Collection Hard Pulls

It seems like someone did put up a fight and won, now collectors are trying to cover their buts by adding "Permissible Purpose collection" on the inquiry. I don't think that is enough, hard pulls are reserved for requests of new credit. I guess they will keep doing it until more people start to sue the heck out of them.

This is a real story....




This case was fairly easy to win because of my hard work and effort in researching and knowing California law. But California law is almost identical to the FCRA so anyone can sue from any state, but you usually would have to sue in Federal Court unless your state has the same provisions as California law and the FCRA that allows for damages if they do to you what they did to me.

Okay, about the suit. My argument was very straight forward. Any inquiry that is ever put into your hard inquiry section is an inquiry that is done by a creditor that is stating that "so and so consumer is requesting additional credit from me, the creditor". However, if a creditor of us, the debtors, is simply doing an account review, whether or not for collection purposes or not, then the inquiry is gonna go into the soft inquiry section of your credit report. Now, the reason for this is simple. California law and the FCRA states that any request for a credit file that is not the result of a credit transaction of the consumer must not be seen by anyone besides the consumer. Because of that the CRA's must know the exact reason for the pursose of the credit file pull at the time of the credit report pull. Both California law and the FCRA state that the person doing the pull must certify the use of the credit report and certify that it won't be used for any other purpose. Therefore if they certify that you're taking out additional credit, but you are not, then they would in fact be in violation simply because they are using it for a purpose other than was has been certified by them and the end result is usually a lowering of your credit score which was exactly what my former creditor was trying to do. This is true even if they have a permissible purpose for a report, such as for you having an account with them.

I had defaulted on a loan with them, unfortunately, and as a result for the next 36 months they were pulling credit reports as hard pulls at least once a month. They were trying to keep my score low so I would be forced to pay off the deficiency balance. Also, they did a soft pull two weeks after my bankruptcy date.

They tried to argue that they had a permissible purpose for the credit report pulls, which I conceded to and figured they would argue for. However, as I said, and the judge agreed, they have a responsibility to report the correct purpose for the pull so that they do not violated my rights and attempt to harm my credit score. It was great because I had all parts of the California Civil code in hand and quoted directly from them in my argument which went off like a charm. I was so happy.

The judge found for me for the amount of 5000 which is the maximum amount of California law.

This is a big victory for California consumers. If anyone from anywhere wants to hear once again my entire argument and my quotes from the law, just shoot me off a pm.

Oh, and to my critics. ner ner ner ner ner ner

I will post a copy of the judgment as soon as it arrives in the mail.
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When you apply for credit to enter into a credit agreement, a creditor(and later if you default, a collection agency) has a permissible purpose to pull your report. They can do so at any time but they still have to certify the purpose of the credit pull as stated here...

http://www.ftc.gov/os/statutes/fcra.htm#607

§ 607. Compliance procedures [15 U.S.C. § 1681e]

(a) Identity and purposes of credit users. Every consumer reporting agency shall maintain reasonable procedures designed to avoid violations of section 605 [§ 1681c] and to limit the furnishing of consumer reports to the purposes listed under section 604 [§ 1681b] of this title. These procedures shall require that prospective users of the information identify themselves, certify the purposes for which the information is sought, and certify that the information will be used for no other purpose. Every consumer reporting agency shall make a reasonable effort to verify the identity of a new prospective user and the uses certified by such prospective user prior to furnishing such user a consumer report. No consumer reporting agency may furnish a consumer report to any person if it has reasonable grounds for believing that the consumer report will not be used for a purpose listed in section 604 [§ 1681b] of this title.

As well as for here...

http://www.leginfo.ca.gov/cgi-bin/d...85.10-1785.19.5

1785.14. (a) Every consumer credit reporting agency shall maintain
reasonable procedures designed to avoid violations of Section 1785.13
and to limit furnishing of consumer credit reports to the purposes
listed under Section 1785.11. These procedures shall require that
prospective users of the information identify themselves, certify the
purposes for which the information is sought and certify that the
information will be used for no other purposes. From the effective
date of this act the consumer credit reporting agency shall keep a
record of the purposes as stated by the user.

As you can see, whether or not they have a permissible purpose, the law clearly states that they have to give the reason for the exact purpose of the credit pull. And California law even goes as far as to say that the CRA's have to keep a record of the purposes.

Now, if a creditor or even a collection agency states that they are pulling the report as a result of "a credit transaction initiated as a result of a consumer", but they are not, then it would be fair to say that they are pulling under false pretenses as stated here...

§ 616. Civil liability for willful noncompliance [15 U.S.C. § 1681n]

(a) In general. Any person who willfully fails to comply with any requirement imposed under this title with respect to any consumer is liable to that consumer in an amount equal to the sum of

(1)(A) any actual damages sustained by the consumer as a result of the failure or damages of not less than $100 and not more than $1,000; or

(B) in the case of liability of a natural person for obtaining a consumer report under false pretenses or knowingly without a permissible purpose, actual damages sustained by the consumer as a result of the failure or $1,000, whichever is greater;

and here...

