Credit Report Access by Title IV-D Child Support Enforcement Agencies

National Child Support Enforcement Association

Credit Report Access by Title IV-D Child Support Enforcement Agencies

Legal Position Paper and Alert to IV-D Agencies (Draft: May 2008)
Prepared by the NCSEA Policy and Government Relations Committee, Emerging
Issues-Policies, Best Practices, Surveys Subcommittee with assistance from:
Amy Clayman, Child Support Enforcement Division of the Massachusetts
Department of Revenue; and Robert Lafer, Chief Legal Counsel, San Diego County
Department of Child Support Services.
I. Issue Presented
The recent federal court decisions in Pintos and Miller (discussed below) have
called into question a governmental child support enforcement agency’s ability to
obtain credit reports as a judgment creditor under 15 U.S.C. §1681b(a)(3)(A)
[subsection (3)(A)]. However, this does not preclude requests for credit reports by
child support enforcement agencies. Below is a brief overview of the authority
available to child support enforcement agencies under the Fair Credit Reporting Act
(FCRA) (15 U.S.C. §1681 et seq.).
II. Federal Case Law
A. Miller Analysis
The case of Miller v. Trans Union, (N.D. Ill. Feb. 28, 2007, No. 06 C 2883)
2007 U.S.Dist. LEXIS 14315 addresses the question of what constitutes a
“permissible purpose” for the use of a consumer credit report as defined by the
FCRA. The specific issue in Miller was whether a private collection agency’s use of
a credit report to collect past-due child support was a permissible purpose under
§1681b(a)(3)(A) of the FCRA. Section 1681b(a)(3)(A) authorizes the use of a
consumer credit report “. . . in connection with a credit transaction involving the
consumer . . ..” The court, basing its decision on amendments to the FCRA made by
the Fair and Accurate Credit Transaction Act of 2003 (FACTA), concluded that the
private collection agency’s use of the credit report was not a permissible purpose
under §1681b(a)(3)(A).
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FACTA added definitions of the terms “credit” and “creditor” to the FCRA.
“Credit” is defined as “the right granted by a creditor . . . to defer payment of debt or
to incur debts and defer its payment . . .” and “creditor” is defined as “any person
who regularly extends, renews, or continues credit . . ..” §1681a(r)(5). According to
Miller, whether a particular use of a credit report is a permissible purpose under
§1681b(a)(3)(A) must be determined in light of the definitions added by FACTA.
The court found that child support obligations, which typically do “not involve one
party granting rights to another to defer payment” are not “credit transactions;”
therefore, the use of a credit report to collect past-due support lacks the “nexus to a
credit transaction” required by §1681b(a)(3)(A). Miller at 14319. The court further
found that the private collection agency was not a “creditor” within the meaning of
§1681b. Id. at 14321. As a result, the court concluded that the private collection
agency’s use of the credit report for collecting past-due child support was not a
permissible purpose under §1681b(a)(3)(A).
The Miller case has raised concern over whether the use of credit reports for
collection of past-due child support is a permissible purpose under the FCRA. Miller
does call into question some creditors’ ability to access consumer reports under
§1681b(a)(3)(A) of the FCRA. Yet it is important to note that in Miller, the entity
seeking access to the credit report was a private collection agency, not a state child
support enforcement agency (IV-D agency). By definition, a IV-D agency stands in
a very different position with regard to the collection and enforcement of past-due
child support than a private collection agency. In addition, in reaching its
conclusion, the Miller court stated that:
Supportkids has not offered evidence that the alleged child support
plaintiff owed to [the custodial parent] was a ‘credit transaction’ or that
[the custodial parent] was a ‘creditor’ within the meaning of §1681b(a).
Supportkids has therefore not shown a “permissible purpose . . ..”
Miller at 14321. (emphasis added).
It therefore remains possible that a IV-D agency, by offering sufficient evidence,
could show that its use of credit reports to collect past-due child support is a
permissible purpose under §1681b(a)(3)(A). However, under current law, it is not
advisable for IV-D agencies to request credit reports under §1681b(a)(3)(A).
B. Pintos Analysis
In Pintos, decided September 21, 2007, the Ninth Circuit court of Appeal
reached the same conclusion as Miller regarding the application of the FACTA
definitions to pre-FACTA actions. The issue in Pintos was whether a debt collection
agency could request the credit report of a woman who had failed to pay impound
fees owed when her car was towed due to an expired California vehicle registration.
The Pintos court held that the collection agency was not entitled to request a credit
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report as a judgment debtor under 15 U.S.C. §1681b(a)(3)(A) as the debtor had not
voluntarily entered into a credit agreement with the collection agency.
Specifically, the Ninth Circuit held that FACTA created definitions of “credit”
and “creditor” that were otherwise missing from the FCRA. In order to determine the
application of 15 U.S.C. §1681b(a)(3)(A), the Pintos court read that section along
with the definitions supplied by FACTA despite the fact that the definitions were not
effective until March 31, 2004. Thus, like Miller, Pintos applied FACTA definitions
retroactively to pre-FACTA actions.
By giving the FACTA definitions retroactive effect, Pintos held that a collection
agency did not have a permissible purpose for requesting a credit report pursuant to
15 U.S.C. §1681b(a)(3)(A) when the debtor “did not voluntarily seek credit.”
[1]

