A federal judge allowed a member to sue Pentagon FCU for breach of contract and discrimination after it canceled his Visa account, allegedly because his income dropped following a railroad injury.

The member, David Powell, sued the credit union for cancelling his Visa account, supposedly due to problems with his credit report.

Pentagon had sent Powell two letters notifying him about the cancellation of his account. The first referred to a credit report by Equifax, but the second letter mentioned only an "investigative report" compiled by Pentagon and third parties, according to court records.

Powell said Pentagon violated the Fair Credit Reporting Act by not informing him about the investigative report. Powell claimed the credit union's stated reason for cancelling his account – his credit report – was merely pretext, as his account was current and the consumer reports did not reveal "significant evidence" of any account activity that could jeopardize repayment.

U.S. District Judge James Zagel rejected Powell's claims for violations of the Fair Credit Reporting Act and the Illinois Consumer Fraud Act, but allowed him to proceed with his breach of contract and discrimination claims.

Lawyers representing the credit union in the case did not return a phone call seeking comment.

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