This case[1] highlights a debt collector's need to possess a "permissible purpose" before accessing and using a consumer's credit report for purposes of collecting a debt.
A consumer representing himself sued United Recovery Systems, LP not under the Fair Debt Collection Practices Act – but under the Fair Credit Report Act ("FCRA").
After discovering entries by United Recovery Systems, LP ("United") on his Experian credit report, the consumer disputed them with United and Experian calling on each to cite a permissible purpose to access his credit history to make those entries. The consumer denied having any legal relationship with United that would trigger a permissible basis (i.e. credit, debt collection, insurance, or employment application) to access and use his credit report.
After a lack of response from United or Experian, the consumer sued United in the Southern District of New York. United moved to dismiss, which was denied as set forth below.
United argued that it was a debt collector, and as such it was entitled to access and use the consumer's credit report. But United failed to establish with evidence that it had the legal right to collect a particular debt owed by the consumer. A blanket assertion of being a debt collector[2] falls short of meeting the "permissible purpose" requirement under FCRA. United did not produce an assignment or other objective indicia supporting the legal right to collect this particular consumer's alleged debt. United's self-serving affidavits that averred an assignment were characterized as "extrinsic" and therefore not accepted as evidence.
United's lack of demonstrable permissible purpose may support the consumer's allegation that United negligently violated FCR § 1681(b)(f) for failing to ascertain whether it actually had a permissible purpose to access his report.
[1] Braun v. United Recovery Systems, LP, (12-04687, SDNY).
[2] United requested that the court take judicial notice of the fact that it is a debt collector by inviting the court view its history on Pacer. That request was rejected because it was disputed by the consumer, and because that purported evidence was not properly presented before the court.