Because the debt was statutory, Pintos found that there was no credit relationship
such that 15 U.S.C. §1681b(a)(3)(A) would apply.
In reaching its conclusion, the Ninth Circuit overturned the lower court’s
finding that debt collection, without an underlying, voluntary credit transaction, was a
permissible purpose under 15 U.S.C. §1681b(a)(3)(A). The Pintos court held that
the case law the District Court had relied upon was decided prior to the 2003 FACTA
amendments. Thus, the case had to be re-evaluated in light of the FACTA
amendments.
The case the District Court had relied upon was the Hasbun case decided in
March of 2003.
[2]
Hasbun centered on a IV-D agency obtaining a credit report in
order to collect an overdue child support obligation. In that case, the Ninth Circuit
held that collection of child support by a child support agency was a permissible
purpose as required by 15 U.S.C. §1681b(a)(3)(A). While Pintos held that the
Hasbun interpretation of 15 U.S.C. §1681b(a)(3)(A) had to be reevaluated, it did not
overturn Hasbun in its entirety.
Pintos held that “FACTA helped to clarify the specific circumstances in which
credit reporting agencies may furnish credit reports to debt collectors under 15
U.S.C. §1681b(a)(3)(A).”
[3]
While Hasbun held that “debt collection was generally a
permissible purpose,”
[4]
the Pintos court held that “debt collection was not always a
permissible purpose for obtaining credit reports.”
[5]
Thus, Pintos re-interpreted 15
U.S.C. §1681b(a)(3)(A) based on the definitions provided for in FACTA. However,
the court in Pintos took no position on “when and how a child support enforcement

[1]
Pintos v. Pacific Creditors Association (9
th
Cir. Jan. 9, 2007, No. 04-17485, No. 04-17558) 2007 U.S. App.
22519
[2]
Saleh Hasbun v. County of Los Angeles (2003) 323 F.3d 801
[3]
Id at *4
[4]
Pintos at *4
[5]
Pintos at *4
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agency may lawfully obtain the consumer credit report of an individual who has fallen
behind in paying court-ordered child support” as that issue was not before the Pintos
court.
[6]

III. Statutory Analysis
A. Enforcement Purpose - Section 1681b(a)(4)
In the aftermath of Miller and Pintos, IV-D agencies are evaluating what, if
any, affect these rulings will have on their ability to access credit reports for use in
establishing and enforcing child support. While these cases may prove to limit the
definition of permissible purpose for use of credit reports under §1681b(a)(3)(A), IVD agencies continue to have access to credit reports under other provisions of the
FCRA.
One such provision allowing IV-D agencies access to consumer reports is
§1681b(a)(4) [subsection (a)(4)]. Pursuant to subsection (a)(4), the use of
consumer reports by IV-D agencies for enforcement of past-due child support is a
permissible purpose. This proposition is supported by several factors. The plain
language of subsection (a)(4)(A) indicates that the statute contemplates enforcement
of past-due support. Subsection (a)(4)(A) authorizes a consumer reporting bureau to
furnish a consumer report for the purpose of “establishing an individual’s capacity to
make child support payments or determining the appropriate level of such
payments.” The wording of this section arguably is focused on determining the
ability to pay an existing child support order, especially when compared to the
wording of the following subsection (a)(5), which addresses the use of credit reports
to set an initial or modified child support “award.”
Further support for the argument that subsection (a)(4) provides authority for
an enforcement request is found in the legislative history of the Personal
Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA).
PRWORA was intended to address welfare and child support enforcement issues
and added subsections (a)(4) and (a)(5), at the same time, to the FCRA. This would
seem to indicate that they were intended to have different purposes. Clearly, there
would be no need for both subsection (a)(4) and (a)(5) if the drafters’ intent for
subsection (a)(4) was to authorize use of credit reports for establishment of child
support orders only. There is strong support for the position that subsection (a)(4)
authorizes IV-D agencies’ access to credit reports for use in enforcing past-due child
support.
Child support enforcement agencies must take note, however, of the
certification required by subsection (a)(4). Prior to requesting a credit report under
subsection (a)(4), a IV-D must certify to the consumer reporting agency that:

