Sounding a cautionary note to the hypercompetitive credit report resale and monitoring industry, the U.S. Court of Appeals for the Ninth Circuit recently held that a reseller’s statements on its website and in television advertisements made it a “credit repair organization” under the federal Credit Repair Organizations Act (CROA), 15 U.S.C. sec. 1679 et seq. (Title IV of the Consumer Credit Protection Act).
The case, Stout v. FreeScore, LLC, No. 10-56887 (9th Cir., Feb. 21, 2014), is a putative class action which alleges that FreeScore, LLC d/b/a FreeScore.com, a consumer credit report reseller, violated certain requirements of CROA and made misleading statements. FreeScore successfully moved to dismiss the case, with the U.S. District Court ruling that FreeScore was not a credit repair organization because it “did not make any promises of credit improvement” but merely “promise[d] to provide a consumer with his or her credit score….” On appeal, the Ninth Circuit reversed the District Court’s dismissal of the case and remanded it for further proceedings, finding that “FreeScore falls squarely within the CROA’s definition of a ‘credit repair organization.’” Continue reading this entry