A Towed Car Does Not Establish A Credit Relationship Under the Fair Credit Reporting Act

A towing company towed our client’s car from the public streets because the registration had expired. The towing company sold the car for nothing. Then it assigned its claim for the towing charge to a collection company, Pacific Creditors. Pacific Creditors pulled our client, Maria Pinto’s credit report. Apparently it was trying to determine if she had enough assets to satisfy a judgment. Assured by her credit report that she was sufficiently well-off, Pacific Creditors then began to telephone Ms. Pintos repeatedly. Its agents told her that if she did not pay the towing charge, it would ruin her good credit. Pacific Creditors knew she had good credit because it had viewed her credit report.

Andrew Ogilvie of our firm filed suit against Pacific Creditors, charging that it had violated the Fair Credit Reporting Act (FCRA) by pulling Ms. Pinto’s credit report without a permissible purpose.

Today the Ninth Circuit Court of Appeals, in Pintos v. Pacific Creditors Ass’n, issued an opinion confirming that Pacific Creditors violated the FCRA by obtaining Ms. Pinto’s credit report without any Fair Credit Reporting Act-sanctioned purpose.

The FCRA only allows credit reports to be pulled “in connection with a credit transaction involving the consumer . . . and involving the . . . collection of an account of . . . the consumer.” Mr. Ogilvie did not believe that the mere fact of owning a car that was later towed constituted such a “credit transaction.” The Ninth Circuit’s opinion confirms that it is not a “credit transaction.”

Why does it matter if someone pulls a credit report without a valid purpose? Because credit reports often contain extremely private and personal data about a person’s assets–including, for example, how much they owe on mortgages and credit cards, how regularly they make payments, and the person’s past addresses and social security number–that information can be harmful or even dangerous if it falls into the wrong hands. Because this information is so sensitive, the FCRA allows damages claims if someone pulls a credit report without a permissible purpose.

Here, Pacific Creditors used Ms. Pintos’s credit report to threaten her. Unless she paid its claim, it would ruin her credit. But identity thieves also use information contained in credit reports. They can open new credit accounts and severely damage the credit of their unsuspecting victims.

We believe the Ninth Circuit’s opinion is a victory for consumers whose rights would otherwise be trampled without any recourse. Congratulations to Mr. Ogilvie and to Ms. Pintos.

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