UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION
WASHINGTON, D.C. 20580
July 28, 1998
Mr. James C. Everson
Vice President - Legal Affairs and Associate Counsel
CommNet Cellular Inc.
8350 East Crescent Parkway, Suite 400
Englewood, CO 80111
- Re: Section 615(a) of the Fair Credit Reporting Act
Dear Mr. Everson:
This responds to your letter regarding the application of the
Fair Credit Reporting Act ("FCRA") to CommNet Cellular's
("CommNet") practice of accessing the consumer reports
of potential individual customers. Specifically, CommNet uses
the consumer report as a basis to determine whether customers
will pay a cash deposit or pre-pay for cellular service, instead
of deferring payment until after the service is used. You ask
whether CommNet is required by Section 615(a) of the FCRA to provide
notice of adverse action to those customers it determines must
pay a deposit or pre-pay for cellular service. We believe that
notice of adverse action is required under these circumstances.
Section 615(a) provides that a person who "takes adverse
action with respect to any consumer that is based in whole or
in part on any information contained in a consumer report"
must notify the consumer of the action. Your letter suggests that
adverse action notices would be required only if the deferral
of payment by customers constitutes an extension of credit. We
disagree. Where an action is taken "in connection with an
application that was made by, or a transaction that was initiated
by, any consumer, . . ." as is the case here, section 603(k)(1)(B)(iv)
broadly defines adverse action as action that is "adverse
to the interests of the consumer." Under the scenario you
describe, the requirement that some customers pay a cash deposit
or pre-pay for service is adverse to the interests of affected
customers because they are unable to defer payment of services.
Accordingly, we believe that under Section 615(a) of the FCRA,
CommNet is obligated to send notice of adverse action to customers
who must pre-pay or pay a cash deposit for cellular service.
The opinions set forth in this informal staff letter are not
binding on the Commission.