1785.31. (a) Any consumer who suffers damages as a result of a
violation of this title by any person may bring an action in a court
of appropriate jurisdiction against that person to recover the
following:
(1) In the case of a negligent violation, actual damages,
including court costs, loss of wages, attorney's fees and, when
applicable, pain and suffering.
(2) In the case of a willful violation:
(A) Actual damages as set forth in paragraph (1) above:
(B) Punitive damages of not less than one hundred dollars ($100)
nor more than five thousand dollars ($5,000) for each violation as
the court deems proper;
(C) Any other relief that the court deems proper.
(3) In the case of liability of a natural person for obtaining a
consumer credit report under false pretenses or knowingly without a
permissible purpose, an award of actual damages pursuant to paragraph
(1) or subparagraph (A) of paragraph (2) shall be in an amount of
not less than two thousand five hundred dollars ($2,500).

The reason being that the CRA's are required to not display inquiries that are not the result of a credit transaction initiated by a consumer as found here...

§ 604. Permissible purposes of consumer reports [15 U.S.C. § 1681b]

(c) Furnishing reports in connection with credit or insurance transactions that are not initiated by the consumer.

(3) Information regarding inquiries. Except as provided in section 609(a)(5) [§ 1681g], a consumer reporting agency shall not furnish to any person a record of inquiries in connection with a credit or insurance transaction that is not initiated by a consumer.

And here..

1785.11.
(c) Except as provided in paragraph (3) of subdivision (a) of
Section 1785.15, a consumer credit reporting agency shall not furnish
to any person a record of inquiries solely resulting from credit
transactions that are not initiated by the consumer.

These provisions are what created the "soft inquiries" and "hard inquiries" sections of everyones credit reports with all three CRA's. Without them, all inquiries ever done by anyone requesting your credit report would be seen by everyone.

So, the key here is what exactly is the reason code for each credit pull. If it's the CRA's themselves that are placing the credit pull from the creditor into the "hard inquiry" section even though the creditor is submitting the pull as a "collection" pull or even an "account review" pull, then it's not the creditor's fault and you can't sue them. And if it's the CRA's fault, then you would sue them to make them stop. This would apply to what I was talking about in the other thread regarding "collection inquiries" being viewed by others.

This is taken from a previous post of mine at the other board. The part in italics is taken exactly from a standard Experian credit report. What they are admitting to is basically itself a violation. I go on to state............................................................................................

Requests viewed by others

The section below lists all who have requested in the recent past to review your credit history as a result of actions involving you, such as the completion of a credit application or the transfer of an account to a collection agency, mortgage or loan application, etc. Creditors may view these requests when evaluating your creditworthiness.

Just that alone, if it is a true Experian policy, and if carried out, is a violation of both the FCRA and California Civil Code, because if a creditor pulls your report for the purposes of a "transfer of an account to a collection agency", then that is not due to a transaction initiated by a consumer and the inquiry itself should not be included to anyone else besides you according to..

http://www.ftc.gov/os/statutes/031224fcra.pdf

FCRA § 604. Permissible purposes of consumer reports [15 U.S.C. § 1681b]
(3) Information regarding inquiries. Except as provided in section 609(a)(5)
[§1681g], a consumer reporting agency shall NOT furnish to any person a record of inquiries in connection with a credit or insurance transaction that is NOT initiated by a consumer.

If your friend does have an inquiry and it is due to collection activity whereby the pull is not a result of a transaction initiated by you and the inquiry itself is in the hard inquiry section whereby potential creditors pull your report and see it, then that would be a violation of the law and you could sue Experian for it. I know this for a fact as it is a matter of law. I do not know of anyone suing for it, though.

In my case, since it is the creditor that is misrepresenting the credit pull, my suit is against the creditor for pulling under false pretenses, but yours, or rather your friends, would be against Experian itself....................................................................................

Back to this thread. In my case with regards to my lawsuit, I had an auto loan that I defaulted on back in May of 2001. My former creditor started making hard inquiries about every month for three years. As you know they fall off after two years but I managed to sue on in March of this year a day before one of the inquiries was gonna fall off from 2003 . There was one more from September of 2003 so there were atleast two violations plus they did an account review pull two weeks after my bankruptcy discharge date in 2004. So I had those violations on my report. I called Experian to make sure that the hards were a result of my creditor falsely claiming that I was taking out additional credit back in 2001 and 2002 and so forth and an Experian customer service rep told me it was exactly that.....that my former creditor was certifying that I was taking out additional credit when I was not obviously, since I was in default. It doesn't take a rocket scientist to figure that out. lol

It's obvious to me that they were doing that to keep my credit score down so that I would be more inclined to pay off my deficiency loan with them. I owed about 6400 bucks or so. That's why they were doing it. I was only able to get 5000 and would have got more if the judge could have allowed, as he put it in his own words. There was a funny story the judge told when I talking about Experian. He said that his dad had recently passed and that he had found out that there was a negative on his report that was actually his dads and that he tried calling the CRA to get it removed but they wouldn't talk to him because they said they couldn't talk to him because he wasn't his dad. Everyone laughed in the courtroom.

Be that as it may, that was my argument.