Class Action Alleges American Express Procures Credit Reports Without ‘Permissible Purpose’ to Do So

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A proposed class action alleges American Express has violated the law by routinely procuring consumers’ credit reports despite having no permissible purpose for doing so. 

The 10-page complaint more specifically claims AmEx has run afoul of the federal Fair Credit Reporting Act (FCRA) by knowingly and intentionally procuring the credit reports of consumers whose debts have been discharged in bankruptcy while also attempting to collect on those discharged debts. 

According to the case, the plaintiff, a Charlotte, North Carolina resident, filed for relief under Chapter 7 of the U.S. Bankruptcy Code in April 2020. American Express, one of the plaintiff’s creditors, thereafter received a notice of the consumer’s application for bankruptcy relief, which should have caused the credit company to stay all collection activities, the lawsuit relays. Per the suit, the plaintiff sent notice to AmEx that her debt had been discharged on July 24, 2020. 

The plaintiff alleges American Express nevertheless accessed her TransUnion credit report in mid-June 2021 despite having no legitimate need—such as seeking a report in connection with a possible credit transaction, for employment purposes or to service an existing credit obligation—for doing so. The case claims AmEx then accessed the plaintiff’s Experian report on June 16, similarly without a permissible purpose for doing so and supposedly in connection with the same discharged debt. 

“Defendant received multiple notices that the alleged debt had been discharged and was no longer collectible,” the complaint says. “Nonetheless, Defendant willfully, deliberately and intentionally procured Plaintiff’s credit report over a year after receiving notice of the entry of the discharge order.” 

The lawsuit alleges American Express “routinely” obtains consumer credit reports under false pretenses, and without a permissible purpose for doing so, for consumers with whom it has no account or credit relationship. The suit contends that this alleged conduct “violates the fundamental privacy protection afforded consumers under the FCRA and runs counter to longstanding regulatory guidance.” 

The lawsuit looks to represent all persons whose consumer report was obtained by American Express within the last five years for an account review purpose and for which AmEx records note that the account relationship had terminated because the debt on the account had been discharged in bankruptcy, the account was closed with a zero balance or the account had been sold or transferred to a third party. The suit also looks to cover all persons whose consumer report was obtained by American Express within the last year with regard to a debt that the company had been notified had been discharged in bankruptcy. 

American Express’s conduct, the lawsuit alleges, has caused consumers’ personal identifying and account-related information to be “unnecessarily disseminated” to the company and other entities with whom AmEx shares information.

“Defendant has subjected consumer class members to an increased risk of identity theft and/or a data breach, resulting in consequential anxiety and emotional distress,” the case avers. 

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