Permissible purpose is explained by the Fair Credit Reporting Act (FCRA) as a set of circumstances wherein any consumer reporting agency may furnish a consumer report. A consumer report must not be provided by any consumer reporting agency unless it satisfies one of the reasons under the permissible purpose. Permissible purpose acts as a layer of protection for consumers against the improper use of their credit information.
Permissible purpose is necessary to protect consumer information and privacy as established by the FCRA. The FCRA, through the permissible purpose, also requires consumer reporting agencies to set policies and requirements to comply with the act.
The act also encourages financial institutions to establish a permissible purpose each time they pull a new credit report. A credit report that is reused can create issues with the FCRA, fair lending, and repayment loan calculations because of possible information inaccuracy and outdated fraud alerts.
Information inaccuracy and outdated fraud alerts can be avoided using reasonable procedures. Reasonable procedures are observed by background screeners to ensure maximum accuracy of information about the individual. The FCRA states that end-users must provide a certification to comply with the permissible purpose requirement. End-users must also identify themselves, certify their purpose for obtaining reports, and certify that the information on the report will not be used for other purposes. Reasonable procedures must be shown by background screening companies to ensure access to only permissible users. Lastly, they must certify to users that the request will be used for a permissible purpose.
The allowable uses of the permissible purpose are stated in Section 604 of the FCRA. The FCRA says that a consumer report may be filed under several circumstances. The first circumstance is in response to the order of a court with jurisdiction to issue such an order or a response to a subpoena issued in connection with the proceedings before a federal grand jury. A consumer report may also be filed in accordance with the written instructions of the consumer.
A permissible purpose on a credit report means that under the FCRA, all users must have a permissible purpose in order to acquire a credit report or consumer report.
The consumer report can also be furnished to an individual for certain purposes, as stated in Section 604 of the FCRA. The FCRA says that a consumer report can be furnished to a person who intends to use the information for a credit transaction involving the consumer, for employment purposes, for insurance underwriting involving the consumer, for determination of the consumer's eligibility for a government license, for assessment of the credit or prepayment risks, and for a business transaction or account review with the consumer.
The consumer report can be provided as a response to a request from the head of a State or a local child support agency. The head of a State or a local child support agency must certify to the consumer reporting agency that the consumer report is needed for the purpose of establishing the consumer's capacity to make child support payments, the paternity of the consumer for the child has been acknowledged by the consumer, a ten days prior notice to the consumer has been provided, and the confidentiality of the consumer report, which can only be used for the purpose of establishing the capacity for child support has been ensured.
The FCRA defines what is not a permissible use of credit reports or consumer reports. Consumer reports are not allowed to be procured in general for employment purposes, as stated in the FCRA Section 604. The FCRA Section 604 also mentions several exceptions if there is a clear and obvious written disclosure to the consumer before the consumer report is procured. The written disclosure must state that the consumer report may be obtained solely for employment purposes. Another exemption is if the customer has written authorization from the person who will procure the consumer report.
The consumer report may be furnished for credit or insurance transactions that are not initiated by the consumer. The consumer, according to the FCRA, can have the credit report or consumer report procured by a consumer reporting agency in connection to a credit or insurance transaction that is not initiated by the consumer only if the consumer has given authorization to the consumer reporting agency to provide the consumer report to the person.
To get a permissible purpose letter, a person or entity must obtain written consent from the consumer. Written consent from the consumer serves as a permissible purpose letter to obtain the consumer report.To obtain the consumer report without the consumer’s written consent is when the consumer applies for credit or credit extension. The credit or credit extension application serves as a permissible purpose for the entity or individual to acquire the consumer report. The consumer report can also be obtained without the consumer written consent through a court order as stated by the FCRA Section 604.
The reselling of a consumer report is not a permissible purpose under the FCRA. The FCRA under Section 607 states that a person may not procure a consumer report for the purposes of selling the report unless the person discloses to the consumer reporting agency the following information. The following information includes the identity of the end-user of the report and each permissible purpose as stated in Section 604 for which the consumer report is furnished to the end-user of the report.
The disclosure of the fact of preparation is not a permissible purpose under the FCRA. The FCRA, under section 606, states that a person may not procure an investigative consumer report on any consumer except if it is clearly and obviously disclosed to the consumer the information in writing. The information in writing is that an investigative consumer report on the consumer's character, personal characteristics, general reputation, and mode of living may be made.
A Drivers Privacy Protection Act (DPPA) permissible purpose is created to safeguard personal information privacy assembled by the State Department of Motor Vehicles (DMVs). The State DMVs are prohibited by the DPPA from using personal information about an individual. Personal information about an individual that was obtained by the department in connection with a motor vehicle record is considered a violation under the DPPA. The DPPA sets the penalties for violations and makes violators liable for civil action against the individual to whom the released information pertains.
The DPPA's permissible purpose or uses limits the personal information disclosure for motor vehicles in certain circumstances. These certain circumstances are defined in Title 18 of U.S. Code § 2721. Title 18 of U.S. Code § 2721 states that personal information obtained by the department in connection with a motor vehicle record can be disclosed for use by any private persona or entity acting on behalf of a Federal, State, or any government agency. Government agencies include any court or law enforcement agency.
Personal information, as stated in Title 18 of U.S. Code § 2721, may also be disclosed for use in the driver, or motor vehicle safety and theft, emissions, product alterations, recalls, advisories, performance monitoring, and market research activities.
Also, Title 18 of U.S. Code § 2721 allows the release of personal information from State MDVs for use in the normal course of business by a legitimate entity. A legitimate entity includes its agents, employees, and contractors that will verify the accuracy of the information and also obtain the correct information for the purpose of preventing fraud.
Another circumstance is for use in connection with any civil, criminal, administrative, or arbitration proceeding in any Federal, State, or local court or agency. This includes the service of process, investigation, in anticipation of legal action, and the execution or enforcement of court decisions and orders, or pursuant to an order of a Federal, State, or local court.
Other circumstances, as stated by Title 18 of U.S. Code § 2721, are for use in research activities like producing statistical reports. Statistical reports must not publish, redisclose, or use personal information to contact individuals. The other permissible purposes defined by Title 18 of U.S. Code § 2721 are:
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