Prospective mother-in-law who obtained consumer report on daughter's fiance may be liable under Fair Credit Reporting Act

Law Reporter, Mar 2003

Phillips v. Grendahl, 312 F.3d 557 (8th Cir. 2002).

The Eighth Circuit Court of Appeals held that a woman who requested that a detective agency obtain her prospective son-in-law's credit report may have violated the federal credit reporting law.

Here, Phillips was engaged to marry Grendahl's daughter. Grendahl hired a private investigator to do a background check on Phillips. The agency requested a finder's report-which includes an individual's address, birth date, employers, and the companies with which the individual has a credit account-on Phillips from a credit reporting agency.

Phillips sued Grendahl, the investigator's agency, and the credit reporting agency, alleging defendants had willfully and maliciously obtained his credit report for illegal purposes in violation of the Fair Credit Reporting Act (FCRA), 15 U.S.C. sec sec 16816-1681u (2000). Suit also alleged invasion of privacy and intrusion upon seclusion.

The trial court granted defendants summary judgment, holding there was no evidence defendants had misrepresented the purpose of the inquiry in obtaining the report, and no evidence that defendants had acted willfully or maliciously. Plaintiff appealed.

Reversing in part, the Eighth Circuit first examined whether the finder's report is a "consumer report," which must contain information "bearing on a consumer's credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living." The finders report disclosed plaintiffs credit accounts and his former employers, which bear on his mode of living, putting the report within the FCRA, the court found.

The FCRA permits access to consumer reports only for certain purposes, such as determining an individual's eligibility for credit. Investigating a person because he wants to marry one's daughter is not one of these purposes, the court said. Defendants therefore had no permissible purpose for obtaining or using the consumer report.

Here, there was evidence that defendants believed their conduct was not covered by the FCRA, but each had some experience in dealing with credit reports and knew that such reports could be obtained legally only under certain circumstances. One might infer that defendants knew their actions were impermissible, creating an issue of materi fact as to whether defendants acted knowingly and with conscious disregard of plaintiff's rights, the court said.

Accordingly, the court reversed and remanded.

Plaintiffs Counsel

Thomas J. Lyons, Little Canada, Minn. Joseph W Dicker, Minneapolis, Minn.