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.