An originator pulls a credit report on a person who telephoned about rates 5 weeks ago and has neither applied nor authorized anything since. Does the earlier general rate inquiry alone provide a permissible purpose to obtain this consumer report?
Correct Answer
C) Not permissible on these facts: a general rate inquiry alone is insufficient
C. The general inquiry alone does not establish a permissible purpose. Asking about advertised rates is different from requesting an actual credit transaction. Five weeks is background information, not a statutory expiration period. The problem is the missing qualifying purpose, not simply elapsed time. Scope and exceptions: An application is not the only possible FCRA purpose. Written instructions, account review and other statutory circumstances must be evaluated separately. The cited FTC staff opinion is interpretive background, not a new rule. Source: Staff discussion of general inquiries, initiated transactions and written instructions — https://www.ftc.gov/legal-library/browse/advisory-opinions/advisory-opinion-landever-10-12-99
Why This Is the Correct Answer
C. The general inquiry alone does not establish a permissible purpose. Asking about advertised rates is different from requesting an actual credit transaction. Five weeks is background information, not a statutory expiration period. The problem is the missing qualifying purpose, not simply elapsed time. Scope and exceptions: An application is not the only possible FCRA purpose. Written instructions, account review and other statutory circumstances must be evaluated separately. The cited FTC staff opinion is interpretive background, not a new rule.
Why the Other Options Are Wrong
Option A: Permissible unless the consumer objects after the report is obtained
A later objection does not determine whether obtaining the report was authorized.
Option B: Permissible: the inquiry 5 weeks ago established a business need
A general commercial interest is not automatically the required business purpose.
Option D: Permissible, because the report is used for a credit decision either way
Calling an intended use a credit decision does not establish the underlying transaction.
Exam Tip
Identify the actual permissible purpose before obtaining a report.
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