Cavin v. Home Loan Class Action Defense Case: Illinois Federal Court Grants Defense Motion For Summary Judgment In Class Action Alleging Violations Of Federal Fair Credit Reporting Act (FCRA)

Mortgage-Offer Mailer Constituted a “Firm Offer of Credit” Under the FCRA (Fair Credit Reporting Act) Warranting Summary Judgment in Favor of Defense Illinois Federal Court Holds

Plaintiffs filed a class action against Home Loan Center for alleged violations of the federal Fair Credit Reporting Act (FCRA) alleging that impermissibly accessed credit reports for purposes of mailing out “pre-approval” mortgage flyers, three of which were mailed to plaintiffs. Cavin v. Home Loan Center Inc., 469 F.Supp.2d 561, 2007 WL 92509, *1 (N.D. Ill. 2007). Plaintiffs did not respond to the loan offers. Id., at *2. Defense and plaintiffs attorneys filed cross-motions for summary judgment; defense attorneys argued that the mailers constituted “firm offers of credit” under the FCRA thus entitling Home Loan Center to obtain the credit reports; plaintiffs argued that mailers did not constitute firm offers because they are too vague. Id., at *3. The district court granted the defense motion, denied the plaintiffs’ motion, and entered judgment in favor of Home Loan Center on the class action complaint.

We do not summarize here all of the language contained in the mailers or the details of the loan program at issue. Class action defense attorneys facing FCRA claims should review the opinion in its entirety in order to understand its full scope. Briefly, the mailers advertised a “SmartLoan” program and stated “This ‘prescreened’ offer of credit is based on information in your credit report indicating that you meet certain criteria.” Cavin, at *1. The mailers set forth “sample loan payments for loans ranging from $100,000 to $600,000.” Id. The reverse side of the mailers stated, “This offer may not be extended if, after responding to this offer, you do not meet the criteria used in the selection process. Further, HomeLoanCenter.com will verify income and employment, review credit, and analyze debt and your equity position in the subject property prior to final loan approval.” Id. Additionally, the mailers stated, “This advertisement does not constitute an offer to enter into an interest rate and/or discount prior agreement.” Id. The mailers were not firm commitments to make a loan, expressly stating “Not all applicants will be approved.”

Id., at *2.

In ruling on the cross-motions for summary judgment, the federal court observed that the parties did not dispute whether Home Loan Center had “express permission to access [plaintiffs’] credit reports,” Cavin, at *2. The class action turned “on whether the SmartLoan mailers constituted a ‘firm offer of credit'” under the FCRA. Id. Plaintiffs urged that the mailers were “vague and totally lacking in terms,” failed to “inform the consumer what is being offered,” and failed to disclose that the mortgage is a negative amortization loan. Id., at *2-*3. The defense countered that the mailers “offered a valuable and popular home mortgage loan worth hundreds of thousands of dollars” and that any missing terms were because mortgage loans “have features and terms that cannot be fixed in advance based solely upon data obtained from prescreening programs.” Id., at *3. Defense attorneys also argued that plaintiffs could not prove actual damages because they never sought or obtained a loan based on the mailers.Id.

Class Action Court Decisions FCRA Class Actions Uncategorized

Class Action Defense Issues–Fair and Accurate Credit Transactions Act

Class Action Defense Attorneys Urged to Advise Clients about FACTA Requirements The Fair and Accurate Credit Transactions Act (FACTA), enacted by Congress to amend the Fair Credit Reporting Act, will become effective in only a matter of days. FACTA requires that credit card receipts provided to customers be modified so that the credit card number shown on the receipt is truncated and so that the expiration date is omitted. Defense attorneys and in-house counsel are encouraged to ensure compliance with FACTA; the author predicts class action lawsuits will be filed alleging FACTA violations within months of its effective date.

Class Actions In The News FCRA Class Actions Uncategorized

E*Trade Class Action Defense Case-Murray v. E*Trade: Illinois Federal Court Rejects Defense Objections To Motion For Certification Of Class Action Alleging Violations Of Federal Fair Credit Reporting Act (FCRA)

Rule 23 Requirements Met in Class Action Alleging FCRA (Fair Credit Reporting Act) Violations Against E*Trade Illinois Federal Court Holds

Plaintiff filed a class action against ETrade alleging violations of the federal Fair Credit Reporting Act (FCRA) arising out of a solicitation mailer he received stating that he was pre-approved for a home equity loan and stating that “[i]nformation from a consumer credit report was used in connection with this offer.” _Murray v. ETrade Fin, Corp._, 240 F.R.D. 392, 2006 WL 3354039, *1 (N.D. Ill. November 20, 2006). Defense attorneys filed a motion for judgment on the pleadings as to the claim for relief in the class action complaint that E*Trade violated the FCRA’s disclosure requirements; the district court granted the motion agreeing with the defense that no private right of action exists for such violations under 15 U.S.C. § 1681m(d). Id. The court denied defense efforts to obtain dismissal of the balance of the class action complaint. Plaintiff’s lawyer then moved the court to certify the lawsuit as a class action; the court rejected defense arguments in opposition to the motion and granted class action certification, finding that the requirements of Rule 23(a) were met and that the class action satisfied also the requirements of Rule 23(b)(3).

