Division of Financial Practices
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Clarke W. Brinckerhoff
Attorney
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202-326-3224
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UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION
WASHINGTON, D.C. 20580
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June 8, 1999
Gregory J. Shibley, Esquire
784 USHighway One, Suite 23
North Palm Beach, FL 33408
Dear Mr. Shibley:
This responds to your request for our view on whether Section
604(a)(3)(F) of the Fair Credit Reporting Act ("FCRA")
provides a dentist with a permissible purpose to obtain a credit
report on the parent of a minor child at the time of providing
an initial free office visit, but before the parent has authorized
any further course of treatment.
Section 604(a)(3)(F) permits consumer reporting agencies (such
as credit bureaus) to provide consumer reports to any party who
has a "legitimate business need for the information in connection
with a business transaction that is initiated by the consumer."
In the attached staff opinion letter (Coffey,
2/11/98), we discuss in some detail the application of that provision
in the context of a consumer who enters an auto dealer's premises
to inquire about products and prices. In that case, we concluded
that such a query does not constitute a "business transaction
that is initiated by the consumer" and that Section 604(a)(3)(F)
therefore did not provide a permissible purpose. In the fact situation
you pose, there is similarly no "business transaction."
The acceptance of a complimentary initial visit to the dentist
is analogous to an automobile "test drive" that the
Coffey letter states is insufficient,
standing alone, to provide a permissible purpose under Section
604(a)(3)(F). In those circumstances, therefore, we believe that
this provision does not provide the dentist with a permissible
purpose to obtain a credit report on the parent of the patient.
An alternative available to the dentist (also noted in the Coffey
letter) would be to obtain the consumer's written consent, because
Section 604(a)(2) provides a permissible purpose for a consumer
report "[i]n accordance with the written instructions
of the consumer to whom it relates." (Emphasis added.) You
note that the parent signed a patient history form including the
statement "I understand that where appropriate,
credit bureau reports may be obtained." (Emphasis added.)
Although you do not ask our opinion on the point, we believe that
the quoted language is insufficient because it is more in the
nature of a notification that a consumer report might be procured
when a permissible purpose arises than a grant of permission by
the consumer to the dentist to obtain a credit report. Credit
card issuers, likewise, often choose to notify applicants that
a consumer report will be obtained, even though they are not required
to do so. Also, the term "where appropriate" may leave
the consumer with the mistaken impression that the authorization
is limited, while the dentist attempts to broadly construe the
provision to permit procurement of a consumer report at any time
for any reason. However, if a consumer signs a document that clearly
"authorizes" a party to procure his or her credit report,
that party would have a permissible purpose under Section 604(a)(2)
to obtain the report. Hammons v. Enterprise Leasing Co.,
993 F. Supp. 1388 (W.D.Okla. 1998).
The opinions set forth in this informal staff letter are not
binding on the Commission.
Sincerely yours,
Clarke W. Brinckerhoff
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