Advisory Opinion to Shibley (06-08-99)

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