Employer Liable for its Employee Who Improperly Obtained a Credit Report

The Sixth Circuit Court of Appeals has ruled that an employer may be held liable under the Fair Credit Reporting Act for an employee's violation of the act by obtaining a credit report for an improper purpose. The Act governs consumer reporting agencies (e.g., TRW) and users of such information, specifically regulating permissible purposes for provision and use of consumer credit reports.

In Jones v Federated Financial Reserve Corp an employee of a company that regularly and appropriately procured credit reports on customers requested and obtained a credit report on her roommate's former wife. The former wife, who had taken precautions to conceal her address and telephone number from her ex-husband, was distressed to learn that he had obtained the information from her credit report. She sued, among others, the employer of the woman who had obtained the credit report. The employer argued that it should not be liable since it did not know of, and did not authorize its employee to obtain the credit report.

The court disagreed. It reasoned that the employer was in the best position to police the activities of its employees whom it authorized to obtain reports for legitimate purposes. To rule that the employer was not liable would thwart the Act's purpose of protecting consumers. Therefore, despite the fact that the employer in fact only authorized the employee to obtain credit reports for legitimate purposes the court ruled that the employer could be held liable for the employee's violation of the Act.