The district court analyzed each of the Rule 23 requirements for certification of a class action, but ” E*Trade refutes only the adequacy of Murray as class representative,” Murray, at *2, so we do not here discuss the court’s analysis supporting its finding that numerosity, commonality and typicality were met. See id., at *2-*4. With respect to the adequacy requirement of Rule 23(a)(4), a district court must examine the adequacy of both the proposed class representative and the proposed class counsel, and determine whether “the representative parties will fairly and adequately protect the interest of the class.” Id., at *5. The court readily concluded that proposed class counsel would adequately represent the class based on the firm’s class action experience, and noted that even E*Trade “praised” its experience. Id.

Certification of Class Actions Class Action Court Decisions FCRA Class Actions Uncategorized

Class Action Defense Issues–Fair and Accurate Credit Transactions Act (FACTA)

Class Action Defense Attorneys Urged to Advise Clients about FACTA Requirements As we previously noted, the Fair and Accurate Credit Transactions Act (FACTA) is scheduled to take effect in December, 2006. Congress requires that credit card receipts provided to customers be modified so that the information contained on them no longer serves as a ready source for credit card fraud or identity theft. Under FACTA, the credit card number shown on the customer copy of the credit card receipt must be truncated and the expiration date must be omitted.

Class Actions In The News FCRA Class Actions Uncategorized

15 U.S.C. § 1681x – Corporate and Technological Circumvention Prohibited: Statutory Provisions of the FCRA (Fair Credit Reporting Act) for Class Action Defense Attorneys

As a resource for the class action defense lawyer who defends against class actions brought under the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681 et seq., we provide the text of the FCRA. To make it perfectly clear that Congress intended to achieve its goals for the FCRA, it specifically enacted legislation prohibiting companies from avoiding the effects of the law, providing in Section 1681x: § 1681x. Corporate and technological circumvention prohibited

FCRA Class Actions Statutes & Rules Uncategorized

15 U.S.C. § 1681w – Disposal of Records: Statutory Provisions of the FCRA (Fair Credit Reporting Act) for Class Action Defense Attorneys

As a resource for the class action defense lawyer who defends against class actions brought under the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681 et seq., we provide the text of the FCRA. Congress enacted legislation concerning the disposal of records as follows:

§ 1681w. Disposal of records

(a) Regulations

(1) In general.

Not later than 1 year after the date of enactment of this section, the Federal banking agencies, the National Credit Union Administration, and the Commission with respect to the entities that are subject to their respective enforcement authority under section 1681s of this title, and the Securities and Exchange Commission, and in coordination as described in paragraph (2), shall issue final regulations requiring any person that maintains or otherwise possesses consumer information, or any compilation of consumer information, derived from consumer reports for a business purpose to properly dispose of any such information or compilation.

FCRA Class Actions Statutes & Rules Uncategorized

15 U.S.C. § 1681v – Disclosures to Governmental Agencies for Counterterrorism Purposes: Statutory Provisions of the FCRA (Fair Credit Reporting Act) for Class Action Defense Attorneys

As a resource for the class action defense lawyer who defends against class actions brought under the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681 et seq., we provide the text of the FCRA. In addition to the statutory provision discussed earlier concerning disclosure of consumer information to the FBI for counterintelligence purposes, Congress enacted rules governing disclosure of such information to governmental agencies for counterterrorism purposes: § 1681v. Disclosures to governmental agencies for counterterrorism purposes

FCRA Class Actions Statutes & Rules Uncategorized

15 U.S.C. § 1681u – Disclosures to FBI for Counterintelligence Purposes: Statutory Provisions for the Class Action Defense Lawyer Who Defends Class Actions Brought Under the FCRA (Fair Credit Reporting Act)

As a resource for class action defense attorneys who defend against class actions brought under the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681 et seq., we provide the text of the FCRA. Congress enacted special rules governing the disclosure of consumer information to the FBI for purposes of counterintelligence, as set forth in Section 1681u which provides:

§ 1681u. Disclosures to FBI for counterintelligence purposes

(a) Identity of financial institutions.

Notwithstanding section 1681b of this title or any other provision of this title, a consumer reporting agency shall furnish to the Federal Bureau of Investigation the names and addresses of all financial institutions (as that term is defined in section 3401 of Title 12) at which a consumer maintains or has maintained an account, to the extent that information is in the files of the agency, when presented with a written request for that information, signed by the Director of the Federal Bureau of Investigation, or the Director’ s designee in a position not lower than Deputy Assistant Director at Bureau headquarters or a Special Agent in Charge of a Bureau field office designated by the Director, which certifies compliance with this section. The Director or the Director’s designee may make such a certification only if the Director or the Director’s designee has determined in writing, that such information is sought for the conduct of an authorized investigation to protect against international terrorism or clandestine intelligence activities, provided that such an investigation of a United States person is not conducted solely upon the basis of activities protected by the first amendment to the Constitution of the United States.

(b) Identifying information.

