Author Topic: FCRA "account review" - 11th Circuit - Bad case law  (Read 2343 times)

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fisthardcheese

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FCRA "account review" - 11th Circuit - Bad case law
« on: November 19, 2014 01:08:35 PM »
My wife had some inquiries on her CR from Macy's (DSNB).  We don't have a Macy's card, but it turns out she had a Macy's card 10 years ago before we were married.  She said the account was paid off and closed (by her).

The pulls on her CR were listed as "account review".  I initially started thinking this is a non permissible purpose because there is no account to review.  There has been no account for 10 years.  After doing some research and conferring with an attorney, it turns out - at least in the 11th Circuit - this is perfectly acceptable.

Levine v. World Financial Network Nat. Bank, 554 F. 3d 1314 - Court of Appeals, 11th Circuit 2009

Levine, in his case, described the exact situation I had.  An account that was closed, then a pull for "account review".  He sued the bank and Experian for FCRA violations of non permissible pull.

The court recognized that, "There is a difference in opinion on whether the ambiguous language in [the Act] contains an absolute prohibition against the sale of credit reports to former creditors whose accounts are closed and paid in full." Mainly, the argument of the Plaintiff relied on an FTC opinion that a closed account can not be sold by a CRA.  But ultimately, the court decided that "Neither of the provisions upon which Levine relies expressly distinguish between closed and open accounts, see 15 U.S.C. § 1681b(a)(3)(A), (F), and we cannot say that the term "account" necessarily means "an open account." Nor have judicial opinions established that the Act forbids the sale of reports for consumers whose accounts are closed."

The lower court ruled in favor of both Experian and the Bank on Summar Judgement and unfortunately, upon final appeal, the Bank ended up settling so the appeals court did not rule as to whether the Bank was negligent or willfully used an incorrect reason for a pull to Experian. However, it does make for a very difficult case to prevail on and sadly, the "You peek, you pay" doctrine as used for any closed account does not apply in the 11th Circuit.

Apparently, if you live in the 11th Circuit, any company you have ever had any prior relationship with are free to pull and retain your credit reports for the rest of your life.  And given how unreliable almost all companies are proving themselves to be these days on keeping your personal, sensitive information secure, that should be more than cause for alarm.
11 Arb Settlements (9 AAA, 2 JAMS)
3 JDB Suits Dismissed With Prejudice (2 pro-se, 1 consumer atty)
3 TCPA Settlements (2 pro-se, 1 consumer atty)
2 FCRA Settlements (consumer atty)
1 FDCPA Settlement (w consumer atty)
1 Small Claims Win (pro-se; Landlord/state consumer law violations)
1 State UDAP Settlement (ITS)
1 Federal PTC Settlement (before hearing; pro-se)

howucantoo

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Re: FCRA "account review" - 11th Circuit - Bad case law
« Reply #1 on: November 19, 2014 02:03:09 PM »
I've posted it before but  "Palliam vs AMEX" in Northern District of IL (7th Circuit) is a good case for why it is a violation for account review on an account that is paid and closed per settlement.

AMEX used Levine in its argument, Judge Kennelly disagreed .

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fisthardcheese

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Re: FCRA "account review" - 11th Circuit - Bad case law
« Reply #2 on: November 19, 2014 02:09:06 PM »
I've posted it before but  "Palliam vs AMEX" in Northern District of IL (7th Circuit) is a good case for why it is a violation for account review on an account that is paid and closed per settlement.

AMEX used Levine in its argument, Judge Kennelly disagreed .

I will run the Palliam case by the attorney to see what his take on it is.  The problem I have is that being in the 11th, I fear the courts here will be more inclined to agree with the Levine ruling rather than going against it from a 7th Circuit case.  Maybe this attorney will be willing to attempt to argue the 7th Circuit ruling is correct and get a new case law for the 11th.  I'm not counting on it, though.
11 Arb Settlements (9 AAA, 2 JAMS)
3 JDB Suits Dismissed With Prejudice (2 pro-se, 1 consumer atty)
3 TCPA Settlements (2 pro-se, 1 consumer atty)
2 FCRA Settlements (consumer atty)
1 FDCPA Settlement (w consumer atty)
1 Small Claims Win (pro-se; Landlord/state consumer law violations)
1 State UDAP Settlement (ITS)
1 Federal PTC Settlement (before hearing; pro-se)

Bruno the JDB Killer

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Re: FCRA "account review" - 11th Circuit - Bad case law
« Reply #3 on: November 19, 2014 02:41:01 PM »
From FCRA Definitions:


(4) Account and electronic fund transfer.— The terms “account” and “electronic fund transfer” have the same meanings as in section 1693a of this title.

1693a Definition:


the term “account” means a demand deposit, savings deposit, or other asset account (other than an occasional or incidental credit balance in an open end credit plan as defined in section 1602 (i)  [1] of this title), as described in regulations of the Bureau, established primarily for personal, family, or household purposes, but such term does not include an account held by a financial institution pursuant to a bona fide trust agreement;
I am not an attorney. Any information I post is strictly my opinion and should be treated as such.

fisthardcheese

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Re: FCRA "account review" - 11th Circuit - Bad case law
« Reply #4 on: November 19, 2014 08:07:25 PM »
I re-read the Pulliam ruling and I am not sure it will help me much.  The judge essentially said that AMEX may not have had a willful violation by doing a credit pull on a closed account, but it most certainly could be a negligent violation.  If I read it correct, he disagreed with the Levine case in that Levine only ruled on the willful aspect.

The problem is that under a negligent violation, you can only get actual damages.  In our case, that would be $0.  It would have to be a willful violation to get the $1k statutory award.
11 Arb Settlements (9 AAA, 2 JAMS)
3 JDB Suits Dismissed With Prejudice (2 pro-se, 1 consumer atty)
3 TCPA Settlements (2 pro-se, 1 consumer atty)
2 FCRA Settlements (consumer atty)
1 FDCPA Settlement (w consumer atty)
1 Small Claims Win (pro-se; Landlord/state consumer law violations)
1 State UDAP Settlement (ITS)
1 Federal PTC Settlement (before hearing; pro-se)

flacorps

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Re: FCRA "account review" - 11th Circuit - Bad case law
« Reply #5 on: November 19, 2014 09:21:19 PM »
2009 was eons ago in terms of what we now know about ID theft through data breaches. Former creditors should be physically and metaphorically shredding and even the 11th ought to be able to figure that out by now.
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