In a new advisory opinion, the CFPB addresses the Fair Credit Reporting Act’s permissible purpose requirement as it applies to both consumer reporting agencies and users of consumer reports.
Consumer reporting agencies.
FCRA Section 604(a) enumerates the circumstances under which a consumer reporting agency (CRA) may provide a consumer report to a user. These circumstances, set forth in Section 604(a)(3), include where the CRA has “reason to believe” that the user intends to use the report for one of the listed “permissible purposes.” Such purposes include where the user “intends to use the information in connection with a credit transaction involving the consumer on whom the information is to be furnished and involving an extension of credit to, or review or collection of an account of, the consumer.” Another permissible purpose is where the user “has a legitimate business need for the information…in connection with a business transaction that is initiated by the consumer or to review an account to determine whether the consumer continues to meet the terms of the account.”
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