Notwithstanding the provisions of section 1681b of this title or any other provision of this title, a consumer reporting agency shall furnish identifying information respecting a consumer, limited to name, address, former addresses, places of employment, or former places of employment, to the Federal Bureau of Investigation when presented with a written request, signed by the Director or the Director’s designee, which certifies compliance with this subsection. The Director or the Director’ s designee in a position not lower than Deputy Assistant Director at Bureau headquarters or a Special Agent in Charge of a Bureau field office designated by the Director may make such a certification only if the Director or the Director’ s designee has determined in writing that such information is sought for the conduct of an authorized investigation to protect against international terrorism or clandestine intelligence activities, provided that such an investigation of a United States person is not conducted solely upon the basis of activities protected by the first amendment to the Constitution of the United States.

FCRA Class Actions Statutes & Rules Uncategorized

Cavin v. Home Loan Center-Class Action Defense Cases: Federal Fair Credit Reporting Act (FCRA) Prohibits Private Right Of Action For Violations Of § 1681m’s Disclosure Requirement Illinois District Court Holds

Illinois Federal Court Grants in Part Motion to Certify Class Action but Dismisses FCRA § 1681m Disclosure Violation Claim

Plaintiffs filed a class action against Home Loan Center alleging that it violated the federal Fair Credit Reporting Act (FCRA), 15 U.S.C. §§ 1681 et seq., by accessing their credit. Cavin v. Home Loan Center, Inc., 236 F.R.D. 387 (N.D. Ill. 2006). The plaintiffs’ lawyer filed a motion for class certification, together with a motion to compel discovery; defense lawyers argued inter alia that FCRA does not permit private rights of action for alleged violations of the disclosure requirements imposed by FCRA § 1681m. The district court granted in part and denied in part both motions. The court also dismissed plaintiffs’ § 1681m claim, agreeing with defense attorneys that no such claim could be maintained.

The lawsuit arose out of three letters sent to plaintiffs by Home Loan Center concerning a “‘prescreened’ offer of credit [that] is based on information in your credit report indicating that you meet certain criteria.” Unless authorized by the consumer, the FCRA prohibits credit reporting agencies from disclosing consumer information unless “the request is in connection with a ‘firm offer of credit.’” Cavin, at 390 (citing 15 U.S.C. § 1681b(c)(1)(B)). Plaintiffs alleged that the letters were not “firm offers of credit” and, accordingly, the lender violated § 1681n, and they alleged further that the letters violated the disclosure requirements contained in § 1681m. Id. Plaintiffs sought certification of a class action under Rule 23(b)(3), which the district court granted for reasons summarized in the Note below.

Class Action Court Decisions FCRA Class Actions Uncategorized

15 U.S.C. § 1681t – Relation to State Laws: Statutory Provisions for Defense Attorneys Who Defend Class Actions Brought Under the FCRA (Fair Credit Reporting Act)

As a resource for the class action defense lawyer who defends against class actions under the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681 et seq., we provide the text of the FCRA. Congress provided for the relation to State laws in Section 1681t as follows:

§ 1681t. Relation to State laws

(a) In general.

Except as provided in subsections (b) and (c), this title does not annul, alter, affect, or exempt any person subject to the provisions of this title from complying with the laws of any State with respect to the collection, distribution, or use of any information on consumers, or for the prevention or mitigation of identity theft, except to the extent that those laws are inconsistent with any provision of this title, and then only to the extent of the inconsistency.

(b) General exceptions.

No requirement or prohibition may be imposed under the laws of any State

(1) with respect to any subject matter regulated under

(A) subsection (c) or (e) of section 1681b of this title, relating to the prescreening of consumer reports;

(B) section 1681i of this title, relating to the time by which a consumer reporting agency must take any action, including the provision of notification to a consumer or other person, in any procedure related to the disputed accuracy of information in a consumer’ s file, except that this subparagraph shall not apply to any State law in effect on the date of enactment of the Consumer Credit Reporting Reform Act of 1996;

(C) subsections (a) and (b) of section 1681m of this title, relating to the duties of a person who takes any adverse action with respect to a consumer;

(D) section 1681m(d) of this title, relating to the duties of persons who use a consumer report of a consumer in connection with any credit or insurance transaction that is not initiated by the consumer and that consists of a firm offer of credit or insurance;

(E) section 1681c of this title, relating to information contained in consumer reports, except that this subparagraph shall not apply to any State law in effect on the date of enactment of the Consumer Credit Reporting Reform Act of 1996;

(F) section 1681s-2 of this title, relating to the responsibilities of persons who furnish information to consumer reporting agencies, except that this paragraph shall not apply

(i) with respect to section 54A(a) of chapter 93 of the Massachusetts Annotated Laws (as in effect on the date of enactment of the Consumer Credit Reporting Reform Act of 1996); or

(ii) with respect to section 1785.25(a) of the California Civil Code (as in effect on the date of enactment of the Consumer Credit Reporting Reform Act of 1996);

(G) section 1681g(e) of this title, relating to information available to victims under section 1681g(e) of this title;

FCRA Class Actions Statutes & Rules Uncategorized