Debt collector must face suit for accessing credit report

A debt collection company failed to convince a federal judge that it had a right to access the credit report of a person whose debt it was assigned to collect in a dispute over a default on a lease.

District Chief Judge Jane Magnus-Stinson on Tuesday rejected Fair Collection & Outsourcing of New England’s motion to dismiss a lawsuit claiming the company wrongly and willfully procured a consumer’s credit report in attempting to collect a debt.

Plaintiff Vivian Pigg defaulted on a rental agreement with a former landlord, after which Fair Collection was assigned the debt to collect. When she discovered the company had procured a copy of her credit report without her consent, she sued under the Fair Credit Reporting Act and the Fair Debt Collection Practices Act.

The company, in its answer to the complaint, acknowledges it obtained Pigg’s consumer credit report, but claims it was entitled to do so under the permissible purposes of obtaining a consumer credit report under federal law. Magnus-Stinson denied Fair Collection’s motion to dismiss.

“(T)he court emphasizes that Fair Collections’ only developed argument is … the debt need not be in connection with a credit transaction,” she wrote, citing Miller v. Wolpoff & Abramson, LLP, 309 Fed.Appx. 40 (7th Cir. 2009). “(A) credit transaction is a necessary prerequisite. Fair Collections did not present any arguments or authority to demonstrate that Ms. Pigg’s debt is in connection with a credit transaction.”

Magnus-Stinson wrote that her order made no finding that the lease agreement was not considered a credit transaction, nor did the ruling foreclose the possibility that Fair Collections could prove another permissible purpose for obtaining the report under the law.

“All this just distills down the definition of a credit transaction,” said Indianapolis attorney John Steinkamp, who represented Pigg. He said there are some gray areas of what defines a credit transaction where collectors could run afoul of federal law by obtaining a consumer’s credit report.

“I’m sure there are other types of debts out there that probably do not fit the meaning of a credit transaction,” he said.

Schererville attorney Jennifer Kalas of Hinshaw & Culbertson represented Fair Collections and did not immediately respond to a message seeking comment.

The case, Vivian Pigg v. Fair Collections & Outsourcing of New England, Inc., 1:16-cv-1902, is in the U.S. District Court for the Southern District of Indiana.