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Commercial Transactions Do Not Qualify Under the Fair Credit Reporting Act: Commercial Case Denied


It is very common for commercial lenders to run business owners’ credit bureau reports when giving out loans. In some instances, business owners maybe denied credit as a result of their credit bureau reports.

Even if there's an inadvertent and/or alleged mistake on a credit bureau report, so long as the transaction is commercial in nature, the Fair Credit Reporting Act (“FCRA”), which is a federal law thatwas enacted to promote the accuracy, fairness, and privacy of consumer information contained in the files of consumer reporting agencies, does not apply.

In Bacharach v. SunTrust Mortg., a business owner filed a FCRA complaint alleging that she was not able to purchase a commercial property as a result of alleged reporting of misinformation to various credit reporting agencies. 2016 U.S. App. LEXIS 12096 (5th Cir. June 30, 2016). The district court granted summary judgment in favor of SunTrust Mortgage and an appeal followed.

The federal appeals court agreed with the district court. It stated that “[n]umerous courts have concluded that the FCRA does not cover reports used or expected to be used only in connection with commercial business transactions.” Id. at *3-4(quoting Hall v. Phenix Investigations, Inc., 2016 U.S. App. LEXIS 5786, at *3 (5th Cir. Mar. 29, 2015)).

While it's extremely important that creditors and those who report to credit reporting organizations provide accurate information, they should be aware that commercial transactions are not held to the same standard as consumer transactions. In fact, they do not fall under the FCRA’s purview.

Thus, you should look carefully at the facts and circumstances surrounding any alleged FCRA breaches by your company. It's not uncommon to receive misdirected threats of FCRA legal action in commercial situations where the law may not be applicable. This is an absolute defense to any such filing so you should take note.

Established in 1997, Gill Law Firm prides itself on zealously representing its clients. To find out how the attorneys and staff at Gill Law Firm can help your corporation protect its rights, please contact us at (561) 454-0301 or by email at awgill@gillattorneys.com.

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