In Wells v. Craig & Landreth Cars, Inc., 2011 WL 1542121 (W.D.Ky. 2011), Judge Simpson held that an auto finance company accessing a consumer’s credit for the potential extension of credit did not violate the “permissible purpose” requirement of FCRA when the buyer’s purchase transaction turned out to be a cash-sale and the buyer claimed that he did not authorize the inquiry on his credit report.  Judge Simpson held that conclusive proof of an extension of credit is not required; the creditor merely need have only ‘reason to believe’ that they were accessing the credit information for a permissible purpose. 


The Fair Credit Reporting Act ( FCRA) allows users (such as potential lenders) to access consumers’ credit reports only if the access is for a “permissible purpose.” See Smith v. Bob Smith Chevrolet, Inc., 275 F.Supp.2d 808, 815 (W.D.Ky.2003). One such permissible purpose allows a lender to access a consumer’s credit report if the lender has reason to believe that the information is to be used “in connection with a credit transaction involving the consumer on whom the information is to be furnished and involving the extension of credit to, or review or collection of an account of, the consumer.” 15 U.S.C. § 1681b(a)(3)(A). See also id. § 1681b(f)(1).    In her complaint, Wells states her FCRA claims against Chase and Telco as follows:  Capital One Auto Finance, J.P. Morgan Chase Bank and Kentucky Telco Fed. Credit Union received an electronic application for credit from Craig and Landreth. That electronic application was not authorized by the Plaintiff. The Plaintiff never filled out nor signed a credit application. There was no verification that a credit application was on file. Pl.’s Second Amended Compl. ¶ 19. In another part of her complaint, Wells also alleges that Chase and Telco’s actions violated the “permissible use” provisions of § 1681b, Compl. ¶ 14, but does not allege any additional facts. ¶  In November 2010, this court granted another potential lender’s motion to dismiss Wells’ FCRA claim, explaining that “Here, Wells claims that Capital One conducted its inquiry into the credit history of Wells (a consumer) upon receipt of an application—allegedly on her behalf—from Craig & Landreth (a dealer in consumer goods), in connection with apparently securing financing for a vehicle. These facts indicate nothing that would raise the inference that Capital One should have doubted Craig & Lan-dreth’s intentions when it submitted its application. Although Wells claims in her Response to Capital One’s motion that the transaction was meant to be a “cash sale,” she points to no fact that shows Capital One knew or should have known of her intentions. Absent any allegation that the application Capital One received from Craig & Landreth was deficient in some way or that Capital One should have had reason to believe the application was unauthorized, Wells’ claim under this statute may not proceed.”  Memorandum Opinion (DN 49) at 4.    The reasoning that supported granting Capital One’s motion to dismiss applies equally to Chase and Telco’s motion to dismiss. Wells makes several at-tempts to differentiate the actions of Chase and Telco from those of Capital One, but the court finds them unconvincing. Wells argues that Chase and Telco had the capacity to receive copies of signed credit applications from Craig & Landreth, but did not receive one from Wells before inquiring into her credit history. Wells appears to claim that the lack of a signed credit application should have alerted Chase and Telco that Wells had not given her permission for a credit application to be submitted on her behalf. However, Wells does not identify, nor has the court found, any provision of the FCRA that requires receipt of a signed, written credit application in order for a lender to have “reason to believe” that the consumer’s credit report is to be used for a permissible purpose. Other courts have held that “conclusive proof” of a permissible purpose is not required for a user to avoid violation of the FCRA, see Korotki v. Attorney Svcs. Corp., Inc., 931 F.Supp. 1269, 1278 (D.Md.1996); rather, only a “reason to believe” is required. Id. Given the facts as alleged in Wells’ complaint, the court concludes that Chase and Telco had reason to believe that they were acquiring Wells’ credit information for a permissible purpose.