'Pre-qualified' letters violated FCRA, class action claims
A Clayton law firm filed three class action complaints in U.S. District Court alleging financial institutions violated the Fair Credit Reporting Act (FCRA). Include the amount of credit being extended;
Attorneys David T. Butsch, Joe D. Jacobson and James J. Simeri of Green Jacobson & Butsch filed the suits on Sept. 20 in East St. Louis on behalf of Scott Van Winkle, Marti L. Klutho and John McDonald.
The plaintiffs allege that Oxford Lending Group, Community First Mortgage and Fresh Start Mortgage sent them by mail a promotional letter that stated they were "pre-qualified" to receive funds.
They claim their credit reports were accessed by the financial institutions even though permission was never given for them to do so.
The plaintiffs also claim the promotional letters did not contain "a firm offer of credit or insurance" because it did not:
Include the interest rate of the credit being extended;
Contain the amortization period of the credit being extended; or
Include the method under which the interest on the credit being extended would be computed.
They also claim that promotional letters failed to identify the actual lender.
The plaintiffs also allege that by failing to include a firm offer of credit in their promotional letters, the defendants have "knowingly and willfully violated the Fair Credit Reporting Act."
According to the complaints, The Fair Credit Reporting, 15 U.S.C. §§ 1681.1681x, is a consumer protection statute that regulates the activities of credit reporting agencies and users of consumer reports, and provides rights to consumers affected by the use of information that is collected about them.
The complaints maintain the purpose of the Fair Credit Reporting Act is to protect consumers' privacy by safeguarding the confidentiality of the information maintained by consumer reporting agencies.
"The Fair Credit Reporting Act protects consumers by prohibiting any
release of consumer reports unless the release is for one of the permissible purposes set forth in 15 U.S.C. § 1681b," the complaints state.
The permissible purposes set forth in 15 U.S.C. § 1681b include, for the most part, transactions initiated by consumers. For instance, § 1681b(a)(3) authorizes the use of consumer reports when the consumer has applied for credit, employment, or insurance, according to the complaint.
The plaintiffs claims that under 15 U.S.C. § 1681n, the lenders are liable to them for damages of $1,000 for each time they violated the Fair Credit Reporting Act, punitive damages, the costs of the lawsuit and reasonable attorney fees.
They are bringing their claims against the defendants on behalf of the class consisting of all individuals in the states of Illinois and Missouri whose consumer reports were obtained by the defendants in connection with a credit transaction not initiated by the individuals, and who received promotional letters similar to theirs on or after Sept. 19, 2005.
"The class is so numerous that joinder of all members is impracticable because, upon information and belief, Defendant obtains consumer reports on consumers throughout the States of Illinois and Missouri but does not extend firm offers of credit, and uses them in standardized mass-marketing of loans but does not extend firm offers of credit, which violates the Fair Credit Reporting Act," the complaints state.
They claim there are questions of law and fact common to the class that include:
Whether defendants violated the Fair Credit Reporting Act by failing to make firm offers of credit to consumers after obtaining consumer reports in connection with credit transactions not initiated by consumers; and
Whether defendants' practice of obtaining consumer reports in connection with credit transactions not initiated by consumers and then failing to make a firm offer of credit to the consumer as required by the Fair Credit Reporting Act was "willful" within the meaning of the statute.
The plaintiffs all claims they will "fairly and adequately" represent the members of and has retained counsel experienced in the prosecution of class actions, and that they are committed to the vigorous prosecution of the claims.
"Many class members may be unaware that they have been victims of Defendants' illegal conduct," the complaint states. "For example, based on information and belief, many class members may have decided to discard the mailing as "junk mail," and therefore never learn that their credit reports have been accessed for illegal purposes."
The plaintiffs are seeking a judgment that:
Awards all damages available under the Fair Credit Reporting Act, including statutory damages of $1,000 per violation, punitive damages, costs and attorneys. fees;
Enjoins defendants within the states of Illinois and Missouri from further violations of the Fair Credit Reporting Act; and
Provides such other relief to which plaintiff or the class may be entitled under the evidence.