Topic: Banking Law
The 6th U.S. Circuit Court of Appeals has held that identity theft prevention satisfies the Fair Credit Reporting Act’s ("FCRA") Legitimate Business Need requirement for purposes of FCRA compliance. The Court in Bickley v. Dish Network, LLC, 2014 WL 1887565 (6th Cir. May 13, 2014) upheld a grant of summary judgment in favor of the defendant, who had pulled a credit report in order to verify the identity of a consumer and determine his eligibility for service.
American Satellite, a third-party reseller for Dish Network, LLC ("Dish), received a request to open a Dish account in the name of George Bickley. American Satellite, through Dish’s credit-agency interface, pulled a credit report from all three major credit-reporting agencies to verify the information provided, but could not find a match and denied the account. Some weeks later, Mr. Bickley received a credit report indicating that Dish had made an inquiry. Upon contacting Dish, Mr. Bickley was informed that someone had tried to open an account in his name, and he was provided with a recording of the phone conversation between the attempted identity thief and American Satellite’s representative.
Bickley sued Dish almost a year later, alleging that Dish violated the FCRA by requesting his credit report without a permissible purpose. Mr. Bickley’s complaint, and a subsequent amended complaint, made no mention of the attempted identity theft. The U.S. District Court granted summary judgment to Dish on Bickley’s complaint, and Bickley appealed to the 6th Circuit.
The 6th Circuit had no difficulty upholding the lower court’s determination that Bickley’s complaint was without merit. The 6th Circuit noted that the case law is clear that a company has a legitimate business need to verify and assess a consumer’s eligibility for a service. The Court further noted that Bickley received a benefit from Dish, his identity was not stolen precisely because of Dish’s conduct. "We reject the contention that a company, dealing with an imposter purporting to be the consumer, should be held liable when the company attempts in good-faith to verify the consumer’s identity and eligibility for commercial services. To hold otherwise would twist the underlying purpose of the statute and punish companies for preventing identity theft."
While only binding in the 6th Circuit, which covers federal district courts in Kentucky, Michigan, Ohio and Tennessee, the Bickley holding should provide comfort to businesses in other jurisdictions as well. The 6th Circuit expressly noted that Bickley’s contention, pulling a credit report to prevent identity theft violates the FCRA, "cannot be accurate, which is perhaps why there is, unsurprisingly, no case law to support the position."
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The 6th U.S. Circuit Court of Appeals has held that identity theft prevention satisfies the Fair Credit Reporting Act’s ("FCRA") Legitimate Business Need requirement for purposes of FCRA compliance. The 6th Circuit expressly noted that Bickley’s contention, pulling a credit report to prevent identity theft violates the FCRA, "cannot be accurate, which is perhaps why there is, unsurprisingly, no case law to support the position."