[6]
Pintos at *4 fn3
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(A) the consumer report is needed for the purpose of establishing an
individual’s capacity to make child support payments or determining the
appropriate level of such payments;
(B) the paternity of the consumer for the child to which the obligation relates
has been established or acknowledged by the consumer in accordance
with State laws under which the obligation arises (if required by those
laws);
(C) the person has provided at least 10 days’ prior notice to the consumer
whose report is requested, by certified or registered mail to the last
known address of the consumer, that the report will be requested; and
(D) the consumer report will be kept confidential, will be used solely for a
purpose described in subparagraph (A), and will not be used in
connection with any other civil, administrative, or criminal proceeding, or
for any other purpose.
Although time-consuming and, in some cases costly, the certification
requirements are not overly burdensome and some IV-D agencies may even satisfy
one or two of the requirements as part of their existing business practices. For
example, it is unlikely that a IV-D agency would try to collect past-due support if the
obligor’s paternity had not already been established. In addition, IV-D agencies are
already required to adhere to strict confidentiality rules. On the other hand, one
requirement that is likely to be a departure from current practices is the notice
requirement set forth in §1681b(a)(4)(C).
Prior to requesting a consumer’s credit report pursuant to subsection
(a)(4)(C), a IV-D agency must provide at least 10 days’ written notice to the obligor of
its intention to request the credit report. The notice must be sent by certified or
registered mail, for which there is a fee above that of standard postage, to the
obligor’s last known address. The statute does not require the IV-D agency to wait
for the obligor’s response, nor does it require that the IV-D agency provide proof that
the obligor actually received the notice. In other contexts, courts have found that
notice sent by certified mail to an individual’s last known address is sufficient, even if
the intended recipient did not actually receive the notice (See, Wiley v. United States
et al., 96-1 U.S. Tax Cas (CCH) P50,089 (1995)); the addressee ignored the notice
of certified mail (See, Rifenburg v. Liffiton Homes, Inc., 107 A.D.2d 1015 (NY 1985);
or the certified mail was returned as undeliverable (See, Kelcon v. Marvin, 278
N.Y.S.2d 117 (1967)). However, these courts have held that if certified mailing is
required, the sender must be able to show the act of mailing, proven by evidence of
mailing practices corroborated by direct testimony or documentary evidence. (Wheat
v. Commissioner of Internal Revenue Service, T.C.M. (CCH) 2955 (1992); See also,
Lundy v. United States, 2007 U.S. Dist. LEXIS 14094). It is therefore imperative that
IV-D agencies implement procedures to document the act of mailing the notice, such
as recording the certified mail number, stamping “certified” on the envelope, and
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retaining the receipt stamped by the post office with the date of mailing.
[7]
Once the
appropriate notice is given, and as long as proper documentation of certified mailing
is made, the notice requirement would appear to be satisfied.
B. Establishment Purpose - Section 1681b(a)(5)
In addition to subsection (a)(4), §1681b(a)(5) [subsection (a)(5)] provides a
IV-D agency administering a State Plan with the authority to request a credit report
for “use to set an initial or modified child support award.” (emphasis added). The
term award indicates the setting of an amount of support due. This differs from
subsection (a)(4) in that subsection (a)(4) appears to be referring to enforcement
actions considering the stated permissible purpose of establishing the obligor’s
capacity to make payments or the “appropriate level of such payments.” In
subsection (a)(5), the purpose is focused on setting a new or modified child support
order as opposed to determining the ability to pay an existing child support order.
This section clearly applies to the establishment or modification of an order for
support. Subsection (a)(5) has no requirement for a notice to the consumer and also
does not state any requirement that paternity be established or acknowledged prior
to the request.
IV. Additional Authority Under the FCRA to Obtain Credit Reports
A. Consumer Authorization - Section 1681b(a)(2)
Section 1681b(a)(2) of the FCRA provides IV-D agencies with another
alternative for obtaining credit reports. Pursuant to §1681b(a)(2), a consumer
reporting agency can provide a credit report “in accordance with the written
instructions of the consumer to whom it relates.” If a IV-D agency obtains an
obligor’s written authorization to request a credit report, the IV-D agency is not
required to provide written notice to the obligor or make any certification to the
consumer reporting agency. The practice of obtaining an obligor’s signed
authorization can be incorporated into a IV-D agency’s everyday business
procedures, either by incorporating an authorization clause into already existing
forms or creating a distinct authorization form. The authorization could be obtained
any time there is contact between the obligor and the IV-D agency in anticipation of a
future need to request the obligor’s credit report. The authorization should state in
clear and specific terms when it expires and that revocation of the authorization by
the obligor must be made in writing to the IV-D agency.
B. Enforcement Purpose - Section 1681b(a)(3)(F)
One additional subsection may be of significant assistance in obtaining credit
reports for enforcement related activities without the necessity of the 10 day notice to

[7]
See, Chiaradonna v. Schweiker, 569 F.Supp. 1471 (1983) and Eischen v. Hildebrandt, et al., 683 N.W.2d 813
(2004) for descriptions of sufficient documentation of certified mailing.
6-7-
consumer. Specifically, §1681b(a)(3)(F) provides that a credit report may be
obtained if there exists a legitimate business need for the information in connection
with a business transaction that is initiated by the consumer; or, there is a legitimate
business need “to review an account to determine whether the consumer continues
to meet the terms of the account.” Although this section has never been applied in a
child support enforcement context, the plain language appears to apply. The
problems associated Pintos and Miller related to the new definitions of credit
transaction supplied by FACTA do not appear to affect the application subsection
(a)(3)(F).
Although this subsection has been narrowly construed in the past, it may,
based on its plain language, have some applicability to child support enforcement
agencies seeking credit reports. For example, child support enforcement agencies
certainly have a legitimate business need to determine whether a consumer has paid
other creditors instead of the child support debt in violation of the account terms (law
requiring payment of child support before all other debts). If the consumer has not
paid other creditors, perhaps a contempt action may not be filed; whereas if they
have paid other creditors the action may be filed.
V. Access to Locate Information
The last section to be considered for this discussion is 15 U.S.C. §1681f
[section f]. Section f has been a part of the FCRA since before PRWORA and the
FACTA amendments. Unlike subsections (a)(4) and (a)(5), it is straightforward and
specific as to its purpose and scope and leaves little need for interpretation. Section
“f” is intended for a governmental agency, such as a State child support enforcement
agency, to request “identifying” information on a child support obligor or a presumed
father.

This sections states, “[n]otwithstanding the provisions of section 1681b of this
title, the consumer reporting agency may furnish identifying information respecting
any consumer, limited to his name, address, former addresses, places of
employment, or former places of employment, to a governmental agency.” The
Office of Child Support Enforcement (OCSE) has interpreted section “f” to mean that
child support agencies may use this section to obtain locate information on an
obligor.
[8]
OCSE has further stated that section “f” may even be used “without a
legally enforceable order.”
[9]

Section “f” is a strong tool available to child support enforcement agencies for
use in locating obligors for the purposes of establishing or enforcing a child support
order. While it will not provide information on assets or income, it may provide
information that will allow for contact with obligors whose whereabouts have
otherwise been unknown.

[8]
OCSE IM-88-1
[9]
Essentials for Attorneys in Child Support Enforcement, Chapter 5-Location of Noncustodial Parents and
Their Assets. www.acf.hhs.gov/programs/cse/pubs/2002/reports/essentials/c5.html.